UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended March 31, 1996
------------------------------------------------------
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 0-15446
MCNEIL REAL ESTATE FUND XXV, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 33-0120335
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 448-5800
------------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
<PAGE>
MCNEIL REAL ESTATE FUND XXV, L.P.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------------- --------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land..................................................... $ 5,524,462 $ 5,524,462
Buildings and improvements............................... 64,569,687 64,330,457
-------------- -------------
70,094,149 69,854,919
Less: Accumulated depreciation and amortization......... (30,105,067) (29,234,446)
-------------- -------------
39,989,082 40,620,473
Cash and cash equivalents................................... 4,369,093 3,987,381
Cash segregated for security deposits....................... 302,472 300,223
Note receivable............................................. 344,225 344,225
Accounts receivable, net of allowance for doubtful
accounts of $714,050 at March 31, 1996 and
December 31, 1995........................................ 852,280 802,426
Escrow deposits............................................. 904,005 979,938
Deferred borrowing costs, net of accumulated
amortization of $69,906 and $67,623 at March 31,
1996 and December 31, 1995, respectively................. 248,844 251,127
Prepaid expenses and other assets........................... 434,225 438,148
-------------- -------------
$ 47,444,226 $ 47,723,941
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage note payable....................................... $ 7,381,507 $ 7,381,507
Accounts payable and accrued expenses....................... 482,355 694,624
Accrued interest............................................ 738,491 686,502
Accrued property taxes...................................... 371,245 450,530
Payable to affiliates - General Partner..................... 259,508 98,407
Land lease obligation....................................... 270,184 277,132
Deferred gain............................................... 344,225 344,225
Security deposits and deferred rental revenue............... 339,736 326,032
-------------- -------------
10,187,251 10,258,959
-------------- -------------
Partners' equity (deficit):
Limited partners - 84,000,000 limited partnership
units authorized; 83,894,648 limited partnership
units issued and outstanding at March 31, 1996
and December 31, 1995.................................. 37,692,654 37,898,581
General Partner.......................................... (435,679) (433,599)
-------------- -------------
37,256,975 37,464,982
-------------- -------------
$ 47,444,226 $ 47,723,941
============== =============
</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 XXV, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1996 1995
-------------- --------------
Revenue:
<S> <C> <C>
Rental revenue............................................... $ 2,309,392 $ 2,061,322
Interest..................................................... 56,130 47,501
------------- -------------
Total revenue.............................................. 2,365,522 2,108,823
------------- -------------
Expenses:
Interest..................................................... 216,136 206,426
Depreciation and amortization................................ 870,621 856,497
Property taxes............................................... 238,501 185,034
Personnel costs.............................................. 230,575 199,301
Utilities.................................................... 187,276 187,731
Repairs and maintenance...................................... 238,558 309,410
Property management fees - affiliates........................ 128,129 121,383
Other property operating expenses............................ 193,786 207,921
General and administrative................................... 42,391 24,870
General and administrative - affiliates...................... 227,556 224,005
------------- -------------
Total expenses............................................. 2,573,529 2,522,578
------------- -------------
Net loss....................................................... $ (208,007) $ (413,755)
============= =============
Net loss allocable to limited partners......................... $ (205,927) $ (409,617)
Net loss allocable to General Partner.......................... (2,080) (4,138)
------------- -------------
Net loss....................................................... $ (208,007) $ (413,755)
============= =============
Net loss per thousand limited partnership units................ $ (2.45) $ (4.88)
============= =============
</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 XXV, L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1994.............. $ (374,160) $ 43,783,028 $ 43,408,868
Net loss.................................. (4,138) (409,617) (413,755)
------------- ------------- -------------
Balance at March 31, 1995................. $ (378,298) $ 43,373,411 $ 42,995,113
============= ============= =============
Balance at December 31, 1995.............. $ (433,599) $ 37,898,581 $ 37,464,982
Net loss.................................. (2,080) (205,927) (208,007)
------------- ------------- -------------
Balance at March 31, 1996................. $ (435,679) $ 37,692,654 $ 37,256,975
============= ============= =============
</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 XXV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------------
1996 1995
----------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants........................ $ 2,272,161 $ 2,104,676
Cash paid to suppliers............................ (1,040,342) (894,772)
Cash paid to affiliates........................... (194,584) (364,606)
Interest received................................. 56,130 47,501
Interest paid..................................... (161,864) (128,828)
Property taxes paid and escrowed.................. (303,611) (239,483)
--------------- --------------
Net cash provided by operating activities............ 627,890 524,488
--------------- --------------
Cash flows from investing activities:
Additions to real estate investments.............. (239,230) (376,915)
--------------- --------------
Cash flows from financing activities:
Payments on capitalized land lease
obligation...................................... (6,948) (9,821)
--------------- --------------
Net increase in cash and cash equivalents............ 381,712 137,752
Cash and cash equivalents at beginning of
period............................................ 3,987,381 3,125,937
--------------- --------------
Cash and cash equivalents at end of period........... $ 4,369,093 $ 3,263,689
=============== ==============
</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 XXV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Loss to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------------
1996 1995
----------------- -----------------
<S> <C> <C>
Net loss............................................. $ (208,007) $ (413,755)
--------------- ---------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization..................... 870,621 856,497
Amortization of deferred borrowing costs.......... 2,283 2,284
Changes in assets and liabilities:
Cash segregated for security deposits........... (2,249) (8,831)
Accounts receivable, net........................ (49,854) 43,154
Escrow deposits................................. 75,933 117,858
Prepaid expenses and other assets............... 3,923 36,252
Accounts payable and accrued expenses........... (212,269) 7,322
Accrued interest................................ 51,989 75,314
Accrued property taxes.......................... (79,285) (188,365)
Payable to affiliates - General Partner......... 161,101 (19,218)
Security deposits and deferred rental
revenue....................................... 13,704 15,976
--------------- --------------
Total adjustments............................. 835,897 938,243
--------------- --------------
Net cash provided by operating activities............ $ 627,890 $ 524,488
=============== ==============
</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 XXV, L.P.
Notes to Financial Statements
March 31, 1996
(Unaudited)
NOTE 1.
- -------
McNeil Real Estate Fund XXV, L.P. (the "Partnership"), formerly known as
Southmark Equity Partners II, Ltd., was organized on February 15, 1985 as a
limited partnership under the provisions of the California Revised Limited
Partnership Act to acquire and operate commercial and residential properties.
The general partner of the Partnership is McNeil Partners, L.P. (the "General
Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil
("McNeil"). The principal place of business for the Partnership and the General
Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the three months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1996.
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, 1995, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XXV, L.P., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
The Partnership pays property management fees equal to 5% of the gross rental
receipts for its residential property 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.
<PAGE>
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 property and $50 per gross square
foot for commercial properties to arrive at the property tangible asset value.
The property tangible asset value is then added to the book value of all other
assets excluding intangible items. The fee percentage decreases subsequent to
1999. Accrued but unpaid asset management fees totaled $193,436 at March 31,
1996.
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner or its affiliates are as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------------
1996 1995
---------------- ---------------
<S> <C> <C>
Property management fees............................. $ 128,129 $ 121,383
Charged to general and administrative
expense:
Partnership administration........................ 62,570 72,561
Asset management fee.............................. 164,986 151,444
--------------- --------------
$ 355,685 $ 345,388
=============== ==============
</TABLE>
Payable to affiliates - General Partner at March 31, 1996 and December 31, 1995
consisted primarily of unpaid property management fees, Partnership general and
administrative expenses and asset management fees and are due and payable from
current operations.
NOTE 4.
- -------
Martha Hess, et al. v. Southmark Equity Partners II, Ltd. (presently known as
McNeil Real Estate Fund XXV, L.P.), Southmark Income Investors, Ltd, Southmark
Equity Partners, Ltd., Southmark Realty Partners III, Ltd., and Southmark Realty
Partners II, Ltd., et al. ("Hess"); Kotowski v. Southmark Equity Partners, Ltd.
and Donald Arceri v. Southmark Income Investors, Ltd. These cases were
previously pending in the Illinois Appellate Court for the First District
("Appellate Court"), as consolidated Case No. 90-107. Consolidated with these
cases are an additional 14 matters against unrelated partnership entities. The
Hess case was filed on May 20, 1988, by Martha Hess, individually and on behalf
<PAGE>
of a putative class of those similarly situated. The original, first, second and
third amended complaints in Hess sought rescission, pursuant to the Illinois
Securities Act, of over $2.7 million of principal invested in five Southmark
(now McNeil) partnerships, and other relief including damages for breach of
fiduciary duty and violation of the Illinois Consumer Fraud and Deceptive
Business Practices Act. The original, first, second and third amended complaints
in Hess were dismissed against the defendant-group because the Appellate Court
held that they were not the proper subject of a class action complaint. Hess
was, thereafter, amended a fourth time to state causes of action against
unrelated partnership entities. Hess went to judgment against that unrelated
entity and the judgment, along with the prior dismissal of the class action, was
appealed. The Hess appeal was decided by the Appellate Court during 1992. The
Appellate Court affirmed the dismissal of the breach of fiduciary duty and
consumer fraud claims. The Appellate Court did, however, reverse in part,
holding that certain putative class members could file class action complaints
against the defendant-group. Although leave to appeal to the Illinois Supreme
Court was sought, the Illinois Supreme Court refused to hear the appeal. The
effect of the denial is that the Appellate Court's opinion remains standing. On
June 15, 1994, the Appellate Court issued its mandate sending the case back to
trial court.
In late January 1995, the plaintiffs filed a Motion to File an Amended
Consolidated Class Action Complaint, which amends the complaint to name McNeil
Partners, L.P. as the successor general partner to Southmark Investment Group.
In February 1995, the plaintiffs filed a Motion for Class Certification. The
amended cases against the defendant-group, and others, are proceeding under the
caption George and Joy Kugler v. I.R.E. Real Estate Income Fund, Jerry and
Barbara Neumann v. Southmark Equity Partners II, Richard and Theresa
Bartoszewski v. Southmark Realty Partners III, and Edward and Rose Weskerna v.
Southmark Realty Partners II.
In September 1995, the court granted the plaintiffs' Motion to File an Amended
Complaint, to Consolidate and for Class Certification. The defendants have
answered the complaint and have plead that the plaintiffs did not give timely
notice of their right to rescind within six months of knowing that right. The
Court ruled on Plaintiff's Motion for Summary Judgment on April 25, 1996 and
entered partial summary judgment, holding in favor of Plaintiffs against the
Partnership, as well as the initial general partners. The Court did not enter
judgment as to the amount of damages, but, instead, set a May 17, 1996 status
hearing and requested both parties to come to an agreement on the amount of
damages by that date. The ultimate resolution of this litigation could result in
a loss of up to $1.8 million in addition to related legal fees. No accrual has
been recorded related to this litigation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
There has been no significant change in the operations of the Partnership's
properties since December 31, 1995. The Partnership reported a net loss of
$208,007 for the first three months of 1996 as compared to a net loss of
$413,755 for the first three months of 1995. Revenues in 1996 were $2,365,522 as
compared to $2,108,823 in 1995, while expenses increased to $2,573,529 from
$2,522,578.
<PAGE>
Net cash provided by operating activities was $627,890 for the three months
ended March 31, 1996, a change from $524,488 provided during the same three
month period in 1995. The Partnership expended $239,230 for capital improvements
and $6,948 for payments on the capitalized land lease obligation. The balance in
cash and cash equivalents increased to $4,369,093 at March 31, 1996, a net
increase of $381,712 from the balance at December 31, 1995.
Harbour Club I Apartments has continued to experience financial difficulties.
The cash flow from operations of the property has not been sufficient to fund
necessary capital improvements and to make the required monthly debt service
payments. Effective January 1, 1993, the Partnership ceased making regularly
scheduled debt service and escrow payments. In lieu of the aforementioned
payments, the Partnership is funding debt service with the excess cash flow of
the property. The Partnership has been notified that the mortgage note payable
is in default and that the servicing agent has assigned the mortgage to the
Department of Housing and Urban Development ("HUD"). If the Partnership is
unable to successfully cure the default, the mortgagee could declare the entire
indebtedness due and proceed with foreclosure on the property or pursue other
actions such as gaining control of the property or placing it in receivership.
As of March 31, 1996, no steps have been taken toward foreclosure.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total revenue increased by $256,699 for the three months ended March 31, 1996 as
compared to the same period in 1995. The increase was mainly due to an increase
in rental revenue, as discussed below.
Rental revenue for the three months ended March 31, 1996 increased by $248,070
as compared to the three months ended March 31, 1995. The increase was mainly
due to increases of approximately $97,000, $72,000, and $53,000 at Century Park,
Kellogg Building and Fidelity Plaza, respectively. These increases were the
result of increases in the occupancy rates at March 31, 1996 as compared to
March 31, 1995. Century Park occupancy went from 89% to 95%, Kellogg Building
increased from 83% to 98% and Fidelity Plaza went from 82% to 87%.
Interest income earned on short-term investments of cash and cash equivalents
increased by $8,629 for the quarter ended March 31, 1996 as compared to the
respective quarter in 1995. The increase was due to greater average cash
balances invested in these accounts during the first three months of 1996. The
Partnership held $4.4 million of cash and cash equivalents at March 31, 1996 as
compared to $3.3 million at March 31, 1995.
Expenses:
Total expenses increased by $50,951 for the three months ended March 31, 1996 as
compared to the same period in 1995. The increase was primarily due to an
increase in property taxes and personnel costs, partially offset by a decrease
in repair and maintenance expenses, as discussed below.
Property taxes increased by $53,467 for the quarter ended March 31, 1996 in
relation to the same quarter in 1995. The increase was mainly due to an increase
in the assessed taxable value of Kellogg Office Building by taxing authorities.
<PAGE>
Personnel costs increased by $31,274 for the three months ended March 31, 1996
in relation to the comparable period in 1995. The increase was mainly due to the
addition of two maintenance technicians at Fidelity Plaza office building.
Repairs and maintenance expense decreased by $70,852 for the quarter ended March
31, 1996 in relation to the same quarter in 1995. The decrease was mainly due to
a decline in contracted repairs expense at Fidelity Plaza, the result of the
hiring of two maintenance technicians. In addition, Fidelity Plaza experienced a
decline in light bulbs and fixtures expense in the first quarter of 1996.
For the first quarter of 1996, general and administrative expenses increased by
$17,521. The increase was due to costs incurred by the Partnership to defend
class action litigation.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities
which generated $627,890 of cash in the first three months of 1996 as compared
to $524,488 for the same period in 1995. The increase in cash provided by
operating activities in 1996 was mainly the result of an increase in cash
received from tenants in 1996. See discussion of increase in rental revenue
above.
The Partnership expended $239,230 and $376,915 for additions to its real estate
investments in the first three months of 1996 and 1995, respectively. The
decrease in 1996 was mainly the result of the reduction of capital improvements
at Fidelity Plaza in 1996.
Short-term liquidity:
At March 31, 1996, the Partnership held cash and cash equivalents of $4,369,093.
This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its properties.
For the remainder of 1996, Partnership properties are expected to provide
positive cash flow from operations after payment of debt service and capital
improvements. Only one property, Harbour Club I Apartments, is encumbered with
mortgage debt and another property, Fidelity Plaza, is encumbered with lease
obligations. The Partnership has budgeted $1,906,859 for necessary capital
improvements for all properties in 1996 which is expected to be funded from
available cash reserves or from operations of the properties. An escrow account
restricted to the funding of priority capital needs is held by the lender for
Harbour Club I in the amount of $332,407, which is included in escrow deposits
on the Balance Sheets. The present cash balance is believed to provide an
adequate reserve for property operations.
Due to the Partnership's projected cash needs for capital improvements, the
uncertain outcome of the lawsuit involving the sale of the Partnership's Units
(see Item 1 - Legal Proceedings) and the default on the Harbour Club I mortgage
loan, the Partnership does not anticipate making distributions to the limited
partners in 1996. There can be no assurance as to when the Partnership will
rebuild cash reserves judged adequate to resume distributions to the partners.
<PAGE>
The General Partner has established a revolving credit facility not to exceed
$5,000,000 in the aggregate which is available on a "first-come, first-served"
basis to the Partnership and other affiliated partnerships if certain conditions
are met. Borrowings under the facility may be used to fund deferred maintenance,
refinancing obligations and working capital needs. There is no assurance that
the Partnership will receive any funds under the facility because no amounts are
reserved for any particular partnership. As of March 31, 1996, $2,662,819
remained available for borrowing under the facility; however, additional funds
could become available as other partnerships repay existing borrowings. This
commitment will terminate on March 26, 1997.
Long-term liquidity:
While the outlook for maintenance of adequate levels of liquidity is favorable,
should operations deteriorate and present cash resources become insufficient to
fund current needs, the Partnership would require other sources of working
capital. No such sources have been identified. The Partnership has no
established lines of credit from outside sources. Other possible actions to
resolve cash deficiencies include refinancings, deferral of capital expenditures
on Partnership properties except where improvements are expected to increase the
competitiveness and marketability of the properties, arranging financing from
affiliates or the ultimate sale of the properties. Sales and refinancings are
possibilities only, and there are at present no plans for any such sales or
refinancings.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
Martha Hess, et al. v. Southmark Equity Partners II, Ltd. (presently known as
McNeil Real Estate Fund XXV, L.P.), Southmark Income Investors, Ltd, Southmark
Equity Partners, Ltd., Southmark Realty Partners III, Ltd., and Southmark Realty
Partners II, Ltd., et al. ("Hess"); Kotowski v. Southmark Equity Partners, Ltd.
and Donald Arceri v. Southmark Income Investors, Ltd. These cases were
previously pending in the Illinois Appellate Court for the First District
("Appellate Court"), as consolidated Case No. 90-107. Consolidated with these
cases are an additional 14 matters against unrelated partnership entities. The
Hess case was filed on May 20, 1988, by Martha Hess, individually and on behalf
of a putative class of those similarly situated. The original, first, second and
third amended complaints in Hess sought rescission, pursuant to the Illinois
Securities Act, of over $2.7 million of principal invested in five Southmark
(now McNeil) partnerships, and other relief including damages for breach of
fiduciary duty and violation of the Illinois Consumer Fraud and Deceptive
Business Practices Act. The original, first, second and third amended complaints
in Hess were dismissed against the defendant-group because the Appellate Court
held that they were not the proper subject of a class action complaint. Hess
was, thereafter, amended a fourth time to state causes of action against
unrelated partnership entities. Hess went to judgment against that unrelated
entity and the judgment, along with the prior dismissal of the class action, was
appealed. The Hess appeal was decided by the Appellate Court during 1992. The
Appellate Court affirmed the dismissal of the breach of fiduciary duty and
consumer fraud claims. The Appellate Court did, however, reverse in part,
holding that certain putative class members could file class action complaints
against the defendant-group. Although leave to appeal to the Illinois Supreme
Court was sought, the Illinois Supreme Court refused to hear the appeal. The
effect of the denial is that the Appellate Court's opinion remains standing. On
June 15, 1994, the Appellate Court issued its mandate sending the case back to
trial court.
<PAGE>
In late January 1995, the plaintiffs filed a Motion to File an Amended
Consolidated Class Action Complaint, which amends the complaint to name McNeil
Partners, L.P. as the successor general partner to Southmark Investment Group.
In February 1995, the plaintiffs filed a Motion for Class Certification. The
amended cases against the defendant-group, and others, are proceeding under the
caption George and Joy Kugler v. I.R.E. Real Estate Income Fund, Jerry and
Barbara Neumann v. Southmark Equity Partners II, Richard and Theresa
Bartoszewski v. Southmark Realty Partners III, and Edward and Rose Weskerna v.
Southmark Realty Partners II.
In September 1995, the court granted the plaintiffs' Motion to File an Amended
Complaint, to Consolidate and for Class Certification. The defendants have
answered the complaint and have plead that the plaintiffs did not give timely
notice of their right to rescind within six months of knowing that right. The
Court ruled on Plaintiff's Motion for Summary Judgment on April 25, 1996 and
entered partial summary judgment, holding in favor of Plaintiffs against the
Partnership, as well as the initial general partners. The Court did not enter
judgment as to the amount of damages, but, instead, set a May 17, 1996 status
hearing and requested both parties to come to an agreement on the amount of
damages by that date. The ultimate resolution of this litigation could result in
a loss of up to $1.8 million in addition to related legal fees. No accrual has
been recorded related to this litigation.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
4. Amended and Restated Limited Partnership
Agreement dated March 26, 1992 (incorporated
by reference to the Current Report of the
registrant on Form 8-K dated March 26, 1992,
as filed on April 9, 1992).
4.1 Amendment No. 1 to the Amended and Restated
Limited Partnership Agreement of McNeil Real
Estate Fund XXV, 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 Loss
per Thousand Limited Partnership Units: Net
loss per thousand limited partnership units
is computed by dividing net loss allocated
to the limited partners by the weighted
average number of limited partnership units
outstanding expressed in thousands. Per
thousand unit information has been computed
based on 83,895 weighted average thousand
limited partnership units outstanding in
1996 and 1995.
27. Financial Data Schedule for the quarter
ended March 31, 1996.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended March 31, 1996.
<PAGE>
MCNEIL REAL ESTATE FUND XXV, 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 XXV, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
May 15, 1996 By: /s/ Donald K. Reed
- ------------------- ----------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
May 15, 1996 By: /s/ Ron K. Taylor
- ------------------- ----------------------------------------
Date Ron K. Taylor
Acting Chief Financial Officer of
McNeil Investors, Inc.
May 15, 1996 By: /s/ Carol A. Fahs
- ------------------- ----------------------------------------
Date Carol A. Fahs
Chief Accounting Officer of McNeil
Real Estate Management, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
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