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 September 30, 1997
----------------------------------------------------
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 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>
MCNEIL REAL ESTATE FUND XXV, L.P.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----------------- --------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land..................................................... $ 4,205,425 $ 5,524,462
Buildings and improvements............................... 47,374,116 65,777,015
-------------- -------------
51,579,541 71,301,477
Less: Accumulated depreciation and amortization......... (26,450,623) (32,569,829)
-------------- -------------
25,128,918 38,731,648
Asset held for sale......................................... 12,095,875 -
Cash and cash equivalents................................... 2,417,718 3,256,746
Cash segregated for security deposits....................... 345,679 314,762
Note receivable............................................. - 344,225
Accounts receivable, net of allowance for doubtful
accounts of $677,123 at September 30, 1997 and
December 31, 1996........................................ 707,836 791,836
Escrow deposits............................................. 9,186 75,327
Deferred borrowing costs, net of accumulated
amortization of $83,604 and $76,755 at September
30, 1997 and December 31, 1996, respectively............. 235,146 241,995
Prepaid expenses and other assets........................... 340,933 349,317
-------------- -------------
$ 41,281,291 $ 44,105,856
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Mortgage note payable....................................... $ 7,170,048 $ 7,381,507
Accounts payable and accrued expenses....................... 156,905 995,763
Accrued interest............................................ 61,244 178,277
Accrued property taxes...................................... 403,969 502,142
Payable to affiliates....................................... 55,740 146,998
Land lease obligation....................................... 217,066 246,332
Deferred gain............................................... - 344,225
Security deposits and deferred rental revenue............... 374,891 329,291
-------------- -------------
8,439,863 10,124,535
-------------- -------------
Partners' equity (deficit):
Limited partners - 84,000,000 limited partnership units
authorized; 82,943,685 limited partnership units
issued and outstanding at September 30, 1997
and December 31, 1996.................................... 33,302,202 34,440,696
General Partner.......................................... (460,774) (459,375)
-------------- -------------
32,841,428 33,981,321
-------------- -------------
$ 41,281,291 $ 44,105,856
============== =============
</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 Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
1997 1996 1997 1996
-------------- --------------- -------------- --------------
Revenue:
<S> <C> <C> <C> <C>
Rental revenue................ $ 2,431,573 $ 2,345,344 $ 7,002,469 $ 6,966,508
Interest...................... 40,205 60,740 113,886 179,047
------------- ------------- ------------- -------------
Total revenue............... 2,471,778 2,406,084 7,116,355 7,145,555
------------- ------------- ------------- -------------
Expenses:
Interest...................... 200,570 214,469 617,583 645,949
Depreciation and
amortization................ 652,488 809,493 2,281,376 2,410,061
Property taxes................ 205,914 194,787 616,600 625,825
Personnel costs............... 203,556 202,226 629,352 625,073
Utilities..................... 260,868 264,272 613,345 630,331
Repairs and maintenance....... 261,326 240,343 778,138 764,067
Property management
fees - affiliates........... 135,779 132,040 403,170 402,121
Other property operating
expenses.................... 175,081 193,459 575,633 579,986
General and administrative.... 38,818 97,899 122,477 175,198
General and administrative -
affiliates.................. 202,960 216,371 618,579 677,988
------------- ------------- ------------- -------------
Total expenses.............. 2,337,360 2,565,359 7,256,253 7,536,599
------------- ------------- ------------- -------------
Net income (loss)................ $ 134,418 $ (159,275) $ (139,898) $ (391,044)
============= ============= ============= =============
Net income (loss) allocable
to limited partners........... $ 133,074 $ (157,683) $ (138,499) $ (387,134)
Net income (loss) allocable
to General Partner............ 1,344 (1,592) (1,399) (3,910)
------------- ------------- ------------- -------------
Net income (loss)................ $ 134,418 $ (159,275) $ (139,898) $ (391,044)
============= ============= ============= =============
Net income (loss) per thousand
limited partnership units..... $ 1.60 $ (1.88) $ (1.67) $ (4.61)
============= ============= ============= =============
Distributions per thousand
limited partnership units..... $ 6.03 $ 2.98 $ 12.06 $ 2.98
============= ============= ============= =============
</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 Nine Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity (Deficit)
--------------- --------------- ----------------
<S> <C> <C> <C>
Balance at December 31, 1995.............. $ (433,599) $ 37,898,581 $ 37,464,982
Rescission of 1,009,777 limited
partnership units...................... - (1,771,535) (1,771,535)
Net loss.................................. (3,910) (387,134) (391,044)
Distributions............................. - (250,006) (250,006)
------------- ------------- -------------
Balance at September 30, 1996............. $ (437,509) $ 35,489,906 $ 35,052,397
============= ============= =============
Balance at December 31, 1996.............. $ (459,375) $ 34,440,696 $ 33,981,321
Net loss.................................. (1,399) (138,499) (139,898)
Distributions............................. - (999,995) (999,995)
------------- ------------- -------------
Balance at September 30, 1997............. $ (460,774) $ 33,302,202 $ 32,841,428
============= ============= =============
</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 (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------------
1997 1996
----------------- ----------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants........................ $ 7,094,948 $ 7,033,285
Cash paid to suppliers............................ (3,561,895) (2,954,739)
Cash paid to affiliates........................... (1,113,007) (1,113,898)
Interest received................................. 113,886 179,047
Interest paid..................................... (727,767) (450,947)
Property taxes paid and escrowed.................. (629,952) (617,713)
--------------- --------------
Net cash provided by operating activities............ 1,176,213 2,075,035
--------------- --------------
Cash flows from investing activities:
Additions to real estate investments.............. (774,521) (1,034,558)
--------------- --------------
Cash flows from financing activities:
Principal payments on mortgage note
payable......................................... (211,459) -
Payments on capitalized land lease
obligation...................................... (29,266) (22,301)
Distributions paid................................ (999,995) (250,006)
--------------- --------------
Net cash used in financing activities................ (1,240,720) (272,307)
--------------- --------------
Net increase (decrease) in cash and
cash equivalents.................................. (839,028) 768,170
Cash and cash equivalents at beginning of
period............................................ 3,256,746 3,987,381
--------------- --------------
Cash and cash equivalents at end of period........... $ 2,417,718 $ 4,755,551
=============== ==============
</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>
Nine Months Ended
September 30,
-----------------------------------------
1997 1996
----------------- ----------------
<S> <C> <C>
Net loss............................................. $ (139,898) $ (391,044)
--------------- --------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization..................... 2,281,376 2,410,061
Amortization of deferred borrowing costs.......... 6,849 6,849
Changes in assets and liabilities:
Cash segregated for security deposits........... (30,917) (12,302)
Accounts receivable, net........................ 84,000 58,717
Escrow deposits................................. 66,141 827,560
Prepaid expenses and other assets............... 8,384 112,075
Accounts payable and accrued expenses........... (838,858) (539,418)
Accrued interest................................ (117,033) (306,572)
Accrued property taxes.......................... (98,173) (71,617)
Payable to affiliates........................... (91,258) (33,789)
Security deposits and deferred rental
revenue....................................... 45,600 14,515
--------------- --------------
Total adjustments............................. 1,316,111 2,466,079
--------------- --------------
Net cash provided by operating activities............ $ 1,176,213 $ 2,075,035
=============== ==============
</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
September 30, 1997
(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 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 nine months ended September 30, 1997
are not necessarily indicative of the results to be expected for the year ending
December 31, 1997.
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, 1996, 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 The Herman Group, 2121 San Jacinto
St., 26th Floor, Dallas, Texas 75201.
NOTE 3.
- -------
Certain prior period amounts have been reclassified 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 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.
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner or its affiliates are as follows:
Nine Months Ended
September 30,
----------------------------
1997 1996
------------ -----------
Property management fees.................... $ 403,170 $ 402,121
Charged to general and administrative
expense:
Partnership administration............... 125,592 175,328
Asset management fee..................... 492,987 502,660
----------- ----------
$ 1,021,749 $ 1,080,109
=========== ==========
Payable to affiliates at September 30, 1997 and December 31, 1996 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 5.
- -------
In October 1992, the Partnership restructured a lease with a major tenant of the
Kellogg Building. In connection with the restructuring, the tenant signed a
promissory note in the amount of $500,000 and the Partnership recorded a
deferred gain as a result of this transaction. The deferred gain was amortized
as payments on the note were received. The tenant defaulted on the note and no
payments were received in 1996 or 1995. The balance of the note and the
corresponding deferred gain were $344,225 at December 31, 1996. In July 1997,
the Partnership received $60,000 in full settlement of the promissory note,
which was recognized as rental revenue on the Statements of Operations.
<PAGE>
NOTE 6.
- -------
Effective January 1, 1993, the Partnership ceased making regularly scheduled
debt service and escrow payments on the mortgage note payable secured by Harbour
Club I Apartments. In lieu of the aforementioned payments, the Partnership was
funding debt service with the excess cash flow of the property. The Partnership
had been notified that the mortgage note payable was in default. Effective
January 23, 1997, the mortgage note payable was sold by the United States
Department of Housing and Urban Development to an unaffiliated lender. In July
1997, the mortgage note was brought current after the Partnership made all
delinquent payments and late charges. Regular monthly mortgage payments were
resumed in July 1997.
NOTE 7.
- -------
In 1996, the Partnership adopted the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement requires the cessation of depreciation on assets held for sale.
Since Northwest Plaza was placed on the market for sale, no depreciation was
taken effective August 1, 1997.
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, 1996. The Partnership reported a net loss of
$139,898 for the first nine months of 1997 as compared to a net loss of $391,044
for the first nine months of 1996. Revenue in 1997 decreased slightly to
$7,116,355 from $7,145,555 in 1996, and expenses dropped to $7,256,253 from
$7,536,599.
Net cash provided by operating activities was $1,176,213 for the nine months
ended September 30, 1997. The Partnership expended $774,521 for capital
improvements, $211,459 for principal payments on its mortgage note payable and
$29,266 for payments on the capitalized land lease obligation. After
distributions of $999,995 to the limited partners, cash and cash equivalents
totaled $2,417,718 at September 30, 1997, a net decrease of $839,028 from the
balance at December 31, 1996.
Effective January 1, 1993, the Partnership ceased making regularly scheduled
debt service and escrow payments on the mortgage note payable secured by Harbour
Club I Apartments. In lieu of the aforementioned payments, the Partnership was
funding debt service with the excess cash flow of the property. The Partnership
had been notified that the mortgage note payable was in default. Effective
January 23, 1997, the mortgage note payable was sold by the United States
Department of Housing and Urban Development to an unaffiliated lender. In July
1997, the mortgage note was brought current after the Partnership made all
delinquent payments and late charges. Regular monthly mortgage payments were
resumed in July 1997.
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total Partnership revenue increased by $65,694 for the three months ended
September 30, 1997 and decreased by $29,200 for the nine months ended September
30, 1997, as compared to the same periods in 1996. The overall decrease was due
to a decrease in interest income. This increase was partially offset by an
increase in rental revenue, mainly in the third quarter of 1997, as discussed
below.
Rental revenue increased by $86,229 for the three months and by $35,961 for the
nine months ended September 30, 1997, as compared to the same periods in 1996.
In the third quarter of 1997, the Partnership received $60,000 in full
settlement of a note receivable from a tenant of the Kellogg Building as further
discussed in Item 1, Note 5. Collections on the note receivable were recorded as
rental revenue since the note represented rental payments due to the property.
In addition, increases in rental revenue of approximately $64,000 and $43,000 at
Kellogg Building and Harbour Club I Apartments were due to increased rental
rates in 1997. These increases were partially offset by decreases of
approximately $88,000 and $25,000 at Northwest Plaza Office Building and Century
Park Office Building, respectively due to decreases in average occupancy in
1997.
Interest income decreased by $20,535 and $65,161 for the three and nine months
ended September 30, 1997, respectively, as compared to the same periods in 1996
due to a lower amount of cash available for short-term investment in 1997. The
Partnership held $2.4 million of cash and cash equivalents at September 30, 1997
as compared to $4.8 million at September 30, 1996.
Expenses:
Total expenses decreased by $227,999 and $280,346 for the three and nine months
ended September 30, 1997, respectively, as compared to the same periods in 1996.
The decrease was primarily due to decreases in depreciation and amortization and
general and administrative expenses, as discussed below.
Depreciation and amortization expense for the three and nine months ended
September 30, 1997 decreased by $157,005 and $128,685, respectively, in relation
to the prior year. The decrease was mainly due to Northwest Plaza being
classified as an asset held for sale by the Partnership effective August 1,
1997. In accordance with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," the Partnership
ceased recording depreciation on the asset at the time it was placed on the
market for sale.
General and administrative expenses decreased by $59,081 for the three months
and by $52,721 for the nine months ended September 30, 1997, as compared to the
same periods in 1996. The decrease was mainly due to a decrease in costs
incurred relating to evaluation and dissemination of information regarding an
unsolicited tender offer. This decrease was partially offset by approximately
$30,000 of costs incurred for investor services which were paid to an unrelated
third party in 1997. In 1996, such costs were paid to an affiliate of the
General Partner and were included in general and administrative - affiliates on
the Statements of Operations.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flow provided by operating activities was $1,176,213 for the first nine
months of 1997 as compared to $2,075,035 provided during the same period in
1996. The decrease in cash provided by operating activities in 1997 was mainly
due to an increase in cash paid to suppliers and interest paid. In February
1997, the Partnership was required to pay the plaintiffs' attorneys $690,000 for
legal expenses for a lawsuit relating to the rescission of limited partnership
units. In 1997, defaulted interest of $184,000 was paid in addition to the
required monthly cash flow payment on the mortgage secured by Harbour Club I.
The Partnership expended $774,521 and $1,034,558 for additions to its real
estate investments during the nine months ended September 30, 1997 and 1996,
respectively. A greater amount was spent in 1996 at Harbour Club I for paving,
roofing and hallway upgrades, and at Northwest Plaza for asbestos remediation.
In 1997, a greater amount was expended for tenant improvements at Century Park.
During the nine months ended September 30, 1997, the Partnership made $211,459
in principal payments on its mortgage note payable secured by Harbour Club I to
cure the default. No such principal payments were made in 1996.
The Partnership distributed $999,995 and $250,006 to the limited partners in the
first nine months of 1997 and 1996, respectively.
Short-term liquidity:
At September 30, 1997, the Partnership held cash and cash equivalents of
$2,417,718. This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its properties.
For the remainder of 1997, 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. In July 1997, the mortgage note of Harbour Club I was brought
current after making all the delinquent payments and late charges. Regular
monthly mortgage payments were resumed in July 1997. The Partnership has
budgeted approximately $1,416,000 for necessary capital improvements for all
properties in 1997 which is expected to be funded from available cash reserves
or from operations of the properties.
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 outlook for maintenance of adequate levels of liquidity is favorable,
should operations deteriorate and present cash resources be insufficient for
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.
The Partnership has determined to begin orderly liquidation of all its assets.
Although there can be no assurance as to the timing of the liquidation due to
real estate market conditions, the general difficulty of disposing of real
estate, and other general economic factors, it is anticipated that such
liquidation would result in the dissolution of the Partnership followed by a
liquidating distribution to the limited partners by December 1999. In this
regard, the Partnership placed Northwest Plaza on the market for sale effective
August 1, 1997.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil,
Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd.,
McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund
XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of
the State of California for the County of Los Angeles, Case No. BC133799 (Class
and Derivative Action Complaint).
The action involves purported class and derivative actions brought by limited
partners of each of the fourteen limited partnerships that were named as nominal
defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their fiduciary duties and certain obligations under the respective Amended
Partnership Agreement. Plaintiffs allege that Defendants have rendered such
Units highly illiquid and artificially depressed the prices that are available
for Units on the resale market. Plaintiffs also allege that Defendants engaged
in a course of conduct to prevent the acquisition of Units by an affiliate of
Carl Icahn by disseminating purportedly false, misleading and inadequate
information. Plaintiffs further allege that Defendants acted to advance their
own personal interests at the expense of the Partnerships' public unit holders
by failing to sell Partnership properties and failing to make distributions to
unitholders.
<PAGE>
On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs are suing for breach of fiduciary duty, breach of contract and an
accounting, alleging, among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive, that these fees should
be reduced retroactively and that the respective Amended Partnership Agreements
governing the Partnerships are invalid.
Defendants filed a demurrer to the consolidated and amended complaint and a
motion to strike on February 14, 1997, seeking to dismiss the consolidated and
amended complaint in all respects. A hearing on Defendant's demurrer and motion
to strike was held on May 5, 1997. The Court granted Defendants' demurrer,
dismissing the consolidated and amended complaint with leave to amend. On
October 31, 1997, the Plaintiffs filed a second consolidated and amended
complaint. Defendants intend to file a demurrer to the second consolidated and
amended complaint on or before December 1, 1997.
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 82,944 and 83,895 weighted average
thousand limited partnership units
outstanding in 1997 and 1996, respectively.
27. Financial Data Schedule for the quarter
ended September 30, 1997.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended September 30, 1997.
<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
November 13, 1997 By: /s/ Ron K. Taylor
- ----------------- -------------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
November 13, 1997 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,417,718
<SECURITIES> 0
<RECEIVABLES> 1,384,959
<ALLOWANCES> (677,123)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 51,579,541
<DEPRECIATION> (26,450,623)
<TOTAL-ASSETS> 41,281,291
<CURRENT-LIABILITIES> 0
<BONDS> 7,170,048
0
0
<COMMON> 0
<OTHER-SE> 32,841,428
<TOTAL-LIABILITY-AND-EQUITY> 41,281,291
<SALES> 7,002,469
<TOTAL-REVENUES> 7,116,355
<CGS> 3,616,238
<TOTAL-COSTS> 5,897,614
<OTHER-EXPENSES> 741,056
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 617,583
<INCOME-PRETAX> (139,898)
<INCOME-TAX> 0
<INCOME-CONTINUING> (139,898)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (139,898)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
