UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
-------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to_____________
Commission file number 0-14267
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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
-----------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
MCNEIL REAL ESTATE FUND XXIV, L.P.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land ................................................... $ 1,624,347 $ 1,624,347
Buildings and improvements ............................. 18,705,224 18,569,845
------------ ------------
20,329,571 20,194,192
Less: Accumulated depreciation and amortization ....... (9,589,133) (9,058,971)
------------ ------------
10,740,438 11,135,221
Asset held for sale ....................................... 2,773,761 2,737,114
Cash and cash equivalents ................................. 1,081,703 1,103,846
Cash segregated for security deposits ..................... 61,394 62,227
Accounts receivable, net of allowance for doubtful
accounts of $22,324 and $38,811 at June 30, 1999
and December 31, 1998, respectively .................... 320,945 306,898
Prepaid expenses and other assets, net .................... 454,079 159,085
------------ ------------
$ 15,432,320 $ 15,504,391
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage note payable ..................................... $ 1,650,000 $ 1,650,000
Accounts payable and accrued expenses ..................... 280,336 193,779
Payable to affiliates ..................................... 705,982 793,128
Security deposits and deferred rental revenue ............. 82,148 73,623
------------ ------------
2,718,466 2,710,530
------------ ------------
Partners' equity (deficit):
Limited partners - 40,000 limited partnership
units authorized and outstanding at June 30,
1999 and December 31, 1998 ........................... 12,741,444 12,823,151
General Partner ........................................ (27,590) (29,290)
------------ ------------
12,713,854 12,793,861
------------ ------------
$ 15,432,320 $ 15,504,391
============ ============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Revenue:
<S> <C> <C> <C> <C>
Rental revenue ..................... $ 797,727 $ 709,441 $ 1,603,697 $ 1,808,837
Interest ........................... 11,469 39,871 22,126 68,429
----------- ----------- ----------- -----------
Total revenue .................... 809,196 749,312 1,625,823 1,877,266
----------- ----------- ----------- -----------
Expenses:
Interest ........................... 31,344 10,314 62,779 108,671
Depreciation and
amortization ..................... 265,965 189,384 530,162 388,098
Property taxes ..................... 73,251 65,113 146,502 164,357
Personnel costs .................... 67,038 66,067 142,673 142,426
Utilities .......................... 37,749 50,017 95,000 119,517
Repairs and maintenance ............ 60,228 88,568 130,319 174,374
Property management
fees - affiliates ................ 47,137 42,999 87,935 102,725
Other property operating
expenses ......................... 40,056 35,961 82,555 100,662
General and administrative ......... (87,792) 117,427 (27,155) 202,978
General and administrative -
affiliates ....................... 85,850 119,127 205,060 255,389
Loss on disposition of real
estate ........................... -- -- -- 118,750
Write-down for impairment
of real estate ................... -- -- -- 126,080
----------- ----------- ----------- -----------
Total expenses ................... 620,826 784,977 1,455,830 2,004,027
----------- ----------- ----------- -----------
Net income (loss) ..................... $ 188,370 $ (35,665) $ 169,993 $ (126,761)
=========== =========== =========== ===========
Net income (loss) allocable to
limited partners ................... $ 186,486 $ (35,308) $ 168,293 $ (125,493)
Net income (loss) allocable to
General Partner .................... 1,884 (357) 1,700 (1,268)
----------- ----------- ----------- -----------
Net income (loss) ..................... $ 188,370 $ (35,665) $ 169,993 $ (126,761)
=========== =========== =========== ===========
Net income (loss) per limited
partnership unit ................... $ 4.66 $ (.89) $ 4.21 $ (3.14)
=========== =========== =========== ===========
Distributions per limited
partnership unit ................... $ -- $ -- $ 6.25 $ 37.50
=========== =========== =========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Six Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity (Deficit)
------------- ------------- ----------------
<S> <C> <C> <C>
Balance at December 31, 1997 ............. $ (24,560) $ 17,935,844 $ 17,911,284
Net loss ................................. (1,268) (125,493) (126,761)
Distributions to limited partners ........ -- (1,500,000) (1,500,000)
------------ ------------ ------------
Balance at June 30, 1998 ................. $ (25,828) $ 16,310,351 $ 16,284,523
============ ============ ============
Balance at December 31, 1998 ............. $ (29,290) $ 12,823,151 $ 12,793,861
Net income ............................... 1,700 168,293 169,993
Distributions to limited partners ........ -- (250,000) (250,000)
------------ ------------ ------------
Balance at June 30, 1999 ................. $ (27,590) $ 12,741,444 $ 12,713,854
============ ============ ============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1999 1998
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants ........................ $ 1,592,605 $ 1,764,567
Cash paid to suppliers ............................ (669,848) (785,273)
Cash paid to affiliates ........................... (380,141) (214,260)
Interest received ................................. 22,126 68,429
Interest paid ..................................... (56,915) (128,618)
Property taxes paid ............................... (107,944) (130,630)
----------- -----------
Net cash provided by operating activities ............ 399,883 574,215
----------- -----------
Cash flows from investing activities:
Additions to real estate investments and
assets held for sale ............................ (172,026) (1,853,152)
Proceeds from disposition of real estate .......... -- 8,438,530
----------- -----------
Net cash provided by (used in) investing
activities ........................................ (172,026) 6,585,378
----------- -----------
Cash flows from financing activities:
Principal payments on mortgage note
payable ......................................... -- (31,075)
Retirement of mortgage note payable ............... -- (5,261,942)
Proceeds from mortgage note payable ............... -- 1,650,000
Distributions to limited partners ................. (250,000) (1,500,000)
----------- -----------
Net cash used in financing activities ................ (250,000) (5,143,017)
----------- -----------
Net increase (decrease) in cash and cash
equivalents ....................................... (22,143) 2,016,576
Cash and cash equivalents at beginning of
period ............................................ 1,103,846 2,180,029
----------- -----------
Cash and cash equivalents at end of period ........... $ 1,081,703 $ 4,196,605
=========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1999 1998
--------- ----------
<S> <C> <C>
Net income (loss) .................................... $ 169,993 $(126,761)
--------- ---------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization ..................... 530,162 388,098
Loss on disposition of real estate ................ -- 118,750
Write-down for impairment of real estate .......... -- 126,080
Amortization of deferred borrowing costs .......... 7,046 2,225
Changes in assets and liabilities:
Cash segregated for security deposits ........... 833 168
Accounts receivable, net ........................ (14,047) (8,782)
Prepaid expenses and other assets, net .......... (302,040) (42,036)
Accounts payable and accrued expenses ........... 86,557 3,394
Payable to affiliates ........................... (87,146) 143,854
Security deposits and deferred rental
revenue ....................................... 8,525 (30,775)
--------- ---------
Total adjustments ............................. 229,890 700,976
--------- ---------
Net cash provided by operating activities ............ $ 399,883 $ 574,215
========= =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XXIV, L.P.
Notes to Financial Statements
June 30, 1999
(Unaudited)
NOTE 1.
- -------
McNeil Real Estate Fund XXIV, L.P. (the "Partnership"), formerly known as
Southmark Equity Partners, Ltd., was organized on October 19, 1984, as a limited
partnership under the provisions of the California Revised Limited Partnership
Act to acquire and operate commercial and residential properties. The general
partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a
Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 600, LB70, Dallas, Texas, 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the six months ended June 30, 1999 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1999.
NOTE 2.
- -------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1998, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XXIV, L.P., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
Certain reclassifications have been made to prior period amounts to conform with
the current period presentation.
NOTE 4.
- -------
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.
<PAGE>
Under the terms of its 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 of such fees during the first quarter of 1998 and $55,500 of such fees
during the second quarter of 1998 in connection with the sale of Southpointe
Plaza and Island Plaza shopping centers, respectively. These fees were paid by
the Partnership in the first quarter of 1999 and were included in payable to
affiliates on the Balance Sheet at December 31, 1998.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The Partnership is paying an asset management fee which is payable to the
General Partner. Through 1999, the asset management fee is calculated as 1% of
the Partnership's tangible asset value. Tangible asset value is determined by
using the greater of (i) an amount calculated by applying a capitalization rate
of 9% to the annualized net operating income of each property or (ii) a value of
$10,000 per apartment unit for residential properties and $50 per gross square
foot for commercial properties to arrive at the property tangible asset value.
The property tangible asset value is then added to the book value of all other
assets excluding intangible items. The fee percentage decreases to .75% in 2000,
.50% in 2001 and .25% thereafter. Total accrued but unpaid asset management fees
of $426,409 and $325,851 were outstanding at June 30, 1999 and December 31,
1998, respectively.
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner or its affiliates are as follows:
Six Months Ended
June 30,
-----------------------
1999 1998
--------- ---------
Property management fees.......................... $ 87,935 $ 102,725
Charged to general and administrative -
affiliates:
Partnership administration..................... 86,216 119,241
Asset management fee........................... 118,844 136,148
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
--------- ---------
$ 292,995 $ 617,614
========= =========
Payable to affiliates at June 30, 1999 and December 31, 1998 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.
<PAGE>
NOTE 5.
- -------
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 not received
until April 1, 1998. Sales proceeds received, as well as the loss on sale, are
detailed below.
<TABLE>
<CAPTION>
Loss on Sale Sales 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>
As discussed in Note 4, 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 the
first quarter of 1999, it did not reduce the amount of net cash proceeds
received from the sale in the first quarter of 1998. The net cash proceeds from
the sale of Southpointe Plaza are $1,115,730 after payment of the disposition
fee.
NOTE 6.
- -------
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>
<PAGE>
As discussed in Note 4, 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 the
first quarter of 1999, it did not reduce the amount of net cash proceeds
received from the sale in the first half of 1998. The net cash proceeds from the
sale of Island Plaza are $1,769,020 after payment of the disposition fee.
NOTE 7.
- -------
On June 24, 1999, the Partnership and 18 affiliated partnerships, collectively
(the "Partnerships"), the General Partner, McNeil Investors, Inc., McNeil Real
Estate Management, Inc. ("McREMI"), McNeil Summerhill, Inc. and Robert A. McNeil
entered into a definitive acquisition agreement (the "Master Agreement") with
WXI/McN Realty L.L.C. ("Newco"), an affiliate of Whitehall Street Real Estate
Limited Partnership XI, a real estate investment fund managed by Goldman, Sachs
& Co., whereby Newco and its subsidiaries will acquire the Partnerships. The
Master Agreement provides that the Partnerships will be merged with subsidiaries
of Newco. The Master Agreement also provides for the acquisition by Newco and
its subsidiaries of the assets of McREMI. The aggregate consideration in the
transaction, including the assumption or prepayment of all outstanding mortgage
debt of the Partnerships, is approximately $644,440,000.
Pursuant to the terms of the Master Agreement, the limited partners in the
Partnership will receive cash on the closing date of the transaction (the
"Closing Date") in exchange for their limited partnership interests. In
addition, the Partnership will declare a special distribution to its limited
partners on the Closing Date equal to its then positive net working capital
balance, if any. The estimated aggregate consideration and net working capital
distribution to be received per unit of limited partnership interest in the
Partnership is currently estimated as $347.
On the Closing Date, the General Partner of the Partnership, will receive an
equity interest in Newco in exchange for its contribution to Newco of the
general partnership interests in the Partnerships, the limited partnership
interests in Fairfax Associates II L.P. and McNeil Summerhill Associates and the
assets of McREMI.
The Partnership's participation in the transaction is subject to, among other
conditions, the approval by a majority of the limited partners of the
Partnership.
In some circumstances, as defined in the Master Agreement, the Partnerships may
be subject to a break-up fee, up to an aggregate maximum of $18,000,000, if the
Master Agreement is terminated with respect to one or more of the Partnerships.
In the case of termination of the Master Agreement in these circumstances, each
of the Partnerships with respect to which the Master Agreement has been
terminated will be severally, but not jointly, liable for payment to Newco of
its respective break-up fee. The break-up fee ratably calculated for the
Partnership is $455,472.
<PAGE>
All previous costs associated with this transaction had been allocated among the
Partnerships and McREMI based on the relative number of properties contained
therein. On June 24, 1999, a fairness opinion (the "Fairness Opinion") was
rendered by Robert A. Stanger & Co., Inc., an independent financial advisor, to
the effect that the aggregate consideration to be paid for the general
partnership interests and limited partnership interests in all of the
Partnerships and the assets of McREMI is fair from a financial point of view to
the holders of each class of limited partnership interests. Based on the
relative values as set forth in the Fairness Opinion, the Partnership recorded
an adjustment to general and administrative expenses during the second quarter
of 1999 in the amount of $(306,015) to reflect the reallocation of previously
paid transaction costs among the Partnerships and McREMI which resulted in a
credit balance in the general and administrative expense account for the three
and six months ended June 30, 1999. This overpayment of general and
administrative expenses is included in prepaid expenses and other assets on the
Balance Sheet at June 30, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
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.
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.
The Partnership reported net income for the first six months of 1999 of $169,993
as compared to a net loss of $126,761 for the first six months of 1998. Revenues
decreased to $1,625,823 in the first six months of 1999 from $1,877,266 for the
same period in 1998. Expenses were $1,455,830 in the first six months of 1999 as
compared to $2,004,027 in the first six months of 1998.
Net cash provided by operating activities was $399,883 for the first six months
of 1999. The Partnership expended $172,026 for additions to its real estate
investments. After distributions of $250,000 to the limited partners during the
first six months of 1999, cash and cash equivalents decreased by $22,143,
leaving a balance of $1,081,703 at June 30, 1999.
RECENT DEVELOPMENTS
- -------------------
On June 24, 1999, McNeil Partners, L.P. (the General Partner of the Partnership)
and WXI/McN Realty L.L.C., an affiliate of Whitehall Street Real Estate Limited
Partnership XI ("Whitehall"), a real estate investment fund managed by Goldman,
Sachs & Co., announced that they have entered into a definitive acquisition
agreement whereby the Whitehall affiliate will acquire by merger nineteen real
estate limited partnerships operated by McNeil Partners, L.P. and Robert A.
McNeil. The limited partnerships involved are the Partnership and McNeil Real
Estate Funds IX, X, XI, XII, XIV, XV, XX, XXI, XXII, XXIII, XXV, XXVI and XXVII,
Hearth Hollow Associates, McNeil Midwest Properties I, L.P., Regency North
Associates, Fairfax Associates and McNeil Summerhill (collectively, the
<PAGE>
"Partnerships"). The Partnerships (other than Fairfax Associates and McNeil
Summerhill which are wholly-owned by Robert A. McNeil and related parties) will
be merged with subsidiaries of WXI/McN Realty L.L.C. The acquisition agreement
also provides for the acquisition by WXI/McN Realty L.L.C. of the assets of
McNeil Real Estate Management, Inc. ("McREMI"). The aggregate consideration in
the transaction, including all outstanding mortgage debt of the Partnerships, is
approximately $644,440,000.
Pursuant to the terms of the acquisition agreement, the limited partners in each
of the Partnerships (other than those wholly-owned by Robert A. McNeil) will
receive cash on the closing date of the transaction in exchange for their
limited partnership interests. In addition, each Partnership will make a special
distribution to its limited partners on the closing date of the transaction
equal to its then net positive working capital balance. McNeil Partners, L.P.
will receive an equity interest in WXI/McN Realty L.L.C. in exchange for its
contribution of its general partnership interests in the Partnerships, the
limited partnership interests in its wholly-owned Partnerships and the assets of
McREMI.
The proposed transaction follows an extensive marketing effort by PaineWebber
Incorporated, exclusive financial advisor to the Partnerships.
The transaction has been unanimously approved by the Board of Directors of
McNeil Investors, Inc., the general partner of McNeil Partners, L.P., the
general partner of each of the Partnerships other than Regency North Associates,
Fairfax Associates and McNeil Summerhill. The respective general partners of
Regency North Associates, Fairfax Associates and McNeil Summerhill also have
approved the transaction. The Board of Directors of McNeil Investors, Inc. based
its approval upon, among other things, the recommendation of a Special Committee
of the Board, appointed at the beginning of the discussions with Whitehall to
represent the interests of holders of limited partnership interests in each of
the Partnerships. In addition, the Special Committee and the Board relied upon
fairness opinions given by Robert A. Stanger & Co., Inc. ("Stanger & Co."), an
independent financial advisor to the Partnerships, to the effect that the
aggregate consideration is fair to the holders of each class of limited
partnership interests in each of the Partnerships. The Special Committee's
recommendation was also based upon the separate opinions of Eastdil Realty
Company ("Eastdil"), the independent financial advisor to the Special Committee.
Stanger & Co. and Eastdil have each also rendered an opinion that the aggregate
consideration to be paid for the general partnership interests and limited
partnership interests in all of the Partnerships and the assets of McREMI is
fair from a financial point of view to the holders of each class of limited
partnership interests in each of the Partnerships.
Each of the Partnerships' participation in the transaction is subject to, among
other conditions, the approval by a majority of the limited partners of the
respective Partnerships. The approval of the limited partners of the
Partnerships will be sought at meetings to be held in the coming months after
the filing of proxy statements with the Securities and Exchange Commission with
respect to the publicly traded Partnerships, and the subsequent mailing of proxy
statements to the limited partners. Preliminary proxy statements were filed with
the SEC on August 3, 1999.
<PAGE>
The aggregate consideration in the transaction has been allocated preliminarily
among the general partnership interests and the limited partnership interests in
each of the Partnerships and McREMI, based upon an allocation analysis prepared
by Stanger & Co. and confirmed by Eastdil. Based upon this allocation analysis
and the fairness opinions rendered by Stanger & Co. and Eastdil, the Special
Committee, the Board of Directors of McNeil Investors, Inc., the respective
general partners of Regency North Associates, Fairfax Associates and McNeil
Summerhill have each unanimously approved the allocation of the aggregate
consideration. The estimated aggregate consideration and working capital
distribution to be received per unit of limited partnership interest of the
Partnership is currently estimated as $347.
McNeil Partners, L.P. will contribute its real estate investment and management
company business to a subsidiary of WXI/McN Realty, L.L.C., along with its
general partnership interests in the Partnerships and its limited partnership
interests in the wholly-owned Partnerships, having an aggregate allocated value,
as determined by Stanger & Co., of approximately $58,640,000, of which
approximately $29,400,000 reflects balances due to McNeil Partners, L.P. and
McREMI as reflected on the Partnerships' financial statements as of March 31,
1999.
The above estimates of the Partnership per unit estimated merger consideration
and working capital distribution and the interest of McNeil Partners, L.P. are
based upon, among other things, the balance sheet of the Partnership as of March
31, 1999, adjusted for intangible assets, non-cash liabilities, transaction
expenses and the McNeil Partners, L.P. interest in the Partnership. Actual
amounts, including the estimate allocable to McNeil Partners, L.P., will vary
with the performance of the Partnership and McNeil Partners, L.P. through the
closing date. The above estimated merger consideration and special working
capital distribution will be adjusted at closing to reflect the then working
capital position of the Partnership.
Whitehall is a $2.26 billion equity fund and is the seventh in a series of funds
sponsored and capitalized by Goldman, Sachs & Co. and its affiliates, along with
public and private investors, to acquire real estate worldwide.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total revenue increased by $59,884 for the three months and decreased by
$251,443 for the six months ended June 30, 1999 as compared to the same periods
in 1998, 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 $15,175 and $91,895 for the first three and six
months of 1999, respectively. This increase was due to an increase in rental
revenue, partially offset by a decrease in interest income, as discussed below.
Rental revenue increased by $88,286 and decreased by $205,140 for the three and
six months ended June 30, 1999, respectively, as compared to the same periods in
1998. Excluding rental revenue of Southpointe Plaza and Island Plaza, rental
revenue increased by $43,434 and $137,964, respectively, in 1999. The largest
increases occurred at Towne Center and Riverbay Plaza shopping centers where
rental revenue increased by approximately $83,000 and $79,000, respectively, for
the six months ended June 30, 1999. The increase in rental revenue at Towne
Center was mainly due to an increase in occupancy from 55% at June 30, 1998 to
87% at June 30, 1999. The increase at Riverbay Plaza was mainly due to increased
rent charged to an anchor tenant after its space was expanded.
<PAGE>
Interest income for the quarter and six months ended June 30, 1999 decreased by
$28,402 and $46,303, respectively, as compared to the same periods in the prior
year. The decrease was due to a lower average amount of cash and cash
equivalents available for short-term investment in 1999. The Partnership held
approximately $1.08 million of cash and cash equivalents at June 30, 1999 as
compared to approximately $4.2 million at June 30, 1998. The greater amount of
cash and cash equivalents at June 30, 1998 was mainly due to net cash proceeds
received from the sales of Southpointe Plaza and Island Plaza, which were later
distributed to the limited partners subsequent to June 30, 1998.
Expenses:
Total expenses decreased by $164,151 for the three months and by $548,197 for
the six months ended June 30, 1999 as compared to the same periods in 1998.
Excluding total expenses of Southpointe Plaza and Island Plaza, which were sold
in 1998, total expenses decreased by $146,220 and $53,957 for the three and six
months ended June 30, 1999, respectively, as compared to the same periods in
1998. The decrease was mainly due to decreases in general and administrative
expenses and general and administrative - affiliates, partially offset by
increases in interest expense, depreciation and amortization, property
management fees - affiliates and other property operating expenses, as discussed
below.
Interest expense increased by $21,030 and decreased by $45,892 for the quarter
and six months ended June 30, 1999, respectively, as compared to the same
periods in 1998. The Partnership recorded $97,288 of interest expense in 1998
related to the Southpointe Plaza mortgage note payable, which was repaid on
April 1, 1998 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 $11,383 and $62,779
of interest expense related to this loan in the first six months of 1998 and
1999, respectively.
Depreciation and amortization expense for the three and six months ended June
30, 1999 increased by $76,581 and $142,064, respectively, in relation to the
same periods in 1998. The increase was mainly due to the amortization of tenant
improvements at Towne Center and Riverbay Plaza shopping centers.
Property taxes increased by $8,138 and decreased by $17,855 in the three and six
months ended June 30, 1999, respectively, as compared to the same periods in
1998. The overall decrease was due to the sales of Southpointe Plaza and Island
Plaza in 1998. The increase for the quarter was mainly due to an increase in
estimated property taxes at Springwood Plaza Shopping Center in 1999.
For the three and six months ended June 30, 1999, utilities decreased by $12,268
and $24,517, respectively, and repairs and maintenance decreased by $28,340 and
$44,055, respectively, as compared to the same periods in 1998, mainly due to
the sales of Southpointe Plaza and Island Plaza in 1998.
Property management fees - affiliates increased by $4,138 and decreased by
$14,790 for the three and six months ended June 30, 1999, respectively, as
compared to the same periods in 1998. Excluding property management fees for
Southpointe Plaza and Island Plaza, property management fees - affiliates
increased by $7,549 and $14,337 for the three and six months ended June 30,
1999, respectively, as compared to the same periods in 1998 due to an increase
in gross rental receipts, on which the fees are based. (See discussion of
increase in rental revenue above).
<PAGE>
Other property operating expenses increased by $4,095 and decreased by $18,107
for the three and six months ended June 30, 1999, respectively, as compared to
the same periods in 1998. Excluding other property operating expenses for
Southpointe Plaza and Island Plaza, other property operating expenses increased
by $8,852 and $13,052 for the three and six months ended June 30, 1999,
respectively, as compared to the same periods in 1998. This increase was mainly
due to an increase in the amortization of prepaid leasing commissions at
Springwood Plaza and Towne Center shopping centers in 1999. The increase at
Springwood Plaza was mainly due to a tenant vacating their space prior to the
expiration of their lease (the remaining prepaid commission balance is fully
amortized when the tenant vacates). The increase at Towne Center was mainly due
to new leases signed during the last half of 1998 and the first half of 1999.
General and administrative expenses for the three and six months ended June 30,
1999 decreased by $205,219 and $230,133, respectively, as compared to the same
periods in 1998. The decrease was mainly due to a $(306,015) reallocation of
previously paid transaction costs among the Partnerships and McREMI in the
second quarter of 1999 (see Item 1, Note 7), partially offset by an increase in
costs related to this transaction in the first half of 1999.
For the three and six months ended June 30, 1999, general and administrative -
affiliates decreased by $33,277 and $50,329, respectively, as compared to the
same periods in 1998. The decrease was mainly due to a decrease in overhead
expenses allocated to the Partnership by McREMI. The amount of expenses
allocated by McREMI is partly a function of the number of properties the
Partnership owns, which decreased in 1999 due to the sales of Southpointe Plaza
and Island Plaza in 1998. In addition, there was a decrease in asset management
fees 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 six months of 1998. No such loss was recognized in
the first six months of 1999.
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. No such write-down was recorded in the first six months
of 1999.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities,
which generated $399,883 of cash in the first six months of 1999 as compared to
the $574,215 for the same period in 1998.
Cash flows from operating activities decreased by $174,332 in the first six
months of 1999 as compared to the first six months of 1998. Excluding
Southpointe Plaza and Island Plaza, cash flows from operating activities
decreased by $64,175. This decrease in cash provided by operating activities was
mainly due to the payment to the General Partner of disposition fees totaling
$259,500 in the first quarter of 1999 (see Note 4 for discussion of disposition
fees incurred as a result of the sales of Southpointe Plaza and Island Plaza in
1998). This decrease was partially offset by an increase in cash received from
tenants, mainly due to an increase in rental revenue, as discussed above.
<PAGE>
The Partnership expended $172,026 and $1,853,152 for capital improvements to its
properties in the first six months of 1999 and 1998, respectively. In the first
half of 1998, the Partnership paid approximately $1.6 million to expand an
anchor tenant's space at Riverbay Plaza Shopping Center.
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 in regularly scheduled principal payments on the
Southpointe Plaza mortgage note payable in the first six months of 1998. The
property was sold and the loan was repaid 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. However, interest only was paid on this loan
for the first six months of 1999 in accordance with the mortgage note agreement.
The Partnership distributed $250,000 and $1,500,000 to the limited partners in
the first six months of 1999 and 1998, respectively.
Short-term liquidity:
At June 30, 1999, the Partnership held cash and cash equivalents of $1,081,703.
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 1999. The Partnership has budgeted approximately $382,000 for
necessary capital improvements for all properties in 1999. These capital
improvements 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.
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. On April 1, 1998, cash proceeds totaling
$6,614,010 were received and $5,294,280 was used to pay the principal and
accrued interest balance of the mortgage note payable secured by the property.
The $204,000 disposition fee accrued in 1998 was paid to the General Partner in
the first quarter of 1999.
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. Cash proceeds totaling $1,824,520 were received after payment of
various closing costs. The $55,500 disposition fee accrued in 1998 was paid to
the General Partner in the first quarter of 1999.
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.
<PAGE>
Long-term liquidity:
While the present outlook for the Partnership's liquidity is favorable, market
conditions may change and property operations can deteriorate. In that event,
the Partnership would require other sources of working capital. No such other
sources have been identified and the Partnership has no established lines of
credit. Other possible actions to resolve working capital deficiencies include
refinancing or renegotiating terms of existing loans, deferring major capital
expenditures on Partnership properties except where improvements are expected to
enhance the competitiveness or marketability of the properties, or arranging
working capital support from affiliates. No affiliate support has been required
in the past, and there is no assurance that support would be provided in the
future, since neither the General Partner nor any affiliates have any obligation
in this regard. See "Recent Developments" above.
The Partnership placed Springwood Plaza on the market for sale effective August
1, 1997.
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 June 30, 1999. 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.
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 is 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. Based on this review, management believes these systems are
substantially compliant. 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.
<PAGE>
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 has assessed these risks and expects to have contingency
plans in place by December 31, 1999 for any material potential failures.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
1) 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).
<PAGE>
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. ("McREMI") 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. 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.
Because the settlement contemplated a transaction which included all of the
Partnerships and plaintiffs claimed that an effort should be made to sell
all of the Partnerships, in or around September 1998, plaintiffs filed a
third consolidated and amended complaint which included allegations with
respect to the Partnerships which had not been named in previously filed
complaints.
On September 15, 1998, the parties signed a Stipulation of Settlement. For
purposes of settlement, the parties stipulated to a class comprised of all
owners of limited partner units in the Partnerships during the period
beginning June 21, 1991, the earliest date that proxy materials began to be
issued in connection with the restructuring of the Partnerships, through
September 15, 1998. As structured, the Stipulation of Settlement provided
for the payment of over $35 million in distributions and the commitment to
market the Partnerships for sale, together with McREMI, through a fair and
impartial bidding process overseen by a national investment banking firm.
To ensure the integrity of that process, defendants agreed, among other
things, to involve plaintiffs' counsel in oversight of that process, and
plaintiffs' counsel retained an independent advisor to represent the
interests of limited partners of the Partnerships in the event of a
transaction. The transaction described in Item 2 - Recent Developments is a
result of that process. The settlement was not conditioned on the
consummation of this transaction.
<PAGE>
On October 6, 1998, the court gave preliminary approval to the settlement.
It granted final approval to the settlement on July 8, 1999 and entered a
Final Order and Judgment dismissing the consolidated action with prejudice.
As a condition of final approval, the court requested, and the parties
agreed to, a slight modification of the release in the Stipulation of
Settlement with respect to future claims. Plaintiffs' counsel intends to
seek an order awarding attorneys' fees and reimbursing their out-of-pocket
expenses in an amount which is as yet undetermined. 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.
2) High River Limited Partnership, Unicorn Associates Corporation and Longacre
Corporation, et al. v. McNeil Partners, L.P. ("MPLP"), McNeil Investors,
Inc., McNeil Real Estate Management, Inc. (McREMI"), Robert A. McNeil and
Carole J. McNeil, - Supreme Court of the State of New York, County of New
York, - Index No. 99 603526.
On July 23, 1999, High River and two other affiliates of Carl C. Icahn
(Unicorn Associates Corporation and Longacre Corporation), filed a
complaint for damages in the Supreme Court of the State of New York, County
of New York. Plaintiffs allege that the defendants improperly interfered
with tender offers made by High River for limited partner units in the
Partnership and other affiliated partnerships in which MPLP serves as
General Partner (the "McNeil Partnerships"), by, among other things, filing
purportedly frivolous litigation to delay High River's offers, issuing
purportedly false and misleading statements opposing the offers and
purportedly forcing High River itself to file litigation to enforce its
rights. High River also alleges that as a result the defendants caused High
River to incur undue expense and that the defendants ultimately prevented
High River from acquiring a greater number of limited partner units.
Plaintiffs also allege that the defendants improperly excluded High River
from participating in the auction process for the sale of the McNeil
Partnerships, and otherwise took steps to prevent its participation in the
auction. In addition, plaintiffs, who are limited partners in, among
others, McNeil Funds IX, X, XI, XII, XIV, XV, XX, XXIV, XXV, XXVI and
XXVII, have also sued the defendants based on their status as opt-outs from
the Schofield settlement. Plaintiffs seek undisclosed damages and an
accounting.
On July 30, 1999, defendants filed an answer to the High River Complaint,
denying each and every material allegation contained in the High River
Complaint and asserting several affirmative defenses.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- ---------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
4. Amended and Restated Limited Partnership
Agreement dated March 30, 1992.
(Incorporated by reference to the Current
Report of the registrant on Form 8-K dated
March 30, 1992, as filed on April 10, 1992).
4.1 Amendment No. 1 to the Amended and Restated
Limited Partnership Agreement of McNeil Real
Estate Fund XXIV, L.P. dated June 1995
(incorporated by reference to the Quarterly
Report of the registrant on Form 10-Q for
the period ended June 30,1995, as filed on
August 14, 1995).
11. Statement regarding computation of 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 number of limited partnership units
outstanding. Per unit information has been
computed based on 40,000 limited partnership
units outstanding in 1999 and 1998.
27. Financial Data Schedule for the quarter
ended June 30, 1999.
(b) Reports on Form 8-K. A Report on Form 8-K dated June 24, 1999 was
filed on June 29, 1999 regarding the transaction detailed in Part 1,
Item 1, Note 7.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
McNEIL REAL ESTATE FUND XXIV, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
August 16, 1999 By: /s/ Ron K. Taylor
- --------------- ------------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
August 16, 1999 By: /s/ Carol A. Fahs
- --------------- ------------------------------------------
Date Carol A. Fahs
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,081,703
<SECURITIES> 0
<RECEIVABLES> 343,269
<ALLOWANCES> (22,324)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 20,329,571
<DEPRECIATION> (9,589,133)
<TOTAL-ASSETS> 15,432,320
<CURRENT-LIABILITIES> 0
<BONDS> 1,650,000
0
0
<COMMON> 0
<OTHER-SE> 12,713,854
<TOTAL-LIABILITY-AND-EQUITY> 15,432,320
<SALES> 1,603,697
<TOTAL-REVENUES> 1,625,823
<CGS> 684,984
<TOTAL-COSTS> 1,215,146
<OTHER-EXPENSES> 177,905
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62,779
<INCOME-PRETAX> 169,993
<INCOME-TAX> 0
<INCOME-CONTINUING> 169,993
<DISCONTINUED> 0
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<NET-INCOME> 169,993
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