MCNEIL REAL ESTATE FUND XXIV LP, 10-K405, 1999-03-31

MCNEIL REAL ESTATE FUND XXIV LP
10-K405, 1999-03-31
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, 1998
-----------------------------------------------

[ ] 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 38

TOTAL OF 39 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, 1998, the Partnership owned
five revenue-producing properties as described in Item 2 - Properties. A
mortgage note payable was obtained in 1998 to fund the expansion of a tenant's
space at Riverbay Plaza as further described in Item 8 - Note 5 - "Mortgage
Notes Payable."

The Partnership does not directly employ any personnel. The General Partner
conducts the business of the Partnership directly and through its affiliates.
The Partnership reimburses affiliates of the General Partner for such services
rendered in accordance with the Amended Partnership Agreement. See Item 8 - Note
2 "Transactions With Affiliates."

The business of the Partnership to date has involved only one industry segment.
See Item 8 - Financial Statements and Supplementary Data. The Partnership has no
foreign operations. The business of the Partnership is not seasonal.

Business Plan:

As previously announced, the Partnership has retained PaineWebber, Incorporated
("PaineWebber") as its exclusive financial advisor to explore alternatives to
maximize the value of the Partnership, including, without limitation, a
transaction in which limited partnership interests in the Partnership are
converted into cash. The Partnership, through PaineWebber, provided financial
and other information to interested parties as part of an auction process and
until early March 1999 was conducting discussions with one bidder in an attempt
to reach a definitive agreement with respect to a sale transaction. In early
March 1999, because the Partnership had been unable to conclude negotiations for
a transaction with such bidder, the Partnership terminated such discussions and
commenced discussions with respect to a sale transaction with another
well-financed bidder who had been involved in the original auction process.
During the last full week of March, the Partnership entered into a 45 day
exclusivity agreement with such party. It is possible that the General Partner
and its affiliates will receive non-cash consideration for their ownership
interests in connection with any such transaction. There can be no assurance
regarding whether any such agreement will be reached nor the terms thereof.

The Partnership placed Springwood Plaza on the market for sale effective August
1, 1997. Island Plaza and Southpointe Plaza were sold in 1998.

<PAGE>
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, 1998. 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.

Environmental Matters:

Environmental laws create potential liabilities that may affect property owners.
The environmental laws of Federal and certain state governments, for example,
impose liability on current and certain past owners of property from which there
is a release or threat of release of hazardous substances. This liability
includes costs of investigation and remediation of the hazardous substances and
natural resource damages. Liability for costs of investigation and remediation
is strict and may be imposed irrespective of whether the property owner was at
fault, although there are a number of defenses. Both governments and third
parties may seek recoveries under these laws.

Third parties also may seek recovery under the common law for damages to their
property or person, against owners of property from which there has been a
release of hazardous and other substances.

The presence of contamination or the failure to remediate contaminations may
adversely affect the owner's ability to sell or lease real estate or to borrow
using the real estate as collateral.

<PAGE>
Various buildings at properties do or may contain building materials that are
the subject of various regulatory programs intended to protect human health.
Such building materials include, for example, asbestos, lead-based paint, and
lead plumbing components. The Company has implemented programs to deal with the
presence of those materials, which include, as appropriate, reduction of
potential exposure situations. The Company does not believe that the costs of
such programs are likely to have a material adverse effect. Failure to implement
such programs can result in regulatory violations or liability claims resulting
from alleged exposure to such materials.

In connection with the proposed sale transaction as more fully described above,
Phase I environmental site assessments have been completed for each property
owned by the Partnership. Such environmental assessments performed on the
properties have not revealed any environmental liability that the Partnership
believes would have a material adverse effect on the Partnership's business,
assets, or results of operations. The Partnership has not been notified by any
governmental authority of any non-compliance, liability or other claim in
connection with any of its properties. There can be no assurances, however, that
environmental liabilities have not developed since such environmental
assessments were prepared, or that future uses or conditions (including, without
limitation, changes in applicable environmental laws and regulations) will not
result in imposition of environmental liability.

Other information:

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
February 1, 1999, High River has purchased 9.1% 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.

<PAGE>
ITEM 2. PROPERTIES
- ------- ----------

The following table sets forth the real estate investment portfolio of the
Partnership at December 31, 1998. 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 Riverbay Plaza Shopping Center,
which is subject to a first lien deed of trust as set forth more fully in Item 8
- - Note 5 - "Mortgage Notes Payable." See also Item 8 - Note 4 "Real Estate
Investments" and Schedule III - Real Estate Investments and Accumulated
Depreciation and Amortization. In the opinion of management, the properties are
adequately covered by insurance.

<TABLE>
<CAPTION>
Net Basis 1998 Date
Property Description of Property Debt Property Taxes Acquired
- -------- ----------- -------------- ------ -------------- --------
Real Estate Investments:

Pine Hills Apartments
<S> <C> <C> <C> <C> <C>
Livingston, TX 128 units $ 2,275,511 $ - $ 34,303 10/85

Riverbay Plaza Retail Center
Riverview, FL 79,298 sq. ft. 4,635,098 1,650,000 71,917 4/85

Sleepy Hollow Apartments
Cleveland, TX 112 units 2,386,862 - 41,999 8/85

Towne Center Retail Center
Derby, KS 94,320 sq. ft. 1,837,750 - 34,763 7/85
---------- ------------ -----------
$ 11,135,221 $ 1,650,000 $ 182,982
========== ============ ===========
Asset Held for Sale:

Springwood Plaza Retail Center
Dellwood, MO 88,323 sq. ft. $ 2,737,114 $ - $ 79,054 9/85
========== ============ ============
</TABLE>

- ---------------------------------------
Total: Apartments - 240 units
Retail Centers - 261,941 sq. ft.

<PAGE>

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

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------------- --------------- -------------- ------------- ----------

Real Estate Investments:

Pine Hills
<S> <C> <C> <C> <C> <C>
Occupancy Rate............ 95% 98% 94% 99% 99%
Rent Per Square Foot...... $7.40 $7.10 $6.93 $6.76 $6.44

Riverbay Plaza
Occupancy Rate............ 100% 100% 94% 94% 92%
Rent Per Square Foot...... $9.14 $7.97 $7.15 $6.85 $8.55

Sleepy Hollow
Occupancy Rate............ 94% 100% 92% 100% 99%
Rent Per Square Foot...... $7.60 $7.24 $7.14 $7.32 $6.91

Towne Center
Occupancy Rate............ 74% 56% 100% 100% 100%
Rent Per Square Foot...... $3.36 $3.30 $3.21 $3.59 $3.21

Asset Held for Sale:

Springwood Plaza
Occupancy Rate............ 79% 87% 96% 80% 72%
Rent Per Square Foot...... $5.68 $5.95 $6.03 $4.49 $4.59
</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
- ----------------------

Real Estate Investments:

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

Pine Hills is a two-story apartment community located in the small town of
Livingston, approximately 60 miles north of Houston, Texas. There is no
comparable competition within the area at present, however there is an abundance
of affordable alternative housing such as mobile homes and rental houses.
Although the property is located on a busy thoroughfare near an interstate
highway, visibility is poor as the property frontage is limited to a driveway
which leads to the main entrance. The vacant land in front of Pine Hills is
currently on the market for sale. If the property is developed, it could have an
impact on Pine Hills' future performance. The Partnership expects to maintain
occupancy in the mid 90% range in 1999 by offering discounts to attract and
maintain tenants and by working to renew leases 90 days prior to the lease
expiration.

<PAGE>

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. The Partnership renovated and expanded
the grocery anchor tenant's space in 1997. Currently, there is only one
competing shopping center in the area, and it is not as well maintained as
Riverbay Plaza. There are currently two proposed shopping center developments
within five miles of Riverbay Plaza. Any future development is not expected to
have a significant impact on the property due to the high occupancy rates in the
area and the renovation and expansion of the grocery anchor tenant's space. The
Partnership expects to maintain occupancy in the high 90% range in 1999.

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

Sleepy Hollow is a two-story apartment community located in the small town of
Cleveland, approximately 30 miles north of Houston, Texas. Although the property
is located on a busy thoroughfare approximately three miles from an interstate
highway, visibility is poor as the property frontage is limited to a driveway
which leads to the main entrance. The driveway is shared with a comparable
apartment community that completed exterior renovations, resulting in a decrease
in Sleepy Hollow's occupancy in 1996. Occupancy improved in 1997 after Sleepy
Hollow completed its own exterior upgrades. A new luxury apartment community
opened in 1997 and another community opened in 1998. 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. The
Partnership expects to maintain occupancy in the low 90% range in 1999 by
offering discounts and concessions to tenants.

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 comprised 42% of the leasable
area and had been vacant for several years. The lease on this space expired in
1997 and was not renewed. Although demand for retail space in Derby is limited,
space available is also limited and smaller spaces are not difficult to lease.
However, since there is a shortage of tenants requiring large spaces, management
divided the large vacated space into three smaller spaces. One of the three
spaces was leased in late 1998 and another was leased in early 1999. The
remaining space (approximately 13% of the leasable area of the property) is
expected to remain vacant throughout 1999. Four leases are scheduled to expire
in 1999 and all are expected to be renewed at the same or higher rental rates.
The Partnership expects to increase occupancy up to the mid 80% range in 1999.

Asset Held for Sale:

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. Most of the comparable
properties in the area are superior to Springwood Plaza; however, the center's
grocery anchor tenant has continued to draw shoppers to the property. This
anchor tenant's lease expires in 1999 and management expects it to be renewed.
With continued attention to the appearance of the property and rental rates
lower than the newer centers in the area, management expects to increase
occupancy to the mid to high 80% range in 1999.

<PAGE>
The following schedule shows lease expirations for each of the Partnership's
commercial properties for 1999 through 2008:

<TABLE>
<CAPTION>
Number of Annual % of Gross
Expirations Square Feet Rent Annual Rent
----------- ----------- ------- ------------
Real Estate Investments:

Riverbay Plaza
<C> <C> <C> <C> <C>
1999 2 755 $ 9,950 1%
2000 5 8,720 75,853 11%
2001 1 750 8,250 1%
2002 1 1,201 13,812 2%
2003 3 4,425 50,700 7%
2004 1 900 10,701 2%
2005 - 2008 - - - -

Towne Center
1999 4 6,250 $ 48,128 13%
2000 3 3,916 26,441 7%
2001 4 9,866 59,598 17%
2002 2 25,660 91,736 26%
2003 1 2,847 21,353 6%
2004 1 2,979 19,223 5%
2005-2008 - - - -

Asset Held for Sale:

Springwood Plaza
1999 4 54,335 $ 273,536 70%
2000 4 7,161 53,012 14%
2001 3 6,475 48,808 12%
2002 - - - -
2003 1 1,800 16,200 4%
2004 - 2008 - - - -
</TABLE>

No residential tenant leases 10% or more of the available rental space. The
following schedule reflects information on commercial tenants occupying 10% or
more of the leasable square feet for each property:

<TABLE>
<CAPTION>
Nature of
Business Square Footage Lease
Use Leased Annual Rent Expiration
- --------- -------------- ----------- ----------

Real Estate Investments:

Riverbay Plaza

<S> <C> <C> <C>
Grocery Store 49,047 $ 422,500 2013
Drugstore 13,500 101,250 2042

Towne Center

Grocery Store 22,660 $ 61,616 2002
Department Store 17,280 69,120 2009
Hardware Store 10,064 24,238 2009

Asset Held for Sale:

Springwood Plaza

Grocery Store 46,558 $ 217,679 1999
</TABLE>

<PAGE>
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:

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 XXIII, 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., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and
Regency North Associates, L.P., - Superior Court of the State of California for
the County of Los Angeles, Case No. BC133799 (Class and Derivative Action
Complaint).

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

On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs are suing for breach of fiduciary duty, breach of contract and an
accounting, alleging, among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive, that these fees should
be reduced retroactively and that the respective Amended Partnership Agreements
governing the Partnerships are invalid.

Defendants filed a demurrer to the consolidated and amended complaint and a
motion to strike on February 14, 1997, seeking to dismiss the consolidated and
amended complaint in all respects. A hearing on Defendant's demurrer and motion
to strike was held on May 5, 1997. The Court granted Defendants' demurrer,
dismissing the consolidated and amended complaint with leave to amend. On
October 31, 1997, the Plaintiffs filed a second consolidated and amended
complaint. The case was stayed pending settlement discussions. A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties. Preliminary
Court approval was received on October 6, 1998. A hearing for Final Approval of
Settlement, initially scheduled for December 17, 1998, has been continued to May
25, 1999.

Because McNeil Real Estate Fund XXIII, L.P., Hearth Hollow Associates, McNeil
Midwest Properties I, L.P. and Regency North Associates, L.P. would be part of
the transaction contemplated in the settlement and Plaintiffs claim that an
effort should be made to sell the McNeil Partnerships, Plaintiffs have included
allegations with respect to McNeil Real Estate Fund XXIII, L.P., Hearth Hollow
Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P.
in the third consolidated and amended complaint.

Plaintiff's counsel intends to seek an order awarding attorney's fees and
reimbursements of their out-of-pocket expenses. The amount of such award is
undeterminable until final approval is received from the court. Fees and
expenses shall be allocated amongst the Partnerships on a pro rata basis, based
upon tangible asset value of each such partnership, less total liabilities,
calculated in accordance with the Amended Partnership Agreements for the quarter
most recently ended.

<PAGE>
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 2,744 as of February 1, 1999

(C) The Partnership distributed $4,644,400 to the limited partners in
1998, of which $3,144,250 was net cash proceeds from the sales of
Southpointe Plaza and Island Plaza shopping centers and the remaining
$1,500,150 was cash from operations. Distributions paid to limited
partners totaled $500,000 in 1997 from cash from operations. No
distributions were paid to the General Partner in 1998 or 1997. During
the last week of March 1999, the Partnership distributed approximately
$250,000 to the limited partners of record as of March 1, 1999. See
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations, and Item 8 - Note 1 - "Organization and
Summary of Significant Accounting Policies - Distributions."

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

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

<TABLE>
<CAPTION>
Statements of Years Ended December 31,
Operations 1998 1997 1996 1995 1994
- ------------------ ------------- ------------ ------------- ------------ ------------

<S> <C> <C> <C> <C> <C>
Rental revenue............... $ 3,255,378 $ 4,186,633 $ 4,136,447 $ 4,058,503 $ 4,127,396
Write-down for impairment
of real estate (126,080) (220,000) (700,000) (1,500,085) -
Net income (loss)............ (473,023) 430,179 (608,182) (1,694,787) (65,511)

Net income (loss) per limited
partnership unit.......... $ (11.71) $ 10.65 $ (15.05) $ (41.95) $ (1.62)
============ =========== ============ =========== ==========

Distributions per limited
partnership unit.......... $ 116.11 $ 12.50 $ 18.75 $ - $ -
============ =========== ============ =========== ===========

As of December 31,
Balance Sheets 1998 1997 1996 1995 1994
- -------------- ------------- ------------ ------------- ------------ ------------
Real estate investments, net... $ 11,135,221 $ 11,397,918 $ 12,971,315 $ 22,816,356 $ 25,251,693
Assets held for sale........... 2,737,114 10,935,647 8,408,672 - -
Total assets................... 15,504,391 25,301,732 23,771,150 25,912,389 27,674,971
Mortgage notes payable......... 1,650,000 5,293,017 5,421,763 5,538,527 5,660,558
Partners' equity............... 12,793,861 17,911,284 17,981,105 19,339,303 21,034,090

</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
revenue-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.

The General Partner placed Southpointe Plaza Shopping Center on the market for
sale effective October 1, 1996. Based on an offer from a non-affiliate to
purchase the center, 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 estimated costs to sell. On March 31, 1998, the
Partnership sold Southpointe Plaza for a gross sales price of $6.8 million. The
Partnership recognized a $118,750 loss on the sale.

The General Partner placed Island Plaza Shopping Center on the market for sale
effective April 1, 1996. Based on an offer from a non-affiliate to purchase the
center, the Partnership recorded a $220,000 write-down for impairment of value
during the fourth quarter of 1997 to record the shopping center at its fair
value less estimated costs to sell. On April 1, 1998, the Partnership sold
Island Plaza for a gross sales price of $1.85 million. A $126,080 write-down for
impairment of real estate was recorded in the first quarter of 1998 and no gain
or loss was recorded on the sale.

In 1997, improvements totaling approximately $1.6 million were performed at
Riverbay Plaza to renovate and expand an anchor tenant's space. These costs were
paid by the tenant and reimbursed by the Partnership in 1998. The Partnership
obtained a mortgage loan secured by Riverbay Plaza to pay these costs and
received such funds in June 1998. See Item 8 - Note 5 - "Mortgage Notes
Payable."

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

1998 compared to 1997

Revenue:

Total revenue decreased by $1,110,294 in 1998 as compared to 1997, mainly due to
the sales of Southpointe Plaza and Island Plaza shopping centers in 1998.
Excluding total revenue of Southpointe Plaza and Island Plaza, total revenue
increased by $109,050 in 1998.

Rental revenue in 1998 decreased by $931,255 as compared to 1997. Excluding
rental revenue of Southpointe Plaza and Island Plaza, rental revenue increased
by $218,280 in 1998. This increase was mainly due to increased rent charged to
an anchor tenant at Riverbay Plaza Shopping Center after its space was expanded.

Interest income increased by $40,246 in 1998 as compared to 1997. The increase
was mainly due to an increase in cash available for short-term investment in
1998 due to proceeds received from the sales of Southpointe Plaza and Island
Plaza on March 31, 1998 and April 1, 1998, respectively.

A gain on involuntary conversion of $149,585 was recognized in 1997 relating to
fire damage that occurred at Riverbay Plaza Shopping Center. No such gain on
involuntary conversion was recorded in 1998.

<PAGE>

In 1997, the assessed taxable value of Southpointe Plaza was reduced by taxing
authorities, resulting in a $39,700 refund of prior years' property taxes. No
refunds of prior years' property taxes were received in 1998.

In 1997, the Partnership received $30,000 in deposits forfeited by prospective
buyers of Southpointe Plaza and Island Plaza. No such income was received in
1998.

Expenses:

Total expenses decreased by $207,092 in 1998 as compared to 1997. Excluding
total expenses of Southpointe Plaza and Island Plaza, which were sold in 1998,
total expenses increased by $504,785. This increase in expenses was mainly due
to an increase in depreciation and amortization and general and administrative
expenses. In addition, interest expense, utilities, and other property operating
expenses showed significant increases in 1998, partially offset by a decrease in
general and administrative-affiliates, as discussed below.

Interest expense in 1998 decreased by $211,414 as compared to 1997. Interest
expense related to the Southpointe Plaza mortgage note payable decreased by
$290,143 due to the repayment of the loan as a result of the sale of the
property. In June 1998, the Partnership received $1,650,000 in proceeds from a
mortgage note payable secured by Riverbay Plaza Shopping Center. The Partnership
recorded $78,729 of interest expense related to this loan in 1998.

Depreciation and amortization increased by $151,260 in 1998 in relation to the
prior year. The increase was mainly due to the amortization of improvements at
Riverbay Plaza completed at the end of 1997 to expand an anchor tenant's space.

Property taxes, repairs and maintenance and property management fees -
affiliates decreased by $124,595, $114,356 and $53,249, respectively, mainly due
to the sales of Southpointe Plaza and Island Plaza in 1998.

In 1998, utilities expense decreased by $17,910 as compared to the prior year.
Excluding expenses for utilities at Southpointe Plaza and Island Plaza, the
remaining properties experienced an increase in utilities expense of $25,235.
This increase in utilities was partially due to an increase in water usage at
Riverbay Plaza due to the expansion of a major tenant's space at the shopping
center. In addition, there was an increase in electricity costs at Towne Center
Shopping Center due to a tenant vacating a large space in the third quarter of
1997. Since this space was vacant for most of 1998, the shopping center was
responsible for paying for the electricity used in this space.

Other property operating expenses decreased by $61,202 in 1998 as compared to
1997. Excluding other property operating expenses at Southpointe Plaza and
Island Plaza, other property operating expenses increased by $19,604. This
increase is due to a tenant receivable at Springwood Plaza that was written off
as uncollectible in 1998.

In 1998, general and administrative expenses increased by $285,955 in relation
to 1997. The increase was mainly due to costs incurred in 1998 to explore
alternatives to maximize the value of the Partnership (see Liquidity and Capital
Resources).

General and administrative - affiliates decreased by $76,617 in 1998 as compared
to 1997, mainly due to a decrease in asset management fees. Asset management
fees decreased as a result of a decline in the tangible asset value of the
Partnership, on which the fees are based, due to the sales of Southpointe Plaza
and Island Plaza.

The Partnership recognized a $118,750 loss on the sale of Southpointe Plaza
Shopping Center in the first quarter of 1998. No such loss was recognized in
1997.

Island Plaza Shopping Center was sold to an unaffiliated buyer on April 1, 1998.
The Partnership recorded a $126,080 write-down for impairment of real estate in
the first quarter of 1998 to record the property at its sales price less
estimated costs to sell. In 1997, the Partnership recorded a $220,000 write-down
for impairment of Island Plaza Shopping Center.

<PAGE>
1997 compared to 1996

Revenue:

Total revenue increased by $197,959 in 1997 as compared to 1996. The increase
was mainly due to a greater gain on involuntary conversion, property tax refund
and other revenue being recorded in 1997, as discussed below.

Rental revenue in 1997 increased by $50,186 as compared to 1996. The slight
increase was mainly due to increased rental rates at all of the properties
except for Southpointe Plaza where expiring leases were renewed at lower market
rates in 1997.

A gain on involuntary conversion of $149,585 was recognized in 1997 relating to
fire damage that occurred at Riverbay Plaza Shopping Center. In 1996, a $45,134
gain on involuntary conversion relating to wind and hail damage suffered at Pine
Hills Apartments was recorded.

In 1997, the assessed taxable value of Southpointe Plaza was reduced by taxing
authorities, resulting in a $39,700 refund of prior years' property taxes. The
Partnership received $20,433 in refunds of prior years' property taxes for Towne
Center Shopping Center in 1996.

In 1997, the Partnership received $30,000 in deposits forfeited by prospective
buyers of Southpointe Plaza and Island Plaza. No such income was received in
1996.

Expenses:

Total expenses decreased by $840,402 in 1997 as compared to 1996. The decrease
was mainly due to a $700,000 write-down for impairment of real estate recorded
in 1996 as compared to a write-down for impairment of $220,000 in 1997. In
addition, there was a decrease in depreciation and amortization expense and
general and administrative expenses, partially offset by an increase in
utilities, as discussed below.

Depreciation and amortization expense in 1997 decreased by $281,194 in relation
to 1996. The decrease was due to Island Plaza, Southpointe Plaza and Springwood
Plaza being classified as assets held for sale by the Partnership effective
April 1, 1996, October 1, 1996 and August 1, 1997, 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.

In 1997, utilities increased by $31,190 as compared to 1996, mainly due to an
increase in water and sewer rates at a majority of the properties. In addition,
there was an increase in water usage at Riverbay Plaza due to the expansion of a
major tenant's space at the shopping center.

General and administrative expenses decreased by $93,903 in 1997 as compared to
1996. The decrease was mainly due to a decrease in costs incurred relating to
evaluation and dissemination of information regarding an unsolicited tender
offer. This decrease was partially offset by approximately $18,000 of costs
incurred for investor services which were paid to an unrelated third party in
1997. In 1996, such costs were paid to an affiliate of the General Partner and
were included in general and administrative - affiliates on the Statements of
Operations.

In 1997, the Partnership recorded a $220,000 write-down for impairment of Island
Plaza Shopping Center. In 1996, the Partnership recorded a $700,000 write-down
for impairment of Southpointe Plaza Shopping Center.

<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------

The Partnership's primary source of cash flows is from operating activities
which generated $1,290,112 of cash in 1998, $1,504,410 in 1997 and $1,153,592 in
1996.

Cash flows from operating activities decreased by $214,298 in 1998 as compared
to 1997. Excluding Southpointe Plaza and Island Plaza , cash flows increased by
$187,628. This increase in cash provided by operating activities was mainly due
to an increase in cash received from tenants (see above discussion of increase
in rental revenue) and a decrease in cash paid to affiliates. These increases in
cash provided were partially offset by an increase in cash paid to suppliers,
mainly due to an increase in general and administrative expenses, as discussed
above.

The increased cash generated through operating activities in 1997 as compared to
1996 was mainly due to an increase in cash received from tenants due to an
increase in rental revenue and an increase in collections of prior year
receivables. In addition, there was a decrease in cash paid to affiliates in
1997.

In 1997, the Partnership received $226,747 of net insurance proceeds for damage
caused by a fire at Riverbay Plaza Shopping Center. In 1996, the Partnership
received $75,000 of net insurance proceeds for wind and hail damage suffered at
Pine Hills Apartments. No insurance proceeds were received in 1998.

The Partnership expended $2,469,527, $537,986 and $484,810 on capital additions
to its real estate investments and assets held for sale in 1998, 1997 and 1996,
respectively. The increase in expenditures in 1998 in relation to 1997 and 1996
was primarily due to approximately $1.6 million expended at Riverbay Plaza to
expand an anchor tenant's space. These costs were paid by the tenant in 1997 and
reimbursed by the Partnership in 1998. In addition, approximately $566,000 of
costs were incurred in 1998 for improvements to a new tenant's space at Towne
Center Shopping Center. In 1997, repairs totaling approximately $233,000 were
completed to repair damage caused by a fire at Riverbay Plaza.

In April 1998, the Partnership received a total of $8,438,530 in proceeds from
the sales of Southpointe Plaza and Island Plaza shopping centers. $5,261,942 of
the proceeds was used to repay the Southpointe Plaza mortgage note payable.

The Partnership made $31,075, $128,746 and $116,764 in regularly scheduled
principal payments on the Southpointe Plaza mortgage note payable in 1998, 1997
and 1996, respectively. The decrease in 1998 was due to the sale of the property
and the repayment of the loan on April 1, 1998.

In June 1998, the Partnership received $1,650,000 in proceeds from a mortgage
note payable secured by Riverbay Plaza Shopping Center. The proceeds were used
to pay for improvements made in 1997 to renovate and expand an anchor tenant's
space.

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

The Partnership distributed $4,644,400 to the limited partners in 1998,
$3,144,250 of which was net cash proceeds from the sales of Southpointe Plaza
and Island Plaza and the remaining $1,500,150 was cash from operations. The
Partnership distributed $500,000 and $750,016 of cash from operations to the
limited partners in 1997 and 1996, respectively.

Short-term liquidity:

At December 31, 1998, the Partnership held cash and cash equivalents of
$1,103,846. This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its properties.

For the Partnership as a whole, management projects positive cash flow from
operations in 1998. The Partnership has budgeted approximately $382,000 for
necessary capital improvements for all properties in 1999, 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.

<PAGE>
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.

Under the terms of the Amended Partnership Agreement, the Partnership pays a
disposition fee to the General Partner equal to 3% of the gross sales price for
brokerage services performed in connection with the sale of the Partnership's
properties. The fee is due and payable at the time the sale closes. The
Partnership incurred $204,000 and $55,500 of such fees during 1998 in connection
with the sale of Southpointe Plaza and Island Plaza shopping centers,
respectively. These fees were paid by the Partnership subsequent to December 31,
1998 and are included in payable to affiliates on the Balance Sheet at December
31, 1998.

During the last week of March 1999, the Partnership distributed approximately
$250,000 to the limited partners of record as of March 1, 1999.

Long-term liquidity:

Only one property, Riverbay Plaza Shopping Center, is encumbered with mortgage
debt. The mortgage is not due until 2001.

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>
YEAR 2000 DISCLOSURE
- --------------------

State of readiness
- ------------------

The year 2000 problem is the result of computer programs being written using two
digits rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in major systems failure or
miscalculations.

Management has assessed its information technology ("IT") infrastructure to
identify any systems that could be affected by the year 2000 problem. The IT
used by the Partnership for financial reporting and significant accounting
functions was made year 2000 compliant during recent systems conversions. The
software utilized for these functions are licensed by third party vendors who
have warranted that their systems are year 2000 compliant.

Management is in the process of evaluating the mechanical and embedded
technological systems at the various properties. Management has inventoried all
such systems and queried suppliers, vendors and manufacturers to determine year
2000 compliance. Management will complete assessment of findings by May 1, 1999.
In circumstances of non-compliance management will work with the vendor to
remedy the problem or seek alternative suppliers who will be in compliance.
Management believes that the remediation of any outstanding year 2000 conversion
issues will not have a material or adverse effect on the Partnership's
operations. However, no estimates can be made as to the potential adverse impact
resulting from the failure of third party service providers and vendors to be
year 2000 compliant.

Cost
- ----

The cost of IT and embedded technology systems testing and upgrades is not
expected to be material to the Partnership. Because all the IT systems have been
upgraded over the last three years, all such systems were compliant, or made
compliant at no additional cost by third party vendors. Management anticipates
the costs of assessing, testing, and if necessary replacing embedded technology
components will be less than $50,000. Such costs will be funded from operations
of the Partnership.

Risks
- -----

Ultimately, the potential impact of the year 2000 issue will depend not only on
the corrective measures the Partnership undertakes, but also on the way in which
the year 2000 issue is addressed by government agencies and entities that
provide services or supplies to the Partnership. Management has not determined
the most likely worst case scenario to the Partnership. As management studies
the findings of its property systems assessment and testing, management will
develop a better understanding of what would be the worst case scenario.
Management believes that progress on all areas is proceeding and that the
Partnership will experience no adverse effect as a result of the year 2000
issue. However, there is no assurance that this will be the case.

Contingency plans
- -----------------

Management is developing contingency plans to address potential year 2000
non-compliance of IT and embedded technology systems. Management believes that
failure of any IT system could have an adverse impact on operations. However,
management believes that alternative systems are available that could be
utilized to minimize such impact. Management believes that any failure in the
embedded technology systems could have an adverse impact on that property's
performance. Management will assess these risks and develop plans to mitigate
possible failures by June, 1999.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------- -----------------------------------------------------------

Not Applicable.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------

Page
Number
------

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

Financial Statements:

<S> <C>
Report of Independent Public Accountants....................................... 18

Balance Sheets at December 31, 1998 and 1997................................... 19

Statements of Operations for each of the three years in the period
ended December 31, 1998..................................................... 20

Statements of Partners' Equity (Deficit) for each of the three years
in the period ended December 31, 1998....................................... 21

Statements of Cash Flows for each of the three years in the period
ended December 31, 1998..................................................... 22

Notes to Financial Statements.................................................. 24

Financial Statement Schedule -

Schedule III - Real Estate Investments and Accumulated
Depreciation and Amortization............................................ 33

</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, 1998 and 1997, and
the related statements of operations, partners' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1998. 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, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998, 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 19, 1999

<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.

BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
1998 1997
------------ -------------
ASSETS
- ------

Real estate investments:
<S> <C> <C>
Land .................................................. $ 1,624,347 $ 1,624,347
Buildings and improvements ............................ 18,569,845 17,771,163
------------ ------------
20,194,192 19,395,510
Less: Accumulated depreciation and amortization ...... (9,058,971) (7,997,592)
------------ ------------
11,135,221 11,397,918

Assets held for sale ..................................... 2,737,114 10,935,647

Cash and cash equivalents ................................ 1,103,846 2,180,029
Cash segregated for security deposits .................... 62,227 84,737
Accounts receivable, net of allowance for doubtful
accounts of $38,811 and $24,095 at December 31,
1998 and 1997, respectively ........................... 306,898 588,578
Prepaid expenses and other assets, net ................... 159,085 114,823
------------ ------------
$ 15,504,391 $ 25,301,732
============ ============

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

Mortgage notes payable ................................... $ 1,650,000 $ 5,293,017
Accounts payable and accrued expenses .................... 193,779 181,540
Payable to tenant ........................................ -- 1,622,873
Payable to affiliates .................................... 793,128 192,735
Security deposits and deferred rental revenue ............ 73,623 100,283
------------ ------------
2,710,530 7,390,448
------------ ------------

Partners' equity (deficit):
Limited partners - 40,000 limited partnership
units authorized and outstanding at
December 31, 1998 and 1997 .......................... 12,823,151 17,935,844
General Partner ....................................... (29,290) (24,560)
------------ ------------
12,793,861 17,911,284
------------ ------------
$ 15,504,391 $ 25,301,732
============ ============
</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,
--------------------------------------------------
1998 1997 1996
----------- ----------- -----------

Revenue:
<S> <C> <C> <C>
Rental revenue ........................... $ 3,255,378 $ 4,186,633 $ 4,136,447
Interest ................................. 140,023 99,777 105,722
Gain on involuntary conversion ........... -- 149,585 45,134
Property tax refund ...................... -- 39,700 20,433
Other revenue ............................ -- 30,000 --
----------- ----------- -----------
Total revenue .......................... 3,395,401 4,505,695 4,307,736
----------- ----------- -----------

Expenses:
Interest ................................. 176,018 387,432 427,365
Depreciation and amortization ............ 1,061,379 910,119 1,191,313
Property taxes ........................... 288,516 413,111 423,275
Personnel costs .......................... 287,861 297,655 273,780
Repairs and maintenance .................. 320,935 435,291 399,778
Property management fees -
affiliates ............................. 187,776 241,025 226,592
Utilities ................................ 226,328 244,238 213,048
Other property operating expenses ........ 235,523 296,725 316,234
General and administrative ............... 388,022 102,067 195,970
General and administrative -
affiliates ............................. 451,236 527,853 548,563
Loss on disposition of real estate........ 118,750 -- --
Write-down for impairment
of real estate ......................... 126,080 220,000 700,000
----------- ----------- -----------
Total expenses ......................... 3,868,424 4,075,516 4,915,918
----------- ----------- -----------

Net income (loss) ........................... $ (473,023) $ 430,179 $ (608,182)
=========== =========== ===========

Net income (loss) allocable to
limited partners ......................... $ (468,293) $ 425,877 $ (602,100)
Net income (loss) allocable to
General Partner .......................... (4,730) 4,302 (6,082)
----------- ----------- -----------
Net income (loss) ........................... $ (473,023) $ 430,179 $ (608,182)
=========== =========== ===========

Net income (loss) per limited
partnership unit ......................... $ (11.71) $ 10.65 $ (15.05)
=========== =========== ===========

Distributions per limited partnership
unit ..................................... $ 116.11 $ 12.50 $ 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, 1998, 1997 and 1996

<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
------------- ------------- ------------
<S> <C> <C> <C>
Balance at December 31, 1995 ............ $ (22,780) $ 19,362,083 $ 19,339,303

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

Distributions to limited partners ....... -- (750,016) (750,016)
------------ ------------ ------------

Balance at December 31, 1996 ............ (28,862) 18,009,967 17,981,105

Net income .............................. 4,302 425,877 430,179

Distributions to limited partners........ -- (500,000) (500,000)
------------ ------------ ------------

Balance at December 31, 1997 ............ (24,560) 17,935,844 17,911,284

Net loss ................................ (4,730) (468,293) (473,023)

Distributions to limited partners ....... -- (4,644,400) (4,644,400)
------------ ------------ ------------

Balance at December 31, 1998 ............ $ (29,290) $ 12,823,151 $ 12,793,861
============ ============ ============
</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,
----------------------------------------------------
1998 1997 1996
------------ ------------ ------------

Cash flows from operating activities:
<S> <C> <C> <C>
Cash received from tenants ................. $ 3,353,156 $ 4,177,736 $ 3,977,657
Cash paid to suppliers ..................... (1,416,124) (1,363,390) (1,370,950)
Cash paid to affiliates .................... (298,119) (650,486) (760,339)
Interest received .......................... 140,023 99,777 105,722
Interest paid .............................. (188,669) (380,361) (398,254)
Property taxes paid ........................ (300,155) (408,866) (420,677)
Property tax refund ........................ -- -- 20,433
Other revenue .............................. -- 30,000 --
----------- ----------- -----------
Net cash provided by operating
activities ................................. 1,290,112 1,504,410 1,153,592
----------- ----------- -----------

Cash flows from investing activities:
Net proceeds received from
insurance company ........................ -- 226,747 75,000
Additions to real estate investments
and assets held for sale ................. (2,469,527) (537,986) (484,810)
Proceeds from disposition of real
estate ................................... 8,438,530 -- --
----------- ----------- -----------
Net cash provided by (used in)
investing activities ....................... 5,969,003 (311,239) (409,810)
----------- ----------- -----------

Cash flows from financing activities:
Deferred borrowing costs paid .............. (47,881) -- --
Principal payments on mortgage
note payable ............................. (31,075) (128,746) (116,764)
Retirement of mortgage note payable ........ (5,261,942) -- --
Proceeds from mortgage note
payable .................................. 1,650,000 -- --
Repayment of advances from
affiliates ............................... -- -- (642,581)
Distributions to limited partners .......... (4,644,400) (500,000) (750,016)
----------- ----------- -----------
Net cash used in financing activities ......... (8,335,298) (628,746) (1,509,361)
----------- ----------- -----------

Net increase (decrease) in cash
and cash equivalents ....................... (1,076,183) 564,425 (765,579)

Cash and cash equivalents at
beginning of year .......................... 2,180,029 1,615,604 2,381,183
----------- ----------- -----------

Cash and cash equivalents at end
of year .................................... $ 1,103,846 $ 2,180,029 $ 1,615,604
=========== =========== ===========
</TABLE>

See discussion of noncash investing and financing activities in Note 4 - "Real
Estate Investments," Note 7 - "Gains on Involuntary Conversions" and Note 8 -
"Disposition of Real Estate."

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

STATEMENTS OF CASH FLOWS

Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1998 1997 1996
------------ ----------- ------------
<S> <C> <C> <C>
Net income (loss) ................................ $ (473,023) $ 430,179 $ (608,182)
----------- ----------- -----------

Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization ................. 1,061,379 910,119 1,191,313
Allowance for doubtful accounts ............... 14,716 (17,056) 41,151
Amortization of deferred borrowing
costs ....................................... 8,312 7,770 31,079
Gain on involuntary conversion ................ -- (149,585) (45,134)
Loss on disposition of real estate ............ 118,750 -- --
Write-down for impairment
of real estate .............................. 126,080 220,000 700,000
Changes in assets and liabilities:
Cash segregated for security deposits........ 22,510 (2,271) 12,314
Accounts receivable ......................... 136,791 (20,770) (158,323)
Prepaid expenses and other
assets, net ............................... (51,875) 19,748 13,070
Accounts payable and accrued
expenses .................................. 12,239 (20,505) (27,583)
Payable to affiliates ....................... 340,893 118,392 14,816
Security deposits and deferred
rental revenue ............................ (26,660) 8,389 (10,929)
----------- ----------- -----------

Total adjustments ....................... 1,763,135 1,074,231 1,761,774
----------- ----------- -----------

Net cash provided by operating
activities .................................... $ 1,290,112 $ 1,504,410 $ 1,153,592
=========== =========== ===========
</TABLE>

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

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1998

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. At
December 31, 1998, the Partnership owned five revenue-producing properties as
described in Note 4 - "Real Estate Investments." All of the Partnership's
remaining properties were acquired in transactions involving payment of all cash
to the sellers. A mortgage note payable was obtained in 1998 to fund the
expansion of a tenant's space at Riverbay Plaza as further described in Note 5 -
"Mortgage Notes Payable."

The Partnership placed Springwood Plaza on the market for sale effective August
1, 1997.

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.

<PAGE>
Adoption of Recent Accounting Pronouncements
- --------------------------------------------

The Partnership has adopted Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information ("SFAS
131"). SFAS 131 requires an enterprise to report financial information about its
reportable operating segments, which are defined as components of a business for
which separate financial information is evaluated regularly by the chief
decision maker in allocating resources and assessing performance. The
Partnership does not prepare such information for internal use, since it
analyzes the performance of and allocates resources for each property
individually. The Partnership's management has determined that it operates one
line of business and it would be impracticable to report segment information.
Therefore, the adoption of SFAS 131 has no impact on the Partnership's financial
statements.

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 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". 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 fair value.

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 and amortization on these assets cease 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.

<PAGE>
Rental Revenue
- --------------

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

The Partnership leases its commercial properties under non-cancelable operating
leases. Certain leases provide concessions and/or periods of escalating or free
rent. Rental revenue is recognized on a straight-line basis over the life of the
related leases. The excess of the rental revenue recognized over the contractual
rental payments is recorded as accrued rent receivable and is included in
accounts receivable on the Balance Sheets.

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

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

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

The Amended Partnership Agreement generally provides that net income and net
loss (other than net income arising from sales or refinancing) shall be
allocated 1% to the General Partner and 99% to the limited partners.

For financial statement purposes, net income arising from sales or refinancing
shall be allocated 1% to the General Partner and 99% to the limited partners.

For tax reporting purposes, net income arising from sales or refinancing shall
be allocated as follows: (a) first, amounts of such net income shall be
allocated among the General Partner and limited partners in proportion to, and
to the extent of, the portion of such partners' share of the net decrease in
Partnership Minimum Gain determined under Treasury Regulations, (b) second, to
the General Partner and limited partners in proportion to, and to the extent of,
the amount by which their respective capital account balances are negative by
more than their respective remaining shares of the Partnership's Minimum Gain
attributable to properties still owned by the Partnership and (c) third, 1% of
such net income shall be allocated to the General Partner and 99% of such net
income shall be allocated to the limited partners.

Federal income tax law provides that the allocation of loss to a partner will
not be recognized unless the allocation is in accordance with a partner's
interest in the partnership or the allocation has substantial economic effect.
Internal Revenue Code Section 704(b) and accompanying Treasury Regulations
establish criteria for allocation of Partnership deductions attributable to
debt. The Partnership's tax allocations for 1998, 1997, and 1996 have been made
in accordance with these provisions.

<PAGE>
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 return 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.

The Partnership distributed $4,644,400, $500,000 and $750,016 to the limited
partners in 1998, 1997 and 1996, respectively. During the last week of March
1999, the Partnership distributed approximately $250,000 to the limited partners
of record as of March 1, 1999.

Net Income (Loss) Per Limited Partnership Unit
- ----------------------------------------------

Net income (loss) per limited partnership unit is computed by dividing net
income (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 1998, 1997 and 1996.

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 to .75% in 2000, .50% in 2001 and
.25% thereafter.

<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,
----------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Property management fees ............................. $187,776 $241,025 $226,592
Charged to general and administrative -
affiliates:
Partnership administration ........................ 212,274 210,751 233,066
Asset management fee .............................. 238,962 317,102 315,497
Charged to loss on disposition of real estate:
Disposition fee ................................... 204,000 -- --
Charged to write-down for impairment
of real estate:
Disposition fee ................................... 55,500 -- --
-------- -------- --------
$898,512 $768,878 $775,155
======== ======== ========
</TABLE>

Payable to affiliates at December 31, 1998 and 1997 consisted primarily of
unpaid property management fees, disposition fees (1998 only), Partnership
general and administrative expenses and asset management fees and is due and
payable from current operations.

NOTE 3 - TAXABLE INCOME (LOSS)
- ------------------------------

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

The Partnership's net assets and liabilities for tax purposes exceeded the net
assets and liabilities for financial reporting purposes by $5,099,178 in 1998,
$5,529,886 in 1997 and $6,081,071 in 1996.

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

The basis and accumulated depreciation and amortization of the Partnership's
real estate investments at December 31, 1998 and 1997 are set forth in the
following tables:

<TABLE>
<CAPTION>
Accumulated
Buildings and Depreciation Net Book
1998 Land Improvements and Amortization Value
---- -------------- ------------ ---------------- ---------------

Pine Hills Apartments
<S> <C> <C> <C> <C>
Livingston, TX $ 605,145 $ 3,809,382 $ (2,139,016) $ 2,275,511
Riverbay Plaza
Riverview, FL 294,546 7,583,702 (3,243,150) 4,635,098
Sleepy Hollow Apartments
Cleveland, TX 363,051 4,394,014 (2,370,203) 2,386,862
Towne Center
Derby, KS 361,605 2,782,747 (1,306,602) 1,837,750
------------- ------------- ------------- -------------

$ 1,624,347 $ 18,569,845 $ (9,058,971) $ 11,135,221
============= ============= ============= =============

Accumulated
Buildings and Depreciation Net Book
1997 Land Improvements and Amortization Value
---- -------------- ------------ ---------------- ---------------

Pine Hills Apartments $ 605,145 $ 3,764,012 $ (1,949,488) $ 2,419,669
Riverbay Plaza 294,546 7,451,775 (2,705,777) 5,040,544
Sleepy Hollow Apartments 363,051 4,370,296 (2,162,469) 2,570,878
Towne Center 361,605 2,185,080 (1,179,858) 1,366,827
------------- ------------- ------------- -------------

$ 1,624,347 $ 17,771,163 $ (7,997,592) $ 11,397,918
============= ============= ============= =============
</TABLE>

<PAGE>
On August 1, 1997 the General Partner placed Springwood Plaza, located in
Dellwood, Missouri, on the market for sale. Springwood Plaza was classified as
such at December 31, 1998 and 1997 with a net book value of $2,737,114 and
$2,691,777, respectively.

The General Partner placed Southpointe Plaza Shopping Center, located in
Sacramento, California on the market for sale effective October 1, 1996. Based
on an offer from a non-affiliate to purchase the center, 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 estimated costs to
sell. Southpointe Plaza was classified as an asset held for sale at December 31,
1997 with a net book value of $6,433,611. On March 31, 1998, the Partnership
sold Southpointe Plaza for a gross sales price of $6.8 million as further
discussed in Note 8 - "Disposition of Real Estate."

The General Partner placed Island Plaza Shopping Center, located in Ft. Myers,
Florida, on the market for sale effective April 1, 1996. Based on an offer from
a non-affiliate to purchase the center, the Partnership recorded a $220,000
write-down for impairment of value during the fourth quarter of 1997 to record
the shopping center at its fair value less estimated costs to sell. Island Plaza
was classified as an asset held for sale at December 31, 1997 with a net book
value of $1,810,259. An additional $126,080 write-down for impairment of value
was recorded in the first quarter of 1998. On April 1, 1998, the Partnership
sold Island Plaza for a gross sales price of $1.85 million as further discussed
in Note 8 - "Disposition of Real Estate."

The results of operations for the assets held for sale were $329,990, $626,063
and $317,577 for the years ended December 31, 1998, 1997 and 1996, respectively.
Results of operations are operating revenues less operating expenses including
depreciation and amortization and interest expense.

The Partnership leases its commercial properties under non-cancelable operating
leases. Future minimum rents to be received as of December 31, 1998 are as
follows:

Real Estate Asset Held
Investments For Sale

1999........................ $ 1,023,822 $ 299,689
2000........................ 950,006 109,031
2001........................ 882,842 49,010
2002........................ 810,055 17,925
2003........................ 710,534 1,500
Thereafter.................. 8,847,137 -
------------ ----------
Total $ 13,224,396 $ 477,155
============ ==========

<PAGE>
Future minimum rents do not include contingent rentals based on sales volume of
tenants. No contingent rents were recognized in 1998. Contingent rents amounted
to $38,404 and $32,518 for the years ended December 31, 1997 and 1996,
respectively. Future minimum rents also do not include expense reimbursements
for common area maintenance, property taxes and other expenses. These expense
reimbursements amounted to $268,396, $526,529 and $548,716 for the years ended
December 31, 1998, 1997 and 1996, 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 NOTES PAYABLE
- -------------------------------

The following sets forth the mortgage notes payable of the Partnership at
December 31, 1998 and 1997. The mortgage notes payable are secured by the
related real estate investment.

<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a)Rate % Maturity 1998 1997
- -------- ------------------ ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Southpointe Plaza(b) First Variable (b) $41,931 9/97 $ - $ 5,293,017

Riverbay Plaza First Variable (c) (c) 4/01 1,650,000 -
------------ ------------
Total $ 1,650,000 $ 5,293,017
============ ============
</TABLE>
<PAGE>

(a) The debt is non-recourse to the Partnership.

(b) Southpointe Plaza was sold and the mortgage was paid off on April 1,
1998. See Note 8 - "Disposition of Real Estate."

(c) In June 1998, the Partnership received $1,650,000 in proceeds from a
mortgage note payable secured by Riverbay Plaza Shopping Center. The
proceeds were used to pay for improvements made in 1997 to renovate and
expand an anchor tenant's space. The mortgage note payable to an
unaffiliated lender bears interest at a variable rate equal to 1.75% plus
the London Interbank Offered Rate per annum and matures on April 15,
2001. At December 31, 1998, the interest rate of the mortgage note was
7.2965%. Interest-only payments are due monthly until July 1, 1999, at
which time monthly principal and interest payments of $13,301 are due.
The remaining principal balance of approximately $1,577,000 is due at
maturity. The Partnership incurred $47,881 of deferred borrowing costs in
connection with the financing of the property.

Scheduled principal maturities of the mortgage note payable under existing terms
are as follows:

1999 $ 18,896
2000 39,955
2001 1,591,149
Thereafter -
------------
Total $ 1,650,000
============

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
notes payable was approximately $1,589,000 at December 31, 1998 and $4,953,000
at December 31, 1997.

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

<PAGE>

<PAGE>
NOTE 7 - GAINS ON INVOLUNTARY CONVERSIONS
- -----------------------------------------

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. During 1997, reimbursements
totaling $226,747 were received from the insurance carrier and repairs were
completed. The Partnership recognized a $149,585 gain on involuntary conversion
which represents the amount of insurance reimbursements received in excess of
the basis of the property damaged.

NOTE 8 - DISPOSITION OF REAL ESTATE
- -----------------------------------

On March 31, 1998, the Partnership sold Southpointe Plaza Shopping Center,
located in Sacramento, California, to an unaffiliated purchaser for a cash
purchase price of $6,800,000. Cash proceeds from the sale were received on April
1, 1998. Sales proceeds received, as well as the resulting loss on sale, are
detailed below.

<TABLE>
<CAPTION>
Loss Sales
on Disposition Proceeds
----------------- ------------------
<S> <C> <C>
Sales price.......................................... $ 6,800,000 $ 6,800,000

Selling costs........................................ (389,990) (185,990)
Straight-line rents receivable written off........... (48,601)
Prepaid leasing commissions written off.............. (43,913)
Carrying value....................................... (6,436,246)
---------------- ---------------
Loss on disposition of real estate................... $ (118,750)
===============

Proceeds from sale of real estate.................... 6,614,010
Retirement of mortgage note payable.................. (5,261,942)
Accrued interest paid................................ (32,338)
--------------
Net cash proceeds.................................... $ 1,319,730
==============

</TABLE>

<PAGE>
As discussed in Note 2 - "Transactions With Affiliates," the Partnership
incurred a $204,000 disposition fee payable to the General Partner in connection
with the sale of Southpointe Plaza. This fee increased the amount of the loss on
disposition of real estate and is included in selling costs above. However, as
the fee was not paid until subsequent to December 31, 1998, it did not reduce
the amount of net cash proceeds received from the sale. The net cash proceeds
from the sale of Southpointe Plaza are $1,115,730 after payment of the
disposition fee.

On April 1, 1998, the Partnership sold Island Plaza Shopping Center, located in
Ft. Myers, Florida, to an unaffiliated purchaser for a cash purchase price of
$1,850,000. The Partnership recorded a $126,080 write-down for impairment of
real estate in the first quarter of 1998 to record the property at the pending
sales price less estimated costs to sell. Sales proceeds are detailed below.

<TABLE>
<CAPTION>
Loss Sales
on Disposition Proceeds
---------------- ---------------
<S> <C> <C>
Sales price.......................................... $ 1,850,000 $ 1,850,000

Selling costs ....................................... (80,980) (25,480)
Straight-line rents receivable written off........... (81,572)
Prepaid leasing commissions written off.............. (3,269)
Carrying value....................................... (1,684,179)
---------------- -------------

Loss on disposition of real estate................... $ -
================

Net cash proceeds.................................... $ 1,824,520
=============
</TABLE>

As discussed in Note 2 - "Transactions With Affiliates," the Partnership
incurred a $55,500 disposition fee payable to the General Partner in connection
with the sale of Island Plaza. This fee increased the amount of the write-down
for impairment of real estate and is included in selling costs above. However,
as the fee was not paid until subsequent to December 31, 1998, it did not reduce
the amount of net cash proceeds received from the sale. The net cash proceeds
from the sale of Island Plaza are $1,769,020 after payment of the disposition
fee.

NOTE 9 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------

<PAGE>
Third parties also may seek recovery under the common law for damages to their
property or person, against owners of property from which there has been a
release of hazardous and other substances.

The presence of contamination or the failure to remediate contaminations may
adversely affect the owner's ability to sell or lease real estate or to borrow
using the real estate as collateral.

Various buildings at properties do or may contain building materials that are
the subject of various regulatory programs intended to protect human health.
Such building materials include, for example, asbestos, lead-based paint, and
lead plumbing components. The Company has implemented programs to deal with the
presence of those materials, which include, as appropriate, reduction of
potential exposure situations. The Company does not believe that the costs of
such programs are likely to have a material adverse effect. Failure to implement
such programs can result in regulatory violations or liability claims resulting
from alleged exposure to such materials.

In connection with the proposed sale transaction as more fully described in Note
1 - "Organization and Summary of Significant Accounting Policies", Phase I
environmental site assessments have been completed for each property owned by
the Partnership. Such environmental assessments performed on the properties have
not revealed any environmental liability that the Partnership believes would
have a material adverse effect on the Partnership's business, assets, or results
of operations. The Partnership has not been notified by any governmental
authority of any non-compliance, liability or other claim in connection with any
of its properties. There can be no assurances, however, that environmental
liabilities have not developed since such environmental assessments were
prepared, or that future uses or conditions (including, without limitation,
changes in applicable environmental laws and regulations) will not result in
imposition of environmental liability.

NOTE 10 - PRO FORMA INFORMATION (UNAUDITED)
- -------------------------------------------

The following unaudited pro forma information for the years ended December 31,
1998 and 1997 reflects the results of operations of the Partnership as if the
sales of Southpointe Plaza and Island Plaza had occurred as of January 1, 1997.
The unaudited pro forma information is not necessarily indicative of the results
of operations which actually would have occurred or those which might be
expected to occur in the future.

1998 1997
------------- ------------
Total revenue........................... $ 3,079,948 $ 2,970,898
Net income (loss)....................... (292,131) 103,604

Net income (loss) per limited
partnership unit...................... (7.23) 2.56

<PAGE>

McNEIL REAL ESTATE FUND XXIV, L.P.

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1998

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

APARTMENTS:

Pine Hills
<S> <C> <C> <C> <C> <C>
Livingston, TX $ - $ 605,145 $ 3,917,607 $ (692,000) $ 583,775

Sleepy Hollow
Cleveland, TX - 363,051 4,010,076 - 383,938

RETAIL CENTERS:

Riverbay Plaza
Riverview, FL 1,650,000 294,546 4,736,097 - 2,847,605

Towne Center
Derby, KS - 361,605 2,359,900 (500,000) 922,847
-------------- -------------- -------------- ------------ -------------

$ 1,650,000 $ 1,624,347 $ 15,023,680 $ (1,192,000) $ 4,738,165
============== ============== ============== ============ =============

Asset Held for Sale (c):

Springwood Plaza
Dellwood, MO $ -
==============
</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.

(c) The asset held for sale is stated at lower of depreciated cost or fair
value less costs to sell. Historical cost, net of accumulated depreciation
and amortization and write-downs, becomes the new cost basis when the asset
is classified as "Held for Sale." Depreciation and amortization cease at
the time the asset is 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 AND AMORTIZATION
December 31, 1998

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

Pine Hills
<S> <C> <C> <C> <C>
Livingston, TX $ 605,145 $ 3,809,382 $ 4,414,527 $ (2,139,016)

Sleepy Hollow
Cleveland, TX 363,051 4,394,014 4,757,065 (2,370,203)

RETAIL CENTERS:

Riverbay Plaza
Riverview, FL 294,546 7,583,702 7,878,248 (3,243,150)

Towne Center
Derby, KS 361,605 2,782,747 3,144,352 (1,306,602)
------------- ------------- --------------- -------------

$ 1,624,347 $ 18,569,845 $ 20,194,192 $ (9,058,971)
============= ============= =============== =============

Asset Held for Sale (c):

Springwood Plaza
Dellwood, MO $ 2,737,114
===============

</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 $25,688,939 and
accumulated depreciation was $12,592,596 at December 31, 1998.

See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1998

Date of Date Depreciable
Description Construction Acquired Lives (Years)
- ----------- ------------ -------- -------------

APARTMENTS:

Pine Hills
<S> <C> <C> <C>
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

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

Asset Held for Sale (c):

Springwood Plaza
Dellwood, MO 1974 09/85

</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:

<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------
1998 1997 1996
------------ ------------ -------------

Real estate investments:

<S> <C> <C> <C>
Balance at beginning of year .................... $ 19,395,510 $ 21,858,487 $ 35,244,771

Improvements .................................... 798,682 2,052,205 458,752

Reclassification to assets held for sale ........ -- (4,368,709) (13,794,699)

Write-off of damaged basis ...................... -- (146,473) (50,337)
------------ ------------ ------------

Balance at end of year .......................... $ 20,194,192 $ 19,395,510 $ 21,858,487
============ ============ ============

Accumulated depreciation and amortization:

Balance at beginning of year .................... $ 7,997,592 $ 8,887,172 $ 12,428,415

Depreciation .................................... 1,061,379 910,119 1,191,313

Reclassification to assets held for sale ........ -- (1,730,388) (4,712,085)

Write-off of damaged basis ...................... -- (69,311) (20,471)
------------ ------------ ------------

Balance at end of year .......................... $ 9,058,971 $ 7,997,592 $ 8,887,172
============ ============ ============

Assets Held for Sale:

Balance of beginning of year .................... $ 10,935,647 $ 8,408,672 $ --

Reclassification to assets held for sale ........ -- 2,638,321 9,082,614

Improvements .................................... 47,972 108,654 26,058

Write-down for impairment
of real estate ............................... (126,080) (220,000) (700,000)

Disposition of real estate ...................... (8,120,425) -- --
------------ ------------ ------------

Balance at end of year .......................... $ 2,737,114 $ 10,935,647 $ 8,408,672
============ ============ ============

</TABLE>

<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURES
---------------------

None.

PART III

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

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

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

Robert A. McNeil, 78 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 an 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.

<PAGE>
Carole J. McNeil 55 Mrs. McNeil is Co-Chairman, with husband
Co-Chairman of the Robert A. McNeil, of McNeil Investors,
Board Inc. Mrs. McNeil has twenty years of
real estate experience, most recently as
a private investor from 1986 to 1993. In
1982, she founded Ivory & Associates, a
commercial real estate brokerage firm in
San Francisco, CA. Prior to that, she
was a commercial real estate associate
with the Madison Company and, earlier, a
commercial sales associate and analyst
with Marcus and Millichap in San
Francisco. In 1978, Mrs. McNeil
established Escrow Training Centers,
California's first accredited commercial
training program for title company
escrow officers and real estate agents
needing college credits to qualify for
brokerage licenses. She began in real
estate as Manager and Marketing Director
of Title Insurance and Trust in Marin
County, CA. Mrs. McNeil serves on the
International Board of Directors of the
Salk Institute.

Ron K. Taylor 41 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.

<PAGE>
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, 1998, 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, 1998. 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 3,648
Units at February 1, 1999 (9.1% of the outstanding Units). The business
address for High River Limited Partnership is 100 South Bedford Road,
Mount Kisco, New York 10549.

(B) Security ownership of management.

Neither the General Partner nor any of the officers or directors of its
general partner own any limited partnership units.

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 to .75% in 2000, .50% in 2001 and .25% thereafter. For the
year ended December 31, 1998, the Partnership paid or accrued $238,962 of such
asset management fees.

<PAGE>
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, 1998, the Partnership paid or accrued $400,050 of such property
management fees and reimbursements. See Item 1 - Business, Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations and
Item 8 - Note 2 - "Transactions With Affiliates."

<PAGE>
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
- -------- -----------------------------------------------------------------
See accompanying Index to Financial Statements at Item 8 - Financial Statements
and Supplementary Data.

(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).

10.4 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)

10.6 Promissory Note dated June 1, 1998, between
Barnett Bank, N.A. and River Bay Plaza XXIV,
L.P.

11. Statement regarding computation of net income
(loss) per limited partnership unit (see Item
8 - Note 1 - "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, 1998.

<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 31, 1999 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 31, 1999 By: /s/ Ron K. Taylor
- -------------- ---------------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)

March 31, 1999 By: /s/ Carol A. Fahs
- -------------- ---------------------------------------------
Date Carol A. Fahs
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,103,846
<SECURITIES> 0
<RECEIVABLES> 345,709
<ALLOWANCES> (38,811)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 20,194,192
<DEPRECIATION> (9,058,971)
<TOTAL-ASSETS> 15,504,391
<CURRENT-LIABILITIES> 0
<BONDS> 1,650,000
0
0
<COMMON> 0
<OTHER-SE> 12,793,861
<TOTAL-LIABILITY-AND-EQUITY> 15,504,391
<SALES> 3,255,378
<TOTAL-REVENUES> 3,395,401
<CGS> 1,546,939
<TOTAL-COSTS> 2,608,318
<OTHER-EXPENSES> 958,008
<LOSS-PROVISION> 126,080
<INTEREST-EXPENSE> 176,018
<INCOME-PRETAX> (473,023)
<INCOME-TAX> 0
<INCOME-CONTINUING> (473,023)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (473,023)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>

Florida documentary stamp _________________ the amount required by law has
been paid with respect to this promissory note and proper stamps have been
affixed to, or the proper legend has been stated on, the mortgage securing
this promissory note pursuant to Florida Statutes Chapter 201.08.

PROMISSORY NOTE

Borrower: River Bay Plaza XXIV, L.P.
13760 Noel Road, Suite 600, LB70
Dallas, TX 75240

Lender: BARNETT BANK, N.A.
P.O. Box 40329
Jacksonville, FL 32203-0329

Principal Amount: $1,650,000.00 Date of Note: June 1, 1998

PROMISE TO PAY. River Bay Plaza XXIV, L.P., jointly and severally if more than
one ("Borrower"), promises to pay to BARNETT BANK, N.A. ("Lender"), or order, in
lawfully obtained money of the United States of America, the principal amount of
One Million Six Hundred Fifty Thousand & 00/100 Dollars ($1,650,000.00),
together with interest on the unpaid principal balance from date(s) of
disbursement, until paid in full as set forth herein.

PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in accordance with the following payment schedule:

12 consecutive monthly interest payments, beginning July 1, 1998, with
interest calculated on the unpaid principal balances at an interest rate of
1.750 percentage points over the Index described below; 22 consecutive
monthly principal and interest payments in the initial amount of $13,301.23
each, beginning July 1, 1999, with Interest calculated on the unpaid
principal balances at an interest rate of 1.750 percentage points over the
Index described below; and 1 principal and interest payment in the initial
amount of $1,584,713.19 on April 15, 2001, with interest calculated on the
unpaid principal balances at an interest rate of 1.750 percentage points
over the Index described below. This estimated final payment is based on
the assumption that all payments will be made exactly as scheduled and that
the Index does not change; the actual final payment will be for all
principal and accrued interest not yet paid, together with any other unpaid
amounts under this Note.

The annual interest rate for this Note is computed on a 365/360 basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Payments shall be allocated between principal, interest, costs, fees,
if any, in the discretion of Lender. Any payment to be debited from Borrower's
designated account will be debited on the scheduled due date; however, if the
scheduled due date is on a weekend or holiday, the payment will be debited on
the next non-weekend/holiday day.

<PAGE>
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Libor Rate
(as defined herein) (the "Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans. If the Index becomes unavailable during the term
of this loan, Lender may designate a substitute index after notice to Borrower.
Borrower understands that Lender may make loans based on other rates as well.
The interest rate change will not occur more often than each 1 month period. The
interest rate shall change on the first Business Banking Day of each Interest
Period. For purposes hereof, the following terms shall have the following
meanings: (a) "Business Banking Day" shall mean each day other than a Saturday,
a Sunday or any holiday on which commercial banks in Jacksonville, Florida are
closed for business; (b) "Interest Period" shall mean (i) initially, the period
commencing the Date of Note and ending the day immediately preceding the first
Interest Rate Change Date or (ii) subsequently, the period commencing any
Interest Rate Change Date and ending on the day immediately preceding the next
subsequent Interest Rate Change Date; (c) "Interest Rate Change Date" shall mean
the first Business Banking Day of each 1 month period; (d) "Libor Rate" shall
mean the offered rate for deposits in United States dollars in the London
Interbank market for a 1 month period which appears on the Libor Rate Reference
Page as of 11:00 a.m. (London time) on the day that is two London Banking Days
preceding the first Business Banking Day of each Interest Period. If at least
two such rates appear on the applicable Libor Rate Reference Page, the rate will
be the arithmetic mean of such offered rates; (e) "Libor Rate Reference Page"
shall mean either (i) the Reuters Screen LIBO Page, (ii) the Dow Jones Telerate
Page 3750, or (iii) such other nationally recognized source, as from time to
time may be used by Lender in its sole discretion as a reference for determining
an applicable Libor Rate; (f) "London Banking Day" shall mean each day other
than a Saturday, a Sunday or any holiday on which commercial banks in London,
England are closed for business. The interest rate or rates to be applied to the
unpaid principal balance of this Note will be the rate or rates set forth above
in the "Payment" section. Notwithstanding any other provision of this Note,
after the first payment stream, the interest rate for each subsequent payment
stream will be effective as of the last payment date of the just-ending payment
stream. Lender will tell Borrower the current Index rate upon Borrower's
request. NOTICE: Under no circumstances will the effective rate of interest on
this Note be more than the maximum rate allowed by applicable law. Whenever
increases occur in the interest rate, Lender, at its option, may do one or more
of the following: (a) increase Borrower's payments to ensure Borrower's loan
will pay off by its original final maturity date, (b) increase Borrower's
payments to cover accruing interest, (c) increase the number of Borrower's
payments, and (d) continue Borrower's payments at the same amount and increase
Borrower's final payment. Upon demand for payment of this Note, the interest
rate on this Note to be applied to the unpaid balance of principal, unpaid
accrued interest, costs and fees, to be applicable until paid in full, will be
the highest interest rate permitted by applicable law.

PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier than it
is due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments under the payment
schedule. Rather, they will reduce the principal balance due and may result in
Borrower making fewer payments.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $100.00,
whichever is greater.

<PAGE>
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due; (b) Borrower breaks any written
promise Borrower has made to Lender, or Borrower fails to perform promptly at
the time and strictly in the manner provided in this Note or in any written
agreement related to this Note, or in any other written agreement or loan
Borrower has with Lender, contingent or absolute, due or to become due, now or
hereafter existing; (c) A breach of any term or condition of any security
agreement, pledge agreement, mortgage loan agreement or any other agreement
related to or securing this Note regardless if said document is executed by
Borrower, any guarantor or a third-party not liable for this Note, upon which a
cure period, if any, contained in said agreement has expired; (d) suspension,
liquidation, sale or transfer of Borrower's business or assets; (e) Any
representation, warranty, statement or report made or furnished to Lender by
Borrower or on Borrower's behalf is false, or misleading in any material
respect; (f) Borrower becomes insolvent, a receiver is appointed for any part of
Borrower's property, Borrower makes an assignment for the benefit of creditors,
or any proceeding is commenced either by Borrower or against Borrower under any
bankruptcy or insolvency

HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY AND EACH
PARTY WAIVES THE RIGHT TO TRIAL BY JURY; (II) EACH WAIVES ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; AND (III) THIS SECTION IS A SPECIFIC AND MATERIAL
ASPECT OF THIS DOCUMENT AND LENDER WOULD NOT EXTEND CREDIT IF THE WAIVERS SET
FORTH IN THIS SECTION WERE NOT A PART OF THIS DOCUMENT.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.

BORROWER:
River Bay Plaza XXIV, L.P.

By: /s/ Ron K. Taylor
-------------------
River Bay Plaza Corp, General Partner,
Ron K. Taylor, President