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 June 30, 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 0-17173
---------
MCNEIL REAL ESTATE FUND XXVII, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-0214387
- --------------------------------------------------------------------------------
(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 XXVII, L.P.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------------- ---------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land..................................................... $ 5,387,855 $ 5,387,855
Buildings and improvements............................... 26,950,803 26,635,813
-------------- -------------
32,338,658 32,023,668
Less: Accumulated depreciation and amortization......... (7,812,287) (7,046,093)
-------------- -------------
24,526,371 24,977,575
-------------- -------------
Mortgage loan investment.................................... - 1,538,932
Less: Allowance for impairment.............................. - (177,161)
-------------- -------------
- 1,361,771
Mortgage loan investments - affiliates...................... 1,283,364 2,235,902
Cash and cash equivalents .................................. 6,817,789 5,718,657
Cash segregated for security deposits and repurchase........
of limited partnership units............................. 166,090 407,565
Accounts receivable......................................... 310,092 299,835
Accrued interest receivable................................. 11,997 23,978
Deferred borrowing costs, net of accumulated
amortization of $97,529 and $48,764 at June 30,
1996 and December 31, 1995, respectively................. 97,530 146,295
Prepaid expenses and other assets........................... 298,799 318,163
-------------- -------------
$ 33,512,032 $ 35,489,741
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Accounts payable and accrued expenses....................... $ 62,566 $ 68,471
Accrued property taxes...................................... 176,347 -
Payable to limited partners................................. - 332,928
Payable to affiliates....................................... 247,141 253,044
Security deposits and deferred rental revenue............... 243,225 204,368
-------------- -------------
729,279 858,811
-------------- -------------
Partners' equity (deficit):
Limited partners - 10,000,000 limited partnership units
authorized; 5,273,885 limited partnership units out-
standing at June 30, 1996 and December 31, 1995........ 32,898,525 34,758,220
General Partner.......................................... (115,772) (127,290)
-------------- -------------
32,782,753 34,630,930
-------------- -------------
$ 33,512,032 $ 35,489,741
============== =============
</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 XXVII, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
Revenue:
<S> <C> <C> <C> <C>
Rental revenue................ $ 1,994,657 $ 1,879,761 $ 3,930,540 $ 3,811,023
Interest income on mortgage
loan investment............. - 51,869 85,285 105,641
Interest income on mortgage
loan investments - affiliates 36,391 66,100 75,350 160,071
Other interest income......... 84,531 108,302 167,224 198,245
Property tax refund........... - - - 30,515
Gain on legal settlement...... - 1,302,324 - 1,302,324
------------- ------------- ------------- -------------
Total revenue............... 2,115,579 3,408,356 4,258,399 5,607,819
------------- ------------- ------------- -------------
Expenses:
Interest...................... 30,737 126,872 55,119 313,750
Depreciation and
amortization................ 386,382 373,657 766,194 744,670
Property taxes................ 205,470 184,897 419,046 404,817
Personnel costs............... 158,902 145,931 346,934 328,423
Utilities..................... 100,123 94,346 212,746 204,263
Repairs and maintenance....... 156,779 154,919 303,378 284,870
Property management
fees - affiliates........... 107,136 108,639 213,179 216,766
Other property operating
expenses.................... 154,634 169,337 305,494 333,980
General and administrative.... 11,431 14,965 24,754 22,758
General and administrative -
affiliates.................. 233,783 243,622 459,735 503,075
------------- ------------- ------------- -------------
Total expenses.............. 1,545,377 1,617,185 3,106,579 3,357,372
------------- ------------- ------------- -------------
Net income before
extraordinary item............ 570,202 1,791,171 1,151,820 2,250,447
Extraordinary item............... - (150,292) - (150,292)
------------- ------------- ------------- -------------
Net income....................... $ 570,202 $ 1,640,879 $ 1,151,820 $ 2,100,155
============= ============= ============= =============
Net income allocable
to limited partners........... $ 564,500 $ 1,624,470 $ 1,140,302 $ 2,079,153
Net income allocable
to General Partner............ 5,702 16,409 11,518 21,002
------------- ------------- ------------- -------------
Net income ...................... $ 570,202 $ 1,640,879 $ 1,151,820 $ 2,100,155
============= ============= ============= =============
Net income per weighted
average hundred limited
partnership units:
Net income before extra-
ordinary item............... $ 10.70 $ 33.39 $ 21.62 $ 41.95
Extraordinary item............ - (2.80) - (2.80)
------------- ----------- ------------- -------------
Net income.................... $ 10.70 $ 30.59 $ 21.62 $ 39.15
============= =========== ============= =============
Distributions per weighted
average hundred limited
partnership units............. $ - $ - $ 56.88 $ -
============ =========== ============= =============
</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 XXVII, L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------------- ---------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1994.............. $ (157,447) $ 32,105,597 $ 31,948,150
Net income................................ 21,002 2,079,153 2,100,155
------------- --------------- --------------
Balance at June 30, 1995.................. $ (136,445) $ 34,184,750 $ 34,048,305
============= =============== ==============
Balance at December 31, 1995.............. $ (127,290) $ 34,758,220 $ 34,630,930
Net income................................ 11,518 1,140,302 1,151,820
Distributions............................. - (2,999,997) (2,999,997)
------------- --------------- --------------
Balance at June 30, 1996.................. $ (115,772) $ 32,898,525 $ 32,782,753
============= =============== ==============
</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 XXVII, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------------------
1996 1995
----------------- ----------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants........................ $ 3,921,319 $ 3,925,395
Cash paid to suppliers............................ (1,148,086) (1,160,707)
Cash paid to affiliates........................... (678,817) (673,376)
Interest received................................. 252,509 212,835
Interest received from affiliates................. 87,331 187,653
Interest paid..................................... (6,355) (276,328)
Property taxes paid............................... (242,699) (221,045)
Property tax refund............................... - 30,515
Cash received from legal settlement............... - 1,302,324
Mortgage prepayment penalty paid.................. - (46,750)
--------------- --------------
Net cash provided by operating activities............ 2,185,202 3,280,516
--------------- --------------
Cash flows from investing activities:
Additions to real estate investments.............. (314,990) (365,303)
Proceeds from collection of mortgage loan
investment...................................... 1,361,771 131,981
Proceeds from collection of mortgage loan
investments - affiliates........................ 952,538 972,000
--------------- --------------
Net cash provided by investing activities............ 1,999,319 738,678
--------------- --------------
Cash flows from financing activities:
Net decrease in cash segregated for
repurchase of limited partnership units......... 247,536 249,020
Principal payments on mortgage note payable....... - (4,706,422)
Repurchase of limited partnership units........... (332,928) (332,931)
Distributions paid................................ (2,999,997) -
--------------- --------------
Net cash used in financing activities................ (3,085,389) (4,790,333)
--------------- --------------
Net increase (decrease) in cash and cash
equivalents....................................... 1,099,132 (771,139)
Cash and cash equivalents at beginning of
period............................................ 5,718,657 7,196,410
--------------- --------------
Cash and cash equivalents at end of period........... $ 6,817,789 $ 6,425,271
=============== ==============
</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 XXVII, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1996 1995
---------------- ---------------
<S> <C> <C>
Net income........................................... $ 1,151,820 $ 2,100,155
--------------- --------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 766,194 744,670
Amortization of deferred borrowing costs.......... 48,765 19,196
Allowance for impairment of mortgage loan
investment...................................... - (91,051)
Changes in assets and liabilities:
Cash segregated for security deposits........... (6,061) (660)
Accounts receivable............................. (10,257) 122,073
Accrued interest receivable..................... 11,981 27,582
Deferred borrowing costs........................ - 103,542
Prepaid expenses and other assets............... 19,364 (23,296)
Accounts payable and accrued expenses........... (5,905) 17,996
Accrued property taxes.......................... 176,347 183,772
Payable to affiliates........................... (5,903) 46,465
Security deposits and deferred rental
revenue....................................... 38,857 30,072
--------------- --------------
Total adjustments............................. 1,033,382 1,180,361
--------------- --------------
Net cash provided by operating activities............ $ 2,185,202 $ 3,280,516
=============== ==============
</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 XXVII, L.P.
Notes to Financial Statements
June 30, 1996
(Unaudited)
NOTE 1.
- -------
McNeil Real Estate Fund XXVII, L.P. (the "Partnership"), formerly known as
Southmark Prime Plus, L.P., was organized by affiliates of Southmark Corporation
("Southmark") on January 16, 1987, as a limited partnership under the provisions
of the Delaware Revised Uniform Limited Partnership Act to make short-term loans
to affiliates of the general partner. 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, 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, 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 XXVII, L.P., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, Dallas, Texas 75240.
NOTE 3.
- -------
The Partnership pays property management fees equal to 5% of the gross rental
receipts for its mini-storage warehouses 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 mini-storage warehouses and commercial properties and leasing
services for its mini-storage warehouses. 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
$30 per gross square foot for mini-storage warehouses 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:
Six Months Ended
June 30,
------------------------
1996 1995
---------- ----------
Property management fees.................... $ 213,179 $ 216,766
Charged to general and administrative -
affiliates:
Partnership administration............... 176,017 216,367
Asset management fee..................... 283,718 286,708
--------- ---------
$ 672,914 $ 719,841
========= =========
Under the terms of its amended partnership agreement, the Partnership is
expressly permitted to make loans to affiliates of the General Partner, so long
as such loans meet certain conditions, including that such loans bear interest
at a rate of prime plus 2.5%, or prime plus 3.5% if the loan is junior to other
indebtedness. These loans are secured by income-producing real estate and may be
either junior or senior to other indebtedness secured by such property. The
Partnership received repayments from affiliates of $952,538 and $972,000 during
the first six months of 1996 and 1995, respectively.
In order to induce the Partnership to lend funds to affiliates of the General
Partner, the General Partner agreed to pay (i) the difference between the
interest rate required by the Partnership's amended partnership agreement to be
charged to affiliates and the interest rate actually paid by certain of those
affiliates, and (ii) all points (1.5% or 2% if the loan is junior to other
indebtedness), closing costs and expenses. The Partnership recorded interest
income on affiliate loans of $75,350 and $160,071 for the six months ended June
30, 1996 and 1995, respectively, of which $13,588 and $13,513, respectively, was
paid or payable by the General Partner.
Payable to affiliates at June 30, 1996 and December 31, 1995 consisted primarily
of a performance incentive fee of $141,647 accrued in prior years, Partnership
general and administrative expenses, asset management fees and prepaid interest.
Except for the performance incentive fee and prepaid interest, all accrued fees
are due and payable from current operations.
<PAGE>
NOTE 4.
- -------
On March 21, 1996, the mortgage loan investment, plus accrued interest, secured
by A-Quality Mini-Storage, was paid off in full by the borrower.
NOTE 5.
- -------
The Partnership filed claims with the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division (the "Bankruptcy Court") against
Southmark for damages relating to improper overcharges, breach of contract and
breach of fiduciary duty. The Partnership settled these claims in 1991, and such
settlement was approved by the Bankruptcy Court.
An Order Granting Motion to Distribute Funds to Class 8 Claimants dated April
14, 1995 was issued by the Bankruptcy Court. In accordance with the Order, in
May 1995 the Partnership received in full satisfaction of its claims, $984,649
in cash, and common and preferred stock in the reorganized Southmark
subsequently sold for $317,675, which amounts represent the Partnership's
pro-rata share of Southmark assets available for Class 8 Claimants.
NOTE 6.
- -------
On May 9, 1995, the Partnership paid down its mortgage note payable by
$4,628,250. In connection with this repayment, the Partnership paid a prepayment
penalty of $46,750 and wrote off $103,542 of deferred borrowing costs relating
to the portion of the loan repaid, resulting in an extraordinary loss of
$150,292 in the second quarter of 1995.
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 net income for the
first six months of 1996 of $1,151,820 as compared to $2,100,155 for the first
six months of 1995. Revenues were $4,258,399 for the first six months of 1996,
down from $5,607,819 for the same period in 1995. Expenses were $3,106,579 in
1996 as compared to $3,357,372 in 1995.
Net cash provided by operating activities was $2,185,202 for the six months
ended June 30, 1996, and $3,280,516 during the same six month period in 1995.
The Partnership expended $314,990 for capital improvements, $85,392 for the
repurchase of limited partnership units (net of a decrease in cash segregated
for the repurchase of limited partnership units) and distributed $2,999,997 to
the limited partners. The Partnership received $952,538 for repayment of
affiliate loans and collected $1,361,771 of principal on its mortgage loan
investment to an unaffiliated borrower, resulting in a net increase in cash and
cash equivalents of $1,099,132 for the six months ended June 30, 1996.
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total revenue decreased by $1,292,777 and $1,349,420 for the three and six
months ended June 30, 1996, respectively, as compared to the same periods in the
prior year, as discussed below.
Rental revenue remained substantially the same for the first and second quarters
of 1996 as compared to the same periods of 1995. Rental revenue decreased at AAA
Sentry and Margate mini-storages due to slight decreases in occupancy in 1996.
Rental revenue increased at the remainder of the properties, mainly due to
increases in rental rates.
Interest income on the Partnership's mortgage loan investment to an unaffiliated
borrower (the A-Quality Mini-Storage loan) decreased by $51,869 and $20,356 for
the three and six months ended June 30, 1996, respectively, in relation to the
comparable periods in the prior year. The decrease was due to the repayment of
the loan by the borrower in the first quarter of 1996.
Interest income on mortgage loans investments - affiliates decreased by $29,709
and $84,721 for the three and six months ended June 30, 1996, respectively, as
compared to the same periods in the prior year. The decrease was mainly the
result of lower total loans outstanding in the first half of 1996. The
Partnership had $1.3 million of loans outstanding at June 30, 1996 as compared
to $2.2 million at June 30, 1995.
In the first quarter of 1995, the Partnership received a $30,515 refund of prior
years' property taxes for AAA Century Mini Storage as a result of an appeal
filed on behalf of the property. No such tax refund was received in 1996.
Other interest income decreased by $23,771 for the three months and by $31,021
for the six months ended June 30, 1995, respectively, due to the Partnership
holding a lower average amount of cash available for short-term investment in
1996.
As discussed in Item 1 - Note 5, in 1995 the Partnership received cash and
common and preferred stock in the reorganized Southmark in settlement of its
bankruptcy claims against Southmark. The Partnership recognized a $1,302,324
gain as a result of this settlement. No such gain was recognized in 1996.
In May 1995, the Partnership recognized a $150,292 extraordinary loss incurred
in connection with the pay down of its mortgage note payable as discussed in
Item 1 - Note 6. The loss consisted of a $46,750 prepayment penalty and $103,542
write off of deferred borrowing costs relating to the portion of the loan
repaid.
Expenses:
Total expenses decreased by $71,808 and $250,793 for the first three and six
months ended June 30, 1996, respectively, as compared to the same periods in the
prior year, mainly due to a decrease in interest expense, as discussed below.
<PAGE>
Interest expense decreased by $96,135 and $258,631 for the three and six months
ended June 30, 1996, respectively, in relation to the respective periods in the
prior year. The decrease was due to the repayment of the Partnership's mortgage
note payable in the third quarter of 1995. The interest expense recorded in 1996
represents amortization of deferred borrowing costs incurred in connection with
obtaining a $5 million line of credit.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership generated $2,185,202 of cash through operating activities in the
first six months of 1996 as compared to $3,280,516 for the same period in 1995.
The decrease in 1996 was mainly due to the Partnership receiving $1,302,324 from
the settlement of a lawsuit in 1995.
The Partnership received $1,361,771 of principal on its mortgage loan investment
to an unaffiliated borrower in 1996 as compared to $131,981 in 1995. The
increase was due to the balance of the mortgage loan investment being repaid in
full by the borrower in the first quarter of 1996.
The Partnership paid $4,706,422 in principal payments on its mortgage note
payable in the six months ended June 30, 1995. No principal payments were made
in 1996 since the loan was repaid in full in 1995.
The Partnership distributed $2,999,997 to the limited partners in the first
quarter of 1996. No distributions were paid to the limited partners in 1995.
Short-term liquidity:
At June 30, 1996, the Partnership held cash and cash equivalents of $6,817,789.
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 1996. The Partnership has budgeted $586,000 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.
The Partnership distributed $2,999,997 to the limited partners in the first
quarter of 1996. The Partnership anticipates making additional distributions in
the third quarter of 1996 totaling $3,000,000 to the limited partners of record
as of August 1, 1996.
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.
The Partnership acquired a $5 million line of credit in 1995 that may be used
for property operations. 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.
<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 June 30, 1996,
$4,082,159 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 30, 1997.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
HCW Pension Real Estate Fund, Ltd. et al. v. Ernst & Young, BDO Seidman et al.
(Case #92-06560-A). This suit was filed on behalf of the Partnership and other
affiliated partnerships (the "Affiliated Partnerships") on May 26, 1992, in the
14th Judicial District Court of Dallas County. The petition sought recovery
against the Partnership's former auditors, Ernst & Young, for negligence and
fraud in failing to detect and/or report overcharges of fees/expenses by
Southmark Corporation ("Southmark"), the former general partner. The former
auditors initially asserted counterclaims against the Affiliated Partnerships
based on alleged fraudulent misrepresentations made to the auditors by the
former management of the Affiliated Partnerships (Southmark) in the form of
client representation letters executed and delivered to the auditors by
Southmark management. The counterclaims sought recovery of attorneys' fees and
costs incurred in defending this action. The counterclaims were later dismissed
on appeal, as discussed below.
The trial court granted summary judgment against the Partnership based on the
statute of limitations; however, on appeal, the Dallas Court of Appeals reversed
the trial court and remanded for trial the Affiliated Partnerships' fraud claims
against Ernst & Young. The Texas Supreme Court denied Ernst & Young's
application for writ of error on January 11, 1996. The Partnership is continuing
to pursue vigorously its claims against Ernst & Young. Trial is set for the week
of October 14, 1996; however, the final outcome of this litigation cannot be
determined at this time.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Document Description
------- --------------------
4.2 Amended and Restated Partnership Agreement
of McNeil XXVII, L.P. dated March 30, 1992.
(Incorporated by reference to the Current
Report of the registrant on Form 8-K dated
March 30, 1992, as filed on April 10, 1992).
10. Mutual Release and Settlement Agreement
between Southmark Storage Associates Limited
Partnership and McNeil Real Estate Fund
XXVII, L.P. (incorporated by reference to
the Quarterly Report of the registrant on
Form 10-Q for the period ended March 31,
1995, as filed on May 15, 1995).
11. Statement regarding computation of Net
Income (Loss) per Hundred Limited Part-
nership Units. Net income (loss) per one
hundred limited partnership units is
computed by dividing net income (loss)
allocated to the limited partners by the
weighted average number of limited partner-
ship units outstanding (expressed in
hundreds). Per unit information has been
omputed based on 52,739 and 53,109 weighted
average limited partnership units (in
hundreds) outstanding in 1996 and 1995.
27. Financial Data Schedule for the quarter
ended June 30, 1996.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended June 30, 1996.
<PAGE>
MCNEIL REAL ESTATE FUND XXVII, 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 XXVII, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
August 14, 1996 By: /s/ Donald K. Reed
- --------------------- ---------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
August 14, 1996 By: /s/ Ron K. Taylor
- --------------------- ---------------------------------------
Date Ron K. Taylor
Acting Chief Financial Officer of
McNeil Investors, Inc.
August 14, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,817,789
<SECURITIES> 0
<RECEIVABLES> 310,092
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 32,338,658
<DEPRECIATION> (7,812,287)
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0
0
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</TABLE>
