MCNEIL REAL ESTATE FUND XXIV LP, 10-K405, 1997-03-28

MCNEIL REAL ESTATE FUND XXIV LP
10-K405, 1997-03-28
REAL ESTATE

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

FORM 10-K405

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

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

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

For the transition period from ______________ to_____________

Commission file number 0-14267
--------

McNEIL REAL ESTATE FUND XXIV, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

California 74-2339537
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)

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

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

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

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

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

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
- ------- --------

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 600, 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, were sold or liquidated for the benefit of creditors.

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

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.

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

General:

The Partnership is engaged in the ownership, operation and management of
residential and retail real estate. At December 31, 1996, 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 27% of the total
Partnership rental revenue in 1996, and 30% in 1995 and 1994.

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.

<PAGE>
Business Plan:

The Partnership determined to evaluate market and other economic conditions to
establish the optimum time to commence an orderly liquidation of the
Partnership's assets in accordance with the terms of the Amended Partnership
Agreement. Taking such conditions as well as other pertinent information into
account, the Partnership has determined to begin orderly liquidation of all its
assets. Although there can be no assurance as to the timing of the liquidation
due to real estate market conditions, the general difficulty of disposing of
real estate, and other general economic factors, it is anticipated that such
liquidation would result in the dissolution of the Partnership followed by a
liquidating distribution to the limited partners by December 1998. In this
regard, the Partnerships has placed Island Plaza and Southpointe Plaza on the
market for sale effective April 1, 1996 and October 1, 1996, respectively. Until
such time as the Partnership's assets are liquidated, the Partnership's plan of
operations is to preserve or increase the net operating income of its assets
whenever possible, while at the same time making whatever capital expenditures
are reasonable under the circumstances in order to preserve and enhance the
value of the Partnership's assets.

Competitive Conditions:

Since the principal business of the Partnership is to own and operate real
estate, the Partnership is subject to all of the risks 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.

Forward-Looking Information:

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

<PAGE>
Other information:

The environmental laws of the Federal government and of certain state and local
governments impose liability on current property owners for the clean-up of
hazardous and toxic substances discharged on the property. 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, a Delaware limited partnership
controlled by Carl C. Icahn ("High River") made an unsolicited tender offer to
purchase from holders of Units up to approximately 45% of the outstanding Units
of the Partnership for a purchase price of $150 per Unit. In September 1996,
High River made another unsolicited tender offer to purchase any and all of the
outstanding Units of the Partnership for a purchase price of $268.13 per unit.
In addition High River made unsolicited tender offers for certain other
partnerships controlled by the General Partner. The Partnership recommended that
the limited partners reject the tender offers made with respect to the
Partnership and not tender their Units. The General Partner believes that as of
January 31, 1997, High River has purchased approximately 8.86% of the
outstanding Units pursuant to the tender offers. In addition, all litigation
filed by High River, Mr. Icahn and his affiliates in connection with the tender
offers has been dismissed without prejudice.

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

The following table sets forth the real estate investment portfolio of the
Partnership at December 31, 1996. 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>
<CAPTION>
Net Basis 1996 Date
Property Description of Property Debt Property Taxes Acquired
- -------- ----------- ------------ ---- -------------- --------
<S> <C> <C> <C> <C> <C>
Real Estate Investments:

Pine Hills Apartments
Livingston, TX 128 units $ 2,584,155 $ - $ 37,657 10/85

Riverbay Plaza Retail Center
Riverview, FL 73,065 sq. ft. 3,469,934 - 58,994 4/85

Sleepy Hollow Apartments
Cleveland, TX 112 units 2,707,700 - 64,889 8/85

</TABLE>

<PAGE>

Towne Center Retail Center
Derby, KS 94,320 sq. ft. 1,450,154 - 40,591 7/85
------------ ----------- -----------
$ 12,971,315 $ - $ 269,243
============ =========== ===========
Assets Held for Sale:

Island Plaza Retail Center
Ft. Myers, FL 60,076 sq. ft. $ 2,016,188 $ - $ 51,468 4/85

Southpointe Plaza Retail Center
Sacramento, CA 83,506 sq. ft. 6,392,484 5,421,763 102,564 11/85
------------ ----------- -----------
$ 8,408,672 $ 5,421,763 $ 154,032
============ =========== ===========
</TABLE>
- ---------------------------------------
Total: Apartments - 240 units
Retail Centers - 399,290 sq. ft.

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

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------------- --------------- -------------- ------------- -------
<S> <C> <C> <C> <C> <C>
Real Estate Investments:

Pine Hills

Occupancy Rate............ 94% 99% 99% 98% 99%
Rent Per Square Foot...... $ 6.93 $ 6.76 $ 6.44 $ 6.06 $ 5.57

Riverbay Plaza
Occupancy Rate............ 94% 94% 92% 88% 89%
Rent Per Square Foot...... $ 7.15 $ 6.85 $ 8.55 $ 7.03 $ 6.85

</TABLE>

<PAGE>

1996 1995 1994 1993 1992
-------------- --------------- -------------- ------------- -------
<S> <C> <C> <C> <C> <C>
Sleepy Hollow
Occupancy Rate............ 92% 100% 99% 95% 98%
Rent Per Square Foot...... $ 7.14 $ 7.32 $ 6.91 $ 6.76 $ 6.58

Springwood Plaza
Occupancy Rate............ 96% 80% 72% 80% 82%
Rent Per Square Foot...... $ 6.03 $ 4.49 $ 4.59 $ 4.96 $ 6.52

Towne Center
Occupancy Rate............ 100% 100% 100% 53% 51%
Rent Per Square Foot...... $ 3.21 $ 3.59 $ 3.21 $ 2.93 $ 2.73

Assets Held for Sale:

Island Plaza
Occupancy Rate............ 86% 79% 80% 84% 79%
Rent Per Square Foot...... $ 6.45 $ 6.20 $ 7.09 $ 7.56 $ 7.42

Southpointe Plaza
Occupancy Rate............ 83% 97% 90% 86% 98%
Rent Per Square Foot...... $ 13.46 $ 14.18 $ 14.35 $ 13.41 $ 16.24
</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
- ------------

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 were developed within the area and 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 grocery anchor tenant at Island Plaza
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

<PAGE>
negotiate a modification of the lease during 1995, resulting in a reduction in
rent. Additionally, road construction completed during 1995 moved the flow of
traffic away from Island Plaza toward the two new shopping centers previously
described. The Partnership expects to maintain occupancy in the high 80% range
in 1997. The Partnership has determined to begin an orderly liquidation of all
the Partnership's assets. In this regard, the Partnership placed Island Plaza on
the market for sale effective April 1, 1996 and has received an offer from a
non-affiliate to purchase the center for $2.1 million.

Pine Hills
- ----------

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. Occupancy declined in 1996 as
a result of the availability of affordable alternative housing such as mobile
homes and rental houses. The Partnership expects to maintain occupancy in the
mid 90% range in 1997.

Riverbay Plaza
- --------------

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.
The Partnership plans to spend approximately $1.6 million in 1997 to expand the
anchor tenant's space by 5,311 square feet. The Partnership expects to maintain
occupancy in the low to mid 90% range in 1997.

Sleepy Hollow
- -------------

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. Two neighboring apartment
communities completed renovations early in 1996 which allowed them to become
more competitive than Sleepy Hollow. In addition, low interest rates and the
availability of affordable alternative housing such as mobile homes and rental
houses have softened the local real estate market. As a result, the property
experienced a decline in occupancy in 1996. Although two additional apartment
communities are scheduled for construction in 1997, the Partnership expects to
maintain occupancy in the low 90% range in 1997.

<PAGE>
Southpointe Plaza
- -----------------

Southpointe Plaza is a retail strip shopping center located in the southern
quadrant of Sacramento, California. The property is easily accessible and highly
visible from the highway. The declining economic conditions in the adjacent
neighborhood have resulted in increased criminal activity. 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. New shopping centers are being
constructed to the south of the property, and one of the property's anchor
tenants opened a store in a new center located five miles to the south. Should
the tenant decide to vacate Southpointe Plaza, it could have a severe negative
impact on the future marketing of the smaller lease space at the center. Another
user of a pad site at the center has also decided to relocate their store to one
of the newer centers, which could result in a sublease to a less desirable
tenant. Although occupancy at the center is projected to increase to the low to
mid 90% range by the end of 1997, management expects to reduce rents for tenants
who are currently paying rents above market. The Partnership has determined to
begin an orderly liquidation of all the Partnership's assets. In this regard,
the Partnership placed Southpointe Plaza on the market for sale effective
October 1, 1996. The Partnership has received an offer from a non-affiliate to
purchase the center for $6.8 million. Based on this offer, the Partnership
recorded a $700,000 write-down for impairment of value during the fourth quarter
of 1996 to record the shopping center at its fair value less costs to sell.

Springwood Plaza
- ----------------

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 and 1996 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 maintain occupancy in mid 90% range in 1997.

Towne Center
- ------------

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. 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. A total of 80% of the leased space at the
center expires during 1997, with 48% of the space expected to vacate. Although
demand for retail space in Derby is limited, space available is also limited and
the smaller spaces should not be difficult to lease. However, management
estimates that it could take up to a year to release the expected vacancy of the
tenant that occupies 42% of the space. Management has concluded that, based on
the projected future cash flows of the property, no impairment of value exists.

<PAGE>
The following schedule shows lease expirations for each of the Partnership's
commercial properties for 1997 through 2006:

<TABLE>
<CAPTION>
Number of Annual % of Gross
Expirations Square Feet Rent Annual Rent
----------- ----------- ------- -----------

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

Riverbay Plaza
- --------------

<C> <C> <C> <C> <C>
1997 4 4,959 $ 36,012 8%
1998 2 1,950 17,556 4%
1999 2 2,555 24,204 5%
2000 2 6,593 45,120 10%
2001 - - - -
2002 - - - -
2003 - - - -
2004 1 40,297 236,256 51%
2005 - 2006 - - - -

Springwood Plaza
- ----------------
1997 5 8,529 $ 67,668 15%
1998 1 2,000 12,000 3%
1999 4 54,335 273,540 61%
2000 2 4,316 24,444 5%
2001 2 7,092 46,308 10%
2002 1 7,100 26,628 6%
2003 - 2006 - - - -

Towne Center
- ------------
1997 8 75,986 $ 196,992 68%
1998 3 7,087 21,792 8%
1999 4 7,831 54,096 19%
2000 - - - -
2001 1 2,768 15,588 5%
2002 - 2006 - - - -
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Number of Annual % of Gross
Expirations Square Feet Rent Annual Rent
----------- ----------- ------- -----------
Assets Held for Sale:
- ---------------------

Island Plaza
- ------------
<C> <C> <C> <C> <C>
1997 4 6,384 $ 44,016 14%
1998 5 7,719 71,076 23%
1999 2 3,415 27,588 9%
2000 2 2,508 16,752 5%
2001 - - - -
2002 - - - -
2003 - - - -
2004 1 30,800 153,996 49%
2005 - 2006 - - - -

Southpointe Plaza
- -----------------

1997 7 12,520 $ 187,260 22%
1998 2 5,843 81,912 10%
1999 1 1,588 22,872 3%
2000 2 3,872 45,960 5%
2001 4 8,627 81,948 10%
2002 2 14,003 158,304 18%
2003 2 19,848 182,484 21%
2004 - 2006 - - - -
</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:

Nature of
Business Square Footage Lease
Use Leased Annual Rent Expiration
- --------- -------------- ----------- ----------
Real Estate Investments:
- ------------------------
Riverbay Plaza

Grocery Store 40,297 $ 236,256 2004
Drugstore 13,500 101,256 2042

Springwood Plaza

Grocery Store 46,558 $ 217,680 1999

Towne Center

Home Furnishings 40,034 $ 48,036 1997
Grocery Store 22,660 61,620 1997

<PAGE>
Nature of
Business Square Footage Lease
Use Leased Annual Rent Expiration
- -------- -------------- ----------- ----------
Assets Held for Sale:
- ---------------------

Island Plaza

Grocery Store 30,800 $ 153,996 2004

Southpointe Plaza

Sporting Goods 10,000 $ 50,004 2002
Toy Store 14,850 95,100 2003

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

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

1) 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.
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 entity and the judgment, along
with the prior dismissals of the class action, was appealed. The claims
against the Partnership were dismissed by the Appellate Court.

2) James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners
L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund
XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund
XXVII, L.P., et al. - Superior Court of the State of California for the
County of Los Angeles, Case No. BC133799 (Class and Derivative Action
Complaint).

<PAGE>
The action involves purported class and derivative actions brought by
limited partners of each of the fourteen limited partnerships that were
named as nominal defendants as listed above (as defined in this Section 2,
the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its
affiliate McNeil Real Estate Management, Inc. and three of their senior
officers and/or directors (as defined in this Section 2, collectively, the
"Defendants") breached their fiduciary duties and certain obligations under
the respective amended partnership agreements. Plaintiffs allege that
Defendants have rendered such Units highly illiquid and artificially
depressed the prices that are available for Units on the resale market.
Plaintiffs also allege that Defendants engaged in a course of conduct to
prevent the acquisition of Units by an affiliate of Carl Icahn by
disseminating purportedly false, misleading and inadequate information.
Plaintiffs further allege that Defendants acted to advance their own
personal interests at the expense of the Partnerships' public unit holders
by failing to sell Partnership properties and failing to make distributions
to unitholders.

On December 16, 1996, the plaintiffs filed a consolidated and amended
complaint. Plaintiffs are suing for breach of fiduciary duty, breach of
contract and an accounting, alleging, among other things, that the
management fees paid to the McNeil affiliates over the last six years are
excessive, that these fees should be reduced retroactively and that the
respective amended partnership agreements governing the Partnerships are
invalid. On January 7, 1997, the Court ordered consolidation with three
other similar actions listed below.

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

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

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

5) 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.

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

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 3,287 as of January 31, 1997

(C) Distributions paid to limited partners totaled $750,016 in 1996. No
distributions were paid to the General Partner in 1996 and no
distributions were paid to the limited partners or General Partner in
1995. 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."

<PAGE>
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>
<CAPTION>
Statements of Years Ended December 31,
Operations 1996 1995 1994 1993 1992
- ------------------ ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Rental revenue............... $ 4,136,447 $ 4,058,503 $ 4,127,396 $ 3,903,950 $ 4,174,958
Write-down for impairment
of real estate.............. (700,000) (1,500,085) - - -
Loss before extraordinary
items....................... (608,182) (1,694,787) (65,511) (30,846) (260,259)
Extraordinary items.......... - - - - 51,510
Net loss..................... (608,182) (1,694,787) (65,511) (30,846) (208,749)

Net loss per limited
partnership unit:
Loss before extraordinary
items....................... $ (15.05) $ (41.95) $ (1.62) $ (.76) $ (6.44)
Extraordinary items.......... - - - - 1.27
------------ ----------- ------------- ------------ ------------

Net income (loss)............ $ (15.05) $ (41.95) $ (1.62) $ (.76) $ (5.17)
============ =========== ============= ============ ============

Distributions per limited
partnership unit............ $ 18.75 $ - $ - $ - $ -
============ =========== ============= ============ ============

As of December 31,
Balance Sheets 1996 1995 1994 1993 1992
- -------------- ------------- ------------- -------------- ------------- -------------

Real estate investments, net. $ 12,971,315 $ 22,816,356 $ 25,251,693 $ 25,836,338 $ 26,303,508
Assets held for sale......... 8,408,672 - - - -
Total assets................. 23,771,150 25,912,389 27,674,971 28,067,428 28,453,312
Mortgage note payable........ 5,421,763 5,538,527 5,660,558 5,874,740 6,126,404
Partners' equity............. 17,981,105 19,339,303 21,034,090 21,099,601 21,130,447

</TABLE>

<PAGE>
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.

Southpointe Plaza is an 83,506 square foot retail strip shopping center located
in the southern quadrant of Sacramento, California. The property is easily
accessible and highly visible from the highway. The declining economic
conditions in the adjacent neighborhood have resulted in increased criminal
activity. 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.
New shopping centers are being constructed to the south of the property, and one
of the property's anchor tenants opened a store in a new center located five
miles to the south. Should the tenant decide to vacate Southpointe Plaza, it
could have a severe negative impact on the future marketing of the smaller lease
space at the center. Another user of a pad site at the center has also decided
to relocate their store to one of the newer centers, which could result in a
sublease to a less desirable tenant. Although occupancy at the center is
projected to increase to the low to mid 90% range by the end of 1997, management
expects to reduce rents for tenants who are currently paying rents above market.
The Partnership has determined to begin an orderly liquidation of all the
Partnership's assets. In this regard, the Partnership placed Southpointe Plaza
on the market for sale effective October 1, 1996 and has received an offer from
a non-affiliate to purchase the center for $6.8 million. Based on this offer,
the Partnership recorded a $700,000 write-down for impairment of value during
the fourth quarter of 1996 to record the shopping center at its estimated fair
value less costs to sell. The shopping center was classified as an asset held
for sale by the Partnership at December 31, 1996.

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 grocery
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 during
1995, 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 caused a
decline in anticipated future cash flows that were considered to be an
impairment; accordingly, the Partnership recorded a write-down for impairment of
real estate of $1,500,085 during the fourth quarter of 1995. The Partnership has
determined to begin an orderly liquidation of all the Partnership's assets. In
this regard, the Partnership placed Island Plaza on the market for sale
effective April 1, 1996 and has received an offer from a non-affiliate to
purchase the center for $2.1 million. The shopping center was classified as an
asset held for sale by the Partnership at December 31, 1996.

<PAGE>
RESULTS OF OPERATIONS
- ---------------------

1996 compared to 1995

Revenue:

Total revenue increased by $90,253 in 1996 as compared to 1995. The increase was
due to an increase in rental revenue and a gain on involuntary conversion,
partially offset by decreases in interest income and property tax refunds, as
discussed below.

Rental revenue for 1996 increased slightly by $77,944 in relation to 1995. The
increase was mainly due to an approximately $136,000 increase in rental revenue
at Springwood Plaza due to an increase in occupancy in 1996. This increase was
partially offset by a decrease of approximately $60,000 at Southpointe Plaza due
to a decrease in occupancy in 1996. See Item 2 - Properties for a more detailed
analysis of occupancy and rents per square foot.

Interest income decreased by $18,116 in 1996 as compared to 1995. The decrease
was due to a lower amount of cash available for short-term investment as a
result of cash distributions paid to the limited partners in 1996.

A gain on involuntary conversion of $45,134 was recognized in the first quarter
of 1996 relating to wind and hail damage suffered at Pine Hills Apartments. No
such gain was recognized in 1995.

In 1996, the Partnership received $20,433 in refunds of prior years' property
taxes for Towne Center Shopping Center. In 1995, the Partnership received
$35,142 in refunds of prior years' property taxes for Riverbay Plaza,
Southpointe Plaza and Springwood Plaza shopping centers.

Expenses:

Total expenses decreased by $996,352 in 1996 as compared to 1995. The decrease
was mainly due to a greater write-down for impairment of real estate being
recorded in 1995. In addition, there was a decrease in depreciation and
amortization and general and administrative - affiliates, partially offset by an
increase in other property operating expenses, as discussed below.

Depreciation and amortization expense for 1996 decreased by $176,093 in relation
to 1995. The decrease was due to Island Plaza and Southpointe Plaza being
classified as assets held for sale by the Partnership effective April 1, 1996
and October 1, 1996, respectively. In accordance with the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," the Partnership ceased recording depreciation on these assets
at the time they were placed on the market for sale.

Other property operating expenses increased by $110,678 in 1996 as compared to
1995. The increase was partially due to an increase in bad debts due to the
bankruptcy filing by a tenant at Southpointe Plaza. In addition, there was an
increase in amortization of leasing commissions in 1996. Two tenants at
Southpointe Plaza and one tenant at Springwood Plaza vacated prior to the
expiration of their leases, resulting in the balance of their prepaid leasing
commissions being fully amortized in 1996.

<PAGE>
General and administrative - affiliates for 1996 decreased by $101,615 in
relation to 1995. The decrease was mainly due to a decrease in overhead expenses
allocated to the Partnership by McREMI. In addition, there was a decrease in
asset management fees as a result of a decrease in the Partnership's tangible
asset value, on which the fees are based.

In 1996, the Partnership recorded a $700,000 write-down for impairment of
Southpointe Plaza Shopping Center. In 1995, the Partnership recorded a
$1,500,085 write-down for impairment of Island Plaza Shopping Center.

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 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.

<PAGE>
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. Five individuals brought suit against the
Partnership based on a purported claim that the Partnership and McREMI orally
promised to agree to extend their lease and approve an assignment of lease from
three of the plaintiffs to two of the other plaintiffs for a restaurant and bar.
In April 1995, a settlement was reached such that the Partnership agreed to pay
three of the plaintiffs $42,500, of which $20,000 was paid by the Partnership's
insurance carrier.

In 1995, the Partnership recorded a $1,500,085 write-down for impairment of
Island Plaza Shopping Center. No such write-down was recorded in 1994.

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

The Partnership's primary source of cash flows is from operating activities
which generated $1,153,592 of cash through operating activities in 1996,
$1,215,207 in 1995 and $1,205,005 in 1994.

In 1996, the Partnership received $75,000 of net insurance proceeds for wind and
hail damage suffered at Pine Hills Apartments. The Partnership spent $484,810,
$432,154 and $706,253 on capital additions to its real estate investments in
1996, 1995 and 1994, respectively. The increase in expenditures in 1994 in
relation to 1996 and 1995 was primarily due to the modification of the sewage
treatment system at Riverbay Plaza in 1994.

The Partnership made a total of $116,764, $122,031 and $214,182 in principal
payments on the Southpointe Plaza mortgage loan in 1996, 1995 and 1994,
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 1996 and 1995.

In 1996, the Partnership repaid $642,581 of advances from affiliates. The
Partnership also distributed $750,016 to the limited partners in 1996.

Short-term liquidity:

At December 31, 1996, the Partnership held cash and cash equivalents of
$1,615,604. This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its properties.
<PAGE>
For the Partnership as a whole, management projects positive cash flow from
operations in 1997. The Partnership has budgeted approximately $2 million for
necessary capital improvements for all properties in 1997, 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.

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.

Only one property, Southpointe Plaza Shopping Center, is encumbered with
mortgage debt. The Partnership has placed Southpointe Plaza on the market for
sale and has received an offer from a non-affiliate to purchase the center for
$6.8 million. When the mortgage note matures in 1997, the Partnership will
attempt to obtain refinancing or extension of the note until the property is
sold.

Long-term liquidity:

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.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
<TABLE>
<CAPTION>

Page
Number
------

INDEX TO FINANCIAL STATEMENTS
- -----------------------------

Financial Statements:

<S> <C>
Report of Independent Public Accountants....................................... 19

Balance Sheets at December 31, 1996 and 1995................................... 20

Statements of Operations for each of the three years in the period
ended December 31, 1996..................................................... 21

Statements of Partners' Equity (Deficit) for each of the three years
in the period ended December 31, 1996....................................... 22

Statements of Cash Flows for each of the three years in the period
ended December 31, 1996..................................................... 23

Notes to Financial Statements.................................................. 25

Financial Statement Schedule -

Schedule III - Real Estate Investments and Accumulated
Depreciation and Amortization ........................................... 34

</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, 1996 and 1995, and
the related statements of operations, partners' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements and the schedule referred to below are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements and the schedule based on our audits.

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

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

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

/s/ Arthur Andersen LLP

Dallas, Texas
March 17, 1997

<PAGE>

McNEIL REAL ESTATE FUND XXIV, L.P.

BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
-----------------------------------
1996 1995
--------------- ------------
<S> <C> <C>
ASSETS
- ------

Real estate investments:

Land..................................................... $ 2,409,114 $ 6,781,836
Buildings and improvements............................... 19,449,373 28,462,935
-------------- -------------
21,858,487 35,244,771
Less: Accumulated depreciation and amortization......... (8,887,172) (12,428,415)
-------------- -------------
12,971,315 22,816,356

Assets held for sale........................................ 8,408,672 -

Cash and cash equivalents................................... 1,615,604 2,381,183
Cash segregated for security deposits....................... 82,466 94,780
Accounts receivable, net of allowance for doubtful
accounts of $41,151 and $0 at December 31, 1996
and 1995 respectively.................................... 550,752 433,580
Prepaid expenses and other assets, net...................... 142,341 186,490
-------------- -------------
$ 23,771,150 $ 25,912,389
============== =============

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------

Mortgage note payable....................................... $ 5,421,763 $ 5,538,527
Accounts payable and accrued expenses....................... 202,045 229,628
Payable to affiliates - General Partner..................... 74,343 59,527
Advances from affiliates.................................... - 642,581
Security deposits and deferred rental revenue............... 91,894 102,823
-------------- -------------
5,790,045 6,573,086
-------------- -------------

Partners' equity (deficit):
Limited partners - 40,000 limited partnership
units authorized and outstanding at
December 31, 1996 and 1995............................. 18,009,967 19,362,083
General Partner.......................................... (28,862) (22,780)
-------------- -------------
17,981,105 19,339,303
-------------- -------------
$ 23,771,150 $ 25,912,389
============== =============
</TABLE>

See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1996 1995 1994
-------------- -------------- ---------------
Revenue:
<S> <C> <C> <C>
Rental revenue.......................... $ 4,136,447 $ 4,058,503 $ 4,127,396
Interest................................ 105,722 123,838 71,505
Gain on involuntary conversion.......... 45,134 - -
Property tax refund..................... 20,433 35,142 -
------------- ------------- --------------
Total revenue......................... 4,307,736 4,217,483 4,198,901
------------- ------------- --------------

Expenses:
Interest................................ 427,365 433,768 380,867
Depreciation and amortization........... 1,191,313 1,367,406 1,290,898
Property taxes.......................... 423,275 402,569 474,811
Personnel costs......................... 273,780 284,238 274,229
Repairs and maintenance................. 399,778 421,102 451,727
Property management fees -
affiliates............................ 226,592 232,136 235,662
Utilities............................... 213,048 201,597 207,398
Other property operating expenses....... 316,234 205,556 269,773
General and administrative.............. 195,970 213,635 70,732
General and administrative -
affiliates............................ 548,563 650,178 608,315
Write-down for impairment
of real estate........................ 700,000 1,500,085 -
------------- ------------- --------------
Total expenses........................ 4,915,918 5,912,270 4,264,412
------------- ------------- --------------

Net loss................................... $ (608,182) $ (1,694,787) $ (65,511)
============= ============= ==============

Net loss allocable to limited partners..... $ (602,100) $ (1,677,839) $ (64,856)
Net loss allocable to General Partner...... (6,082) (16,948) (655)
------------- ------------- --------------
Net loss................................... $ (608,182) $ (1,694,787) $ (65,511)
============= ============= ==============

Net loss per limited partnership unit...... $ (15.05) $ (41.95) $ (1.62)
============= ============= ==============

Distributions per limited partnership
unit.................................... $ 18.75 $ - $ -
============= ============= ==============
</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, 1996, 1995 and 1994

<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1993.............. $ (5,177) $ 21,104,778 $ 21,099,601

Net 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

Net loss.................................. (6,082) (602,100) (608,182)

Distributions............................. - (750,016) (750,016)
------------- ------------- -------------

Balance at December 31, 1996.............. $ (28,862) $ 18,009,967 $ 17,981,105
============= ============= =============
</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>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1996 1995 1994
--------------- --------------- ----------------
Cash flows from operating activities:
<S> <C> <C> <C>
Cash received from tenants.............. $ 3,977,657 $ 4,050,223 $ 4,140,189
Cash paid to suppliers.................. (1,370,950) (1,323,776) (1,258,002)
Cash paid to affiliates................. (760,339) (861,503) (838,624)
Interest received....................... 105,722 123,838 71,505
Interest paid........................... (398,254) (399,056) (349,155)
Property taxes paid..................... (420,677) (409,661) (560,908)
Property tax refund..................... 20,433 35,142 -
------------- ------------- --------------
Net cash provided by operating
activities.............................. 1,153,592 1,215,207 1,205,005
------------- ------------- --------------

Cash flows from investing activities:
Net proceeds received from
insurance company..................... 75,000 - -
Additions to real estate
investments........................... (484,810) (432,154) (706,253)
------------- ------------- --------------
Net cash used in investing activities...... (409,810) (432,154) (706,253)
------------- ------------- --------------

Cash flows from financing activities:
Principal payments on mortgage
note payable.......................... (116,764) (122,031) (214,182)
Repayment of advances from
affiliates............................ (642,581) - -
Distributions paid...................... (750,016) - -
------------- ------------- --------------
Net cash used in financing activities...... (1,509,361) (122,031) (214,182)
------------- ------------- --------------

Net increase (decrease) in cash
and cash equivalents.................... (765,579) 661,022 284,570

Cash and cash equivalents at
beginning of year....................... 2,381,183 1,720,161 1,435,591
------------- ------------- --------------

Cash and cash equivalents at end
of year................................. $ 1,615,604 $ 2,381,183 $ 1,720,161
============= ============= ==============
</TABLE>

See discussion of noncash investing and financing activities in Note 4 - "Real
Estate Investments."

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>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1996 1995 1994
--------------- --------------- ----------------
<S> <C> <C> <C>
Net loss................................... $ (608,182) $ (1,694,787) $ (65,511)
------------- ------------- --------------

Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization........... 1,191,313 1,367,406 1,290,898
Allowance for doubtful accounts......... 41,151 (77,044) (7,956)
Amortization of deferred borrowing
costs................................. 31,079 31,079 31,079
Amortization of deferred gain........... - (17,000) (20,400)
Gain on involuntary conversion.......... (45,134) - -
Write-down for impairment
of real estate........................ 700,000 1,500,085 -
Changes in assets and liabilities:
Cash segregated for security deposits. 12,314 (8,929) (2,083)
Accounts receivable................... (158,323) 44,989 49,399
Prepaid expenses and other
assets, net......................... 13,070 (1,828) 21,943
Accounts payable and accrued
expenses............................ (27,583) 35,015 (93,507)
Payable to affiliates - General
Partner............................. 14,816 20,811 5,353
Security deposits and deferred
rental revenue...................... (10,929) 15,410 (4,210)
------------- ------------- --------------

Total adjustments................. 1,761,774 2,909,994 1,270,516
------------- ------------- --------------

Net cash provided by operating
activities.............................. $ 1,153,592 $ 1,215,207 $ 1,205,005
============= ============= ==============
</TABLE>

See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996

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. 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. The principal place of business for the Partnership and
the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240.

The Partnership is engaged in diversified real estate activities, including the
ownership, operation and management of residential and commercial properties.
The Partnership determined to evaluate market and other economic conditions to
establish the optimum time to commence an orderly liquidation of the
Partnership's assets in accordance with the terms of the Amended Partnership
Agreement. At December 31, 1996, 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 27% of the total Partnership
rental revenue in 1996 and 30% in 1995 and 1994.

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

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

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

Assets Held for Sale
- --------------------

Assets held for sale are stated at the lower of depreciated cost or fair value
less costs to sell. Depreciation on these assets ceases at the time they are
placed on the market for sale.

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.

<PAGE>
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 1996, 1995, and 1994 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 a 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.
<PAGE>
The Partnership distributed $750,016 to the limited partners in 1996. No
distributions were made to the partners in 1995 or 1994.

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 1996,
1995 and 1994.

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.

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

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1996 1995 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
Property management fees................... $ 226,592 $ 232,136 $ 235,662
Charged to general and administrative -
affiliates:
Partnership administration.............. 233,066 310,258 291,507
Asset management fee.................... 315,497 339,920 316,808
------------- ------------- --------------
$ 775,155 $ 882,314 $ 843,977
============= ============= ==============
</TABLE>

In 1996, the Partnership repaid $642,581 of noninterest-bearing advances from
affiliates.

Payable to affiliates - General Partner at December 31, 1996 and 1995 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 $6,081,071 in 1996,
$5,490,840 in 1995 and $4,043,975 in 1994.

<PAGE>
NOTE 4 - REAL ESTATE INVESTMENTS
- --------------------------------

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

<TABLE>
<CAPTION>
Accumulated
Buildings and Depreciation Net Book
1996 Land Improvements and Amortization Value
---- -------------- ------------ ---------------- ---------------
<S> <C> <C> <C> <C>
Pine Hills Apartments
Livingston, TX $ 605,145 $ 3,735,664 $ (1,756,654) $ 2,584,155
Riverbay Plaza
Riverview, FL 294,546 5,670,698 (2,495,310) 3,469,934
Sleepy Hollow Apartments
Cleveland, TX 363,051 4,297,494 (1,952,845) 2,707,700
Springwood Plaza
Dellwood, MO 784,767 3,579,942 (1,605,337) 2,759,372
Towne Center
Derby, KS 361,605 2,165,575 (1,077,026) 1,450,154
------------- ------------- ------------- -------------

$ 2,409,114 $ 19,449,373 $ (8,887,172) $ 12,971,315
============= ============= ============= =============

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

Island Plaza $ 832,191 $ 3,100,907 $ (1,897,524) $ 2,035,574
Pine Hills Apartments 605,145 3,698,238 (1,584,751) 2,718,632
Riverbay Plaza 294,546 5,666,314 (2,246,406) 3,714,454
Sleepy Hollow Apartments 363,051 4,240,757 (1,747,160) 2,856,648
Southpointe Plaza 3,540,531 6,320,334 (2,535,506) 7,325,359
Springwood Plaza 784,767 3,282,809 (1,433,389) 2,634,187
Towne Center 361,605 2,153,576 (983,679) 1,531,502
------------- ------------- ------------- -------------

$ 6,781,836 $ 28,462,935 $ (12,428,415) $ 22,816,356
============= ============== ============= =============
</TABLE>

Island Plaza, a 60,076 square foot single-story strip shopping center in Ft.
Myers, Florida, 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 grocery
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 in 1995,
resulting in a reduction in rent. Additionally, road construction completed

<PAGE>
during 1995 has moved the flow of traffic away from Island Plaza toward the two
new shopping centers previously described. These events caused a decline in
future cash flows that was considered to be an impairment; accordingly, the
Partnership recorded a write-down for impairment of the asset of $1,500,085
during the fourth quarter of 1995. The Partnership has determined to begin an
orderly liquidation of all the Partnership's assets. In this regard, the
Partnership placed Island Plaza on the market for sale effective April 1, 1996
and has received an offer from a non-affiliate to purchase the center for $2.1
million. Accordingly, the shopping center was classified as an asset held for
sale by the Partnership at December 31, 1996. The net book value of Island Plaza
was $2,016,188 at December 31, 1996.

The results of operations for the assets held for sale at December 31, 1996 were
$167,511, $118,740 and $154,310 for 1996, 1995 and 1994, respectively. Results
of operations are operating revenues less operating expenses including
depreciation and interest expense.

In December 1995, wind and hail damage occurred at Pine Hills Apartments. During
1996, reimbursements totaling $75,000 were received from the insurance carrier,
and repairs to the property were completed. In 1996, the Partnership recognized
a $45,134 gain on involuntary conversion, which represents the amount of
insurance reimbursements received in excess of the basis of the property
damaged.

In February 1997, a fire occurred at Riverbay Plaza Shopping Center. One
tenant's space (less than 3% of the total leasable square footage of the center)
was completely destroyed. In addition, there was damage to the roof and several
tenant spaces incurred water and smoke damage. The total cost of repairs cannot
be determined at this time. Management expects the majority of the repairs,
excluding a $25,000 deductible, will be covered by the property's insurance
carrier.

<PAGE>
The Partnership leases its commercial properties under non-cancelable operating
leases. Future minimum rents to be received as of December 31, 1996 are as
follows:

Real Estate Assets Held
Investments For Sale
-------------- ---------------

1997..................... $ 1,047,000 $ 1,072,000
1998..................... 858,000 870,000
1999..................... 706,000 837,000
2000..................... 443,000 807,000
2001..................... 390,000 729,000
Thereafter............... 2,260,000 1,500,000
------------- --------------
Total $ 5,704,000 $ 5,815,000
============= ==============

Future minimum rents do not include contingent rentals based on sales volume of
tenants. Contingent rents amounted to $32,518, $8,426 and $7,809 for the years
ended December 31, 1996, 1995 and 1994, respectively. Future minimum rents also
do not include expense reimbursements for common area maintenance, property
taxes and other expenses. These expense reimbursements amounted to $548,716,
$444,862 and $487,347 for the years ended December 31, 1996, 1995 and 1994,
respectively. These contingent rents and expense reimbursements, which include
amounts related to the assets held for sale, are included in rental revenue on
the Statements of Operations.

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, 1996 and 1995. The
mortgage note payable is secured by the related real estate investment.

<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a)Rate %(b) Maturity 1996 1995
- -------- --------------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Southpointe Plaza First 7.089 $42,703 4/97 $ 5,421,763 $ 5,538,527
============ ===========
</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, 1996.

The Partnership has placed Southpointe Plaza on the market for sale and has
received an offer from a non-affiliate to purchase the center for $6.8 million.
When the mortgage note matures in 1997, the Partnership will attempt to obtain
refinancing or extension of the note until the property is sold.

<PAGE>
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 $5,081,000 at December 31, 1996 and $5,170,000 at
December 31, 1995.

NOTE 6 - LEGAL PROCEEDINGS
- --------------------------

The action involves purported class and derivative actions brought by
limited partners of each of the fourteen limited partnerships that were
named as nominal defendants as listed above (as defined in this Section 2,
the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its
affiliate McNeil Real Estate Management, Inc. and three of their senior
officers and/or directors (as defined in this Section 2, collectively, the
"Defendants") breached their fiduciary duties and certain obligations under
the respective amended partnership agreements. Plaintiffs allege that
Defendants have rendered such Units highly illiquid and artificially

<PAGE>
depressed the prices that are available for Units on the resale market.
Plaintiffs also allege that Defendants engaged in a course of conduct to
prevent the acquisition of Units by an affiliate of Carl Icahn by
disseminating purportedly false, misleading and inadequate information.
Plaintiffs further allege that Defendants acted to advance their own
personal interests at the expense of the Partnerships' public unit holders
by failing to sell Partnership properties and failing to make distributions
to unitholders.

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

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

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

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

<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996

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

Pine Hills
Livingston, TX $ - $ 605,145 $ 3,917,607 $ (692,000) $ 510,057

Sleepy Hollow
Cleveland, TX - 363,051 4,010,076 - 287,418

RETAIL CENTERS:

Riverbay Plaza
Riverview, FL - 294,546 4,736,097 - 934,601

Springwood Plaza
Dellwood, MO - 784,767 2,574,183 - 1,005,760

Towne Center
Derby, KS - 361,605 2,359,900 (500,000) 305,675
------------- ------------- ------------- ------------ ------------
$ - $ 2,409,114 $ 17,597,863 $ (1,192,000) $ 3,043,510
============= ============= ============= ============ ============

ASSETS HELD FOR SALE:

Island Plaza
Fort Myers, FL $ -

Southpointe Plaza
Sacramento, CA 5,421,763
-------------
$ 5,421,763
=============
</TABLE>

(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.

(c) Assets held for sale are stated at lower of cost or fair value less cost to
sell. Historical cost net of accumulated depreciation and write-downs
becomes the new cost basis when the asset is classified as "Held for Sale."
Depreciation ceases at the time the assets are placed on the market for
sale.

See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996

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

Pine Hills
Livingston, TX $ 605,145 $ 3,735,664 $ 4,340,809 $ (1,756,654)

Sleepy Hollow
Cleveland, TX 363,051 4,297,494 4,660,545 (1,952,845)

RETAIL CENTERS:

Riverbay Plaza
Riverview, FL 294,546 5,670,698 5,965,244 (2,495,310)

Springwood Plaza
Dellwood, MO 784,767 3,579,942 4,364,709 (1,605,337)

Towne Center
Derby, KS 361,605 2,165,575 2,527,180 (1,077,026)
------------- ------------- --------------- -------------

$ 2,409,114 $ 19,449,373 $ 21,858,487 $ (8,887,172)
============= ============= =============== =============

ASSETS HELD FOR SALE (c):

Island Plaza
Fort Myers, FL $ 2,016,188

Southpointe Plaza
Sacramento, CA 6,392,000
---------------
$ 8,408,188
===============
</TABLE>

(a) For Federal income tax purposes, the properties are depreciated over lives
ranging from 7-39 years using ACRS or MACRS methods. The aggregate cost of
real estate investments for Federal income tax purposes was $38,562,094 and
accumulated depreciation was $16,205,687 at December 31, 1996.

See accompanying notes to Schedule III.

<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996

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

Pine Hills
Livingston, TX 1984 10/85 5-25

Sleepy Hollow
Cleveland, TX 1983 08/85 5-25

RETAIL CENTERS:

Riverbay Plaza
Riverview, FL 1983 04/85 5-25

Springwood Plaza
Dellwood, MO 1974 09/85 5-25

Towne Center
Derby, KS 1976 07/85 5-25

ASSETS HELD FOR SALE (c):

Island Plaza
Fort Myers, FL 1985 04/85

Southpointe Plaza
Sacramento, CA 1982-84 11/85

</TABLE>

See accompanying notes to Schedule III.
<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:

Balance at beginning of year............... $ 35,244,771 $ 36,312,702 $ 35,606,449

Improvements............................... 458,752 432,154 706,253

Reclassification to assets held for sale... (13,794,699) - -

Write-off of damaged basis................. (50,337) - -

Write-down for impairment
of real estate.......................... - (1,500,085) -
------------- ------------- --------------

Balance at end of year..................... $ 21,858,487 $ 35,244,771 $ 36,312,702
============= ============= ==============

Accumulated depreciation and amortization:

Balance at beginning of year............... $ 12,428,415 $ 11,061,009 $ 9,770,111

Depreciation............................... 1,191,313 1,367,406 1,290,898

Reclassification to assets held for sale... (4,712,085) - -

Write-off of damaged basis................. (20,471) - -
------------- ------------- --------------

Balance at end of year..................... $ 8,887,172 $ 12,428,415 $ 11,061,009
============= ============= ==============

Assets Held for Sale:

Balance of beginning of year............... $ - $ - $ -

Reclassification to assets held for sale... 9,082,614 - -

Improvements............................... 26,058 - -

Write-down for impairment
of real estate.......................... (700,000) - -
------------- ------------- --------------

Balance at end of year..................... $ 8,408,672 $ - $ -
============= ============= ==============

</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:

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

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

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

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

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

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

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

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

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

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 3,545
Units at January 31, 1997 (approximately 8.86% of the outstanding Units).
The business address for High River Limited Partnership is 100 South
Bedford Road, Mount Kisco, New York 10549.

<PAGE>

(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.

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, 1996,
the Partnership paid or accrued $315,497 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, 1996, the Partnership paid or accrued $459,658 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."

In 1996, the Partnership repaid $642,581 of advances from 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)

<PAGE>

11. Statement regarding computation of Net Income
per Limited Partnership Unit (see Item 8 -
"Organization and Summary of Significant
Accounting Policies").

(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, 1996.

<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.

McNEIL REAL ESTATE FUND XXIV, L.P.

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

By: McNeil Investors, Inc., General Partner

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

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

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

March 28, 1997 By: /s/ Carol A. Fahs
- -------------- ----------------------------------------
Date Carol A. Fahs
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)

<ARTICLE> 5

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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,615,604
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