McNeil Partnerships to Merge With an Affiliate of Whitehall
DALLAS, Texas, June 25, 1999 -- McNeil Partners, L.P., a privately held sponsor
of real estate partnerships, and WXI/McN Realty L.L.C., an affiliate of
Whitehall Street Real Estate Limited Partnership XI, a real estate investment
fund managed by Goldman, Sachs & Co., today announced that they have entered
into a definitive acquisition agreement whereby the Whitehall affiliate will
acquire by merger nineteen real estate limited partnerships operated by McNeil
Partners, L.P. and Robert A. McNeil. The limited partnerships involved are
McNeil Real Estate Funds IX, X, XI, XII, XIV, XV, XX, XXI, XXII, XXIII, XXIV,
XXV, XXVI and XXVII, Hearth Hollow Associates, McNeil Midwest Properties,
Regency North Associates, Fairfax Associates and McNeil Summerhill
(collectively, the "Partnerships"). The Partnerships (other than Fairfax
Associates and McNeil Summerhill which are wholly-owned by Robert A. McNeil and
related parties) will be merged with subsidiaries of WXI/McN Realty L.L.C. The
acquisition agreement also provides for the acquisition by WXI/McN Realty of the
assets of McNeil Real Estate Management, Inc. ("McREMI"), the real estate
investment and management company controlled by Robert A. McNeil. The aggregate
consideration in the transaction, including all outstanding mortgage debt of the
Partnerships, is approximately $644,440,000.
Pursuant to the terms of the acquisition agreement, the limited partners in each
of the Partnerships (other than those wholly-owned by Robert A. McNeil) will
receive cash on the closing date of the transaction in exchange for their
limited partnership interests. In addition, each Partnership will make a special
distribution to its limited partners on the closing date of the transaction
equal to its then net positive working capital balance. McNeil Partners, L.P.
will receive an equity interest in WXI/McN Realty in exchange for its
contribution of its general partnership interests in the Partnerships, the
limited partnership interests in its wholly owned Partnerships and the assets of
McREMI.
The proposed transaction follows an extensive marketing effort by PaineWebber
Incorporated, exclusive financial advisor to the Partnerships.
The transaction has been unanimously approved by the Board of Directors of
McNeil Investors, Inc., the general partner of McNeil Partners, L.P., the
general partner of each of the Partnerships other than Regency North, Fairfax
Associates and McNeil Summerhill. The respective general partners of Regency
North, Fairfax Associates and McNeil Summerhill also have approved the
transaction. The Board of Directors of McNeil Investors based its approval upon,
among other things, the recommendation of a Special Committee of the Board,
appointed at the beginning of the discussions with Whitehall to represent the
interests of holders of limited partnership interests in each of the
Partnerships. In addition, the Special Committee and the Board relied upon
fairness opinions given by Robert A. Stanger & Co., Inc. ("Stanger & Co."), an
independent financial advisor to the Partnerships, to the effect that the
aggregate consideration is fair to the holders of each class of limited
partnership interests in each Partnership. The Special Committee's
recommendation was also based upon the separate opinions of Eastdil Realty
Company, the independent financial advisor to the Special Committee. Stanger &
Co. and Eastdil have each also rendered an opinion that the aggregate
consideration to be paid for the general partnership interests and limited
partnership interests in all of the Partnerships and the assets of McREMI is
fair from a financial point of view to the holders of each class of limited
partnership interests in each of the Partnerships.
Each Partnership's participation in the transaction is subject to, among other
conditions, the approval by a majority of the limited partners of that
Partnership. The approval of the limited partners of the Partnerships will be
sought at meetings to be held in the coming months after the filing of proxy
statements with the Securities and Exchange Commission with respect to the
publicly traded Partnerships, and the subsequent mailing of proxy statements to
the limited partners.
The aggregate consideration in the transaction has been allocated preliminarily
among the general partnership interests and the limited partnership interests in
each of the Partnerships and McREMI, based upon an allocation analysis prepared
by Stanger & Co. and confirmed by Eastdil. Based upon this allocation analysis
and the fairness opinions rendered by Stanger & Co. and Eastdil, the Special
Committee, the Board of Directors of McNeil Investors, the respective general
partners of Regency North, Fairfax Associates and McNeil Summerhill have each
unanimously approved the allocation of the aggregate consideration. The
estimated aggregate consideration and working capital distribution to be
received per unit of limited partnership interest, is currently estimated as
follows:
Estimated
Consideration and
Working Capital Distribution
Partnership Per Unit
- ----------- ----------------------------
McNeil Real Estate Fund IX $ 424
McNeil Real Estate Fund X 234
McNeil Real Estate Fund XI 221
McNeil Real Estate Fund XII 77
McNeil Real Estate Fund XIV 214
McNeil Real Estate Fund XV 160
McNeil Real Estate Fund XX 92
McNeil Real Estate Fund XXI* 99
McNeil Real Estate Fund XXII* 0.25
McNeil Real Estate Fund XXIII* 0.28
McNeil Real Estate Fund XXIV 347
McNeil Real Estate Fund XXV 0.50
McNeil Real Estate Fund XXVI 0.27
McNeil Real Estate Fund XXVII 10.54
Hearth Hollow Associates 40,115
McNeil Midwest Properties 25,840
Regency North Associates 75,916
Fairfax Associates 450,065
McNeil Summerhill 9,309
* Current Income Units ONLY
McNeil Partners, L.P. will contribute its real estate investment and management
company business to a subsidiary of WXI/McN Realty, L.L.C., along with its
general partnership interests in the Partnerships and its limited partnership
interests in the wholly-owned Partnerships, having an aggregate allocated value,
as determined by Stanger & Co., of approximately $58,640,000, of which
approximately $29,400,000 reflects balances due to McNeil and affiliates as
reflected on the Partnership financial statements as of March 31, 1999.
The above estimates of the per unit estimated merger consideration and working
capital distribution and the interest of McNeil Partners, L.P. are based upon,
among other things, the balance sheet of each Partnership as of March 31, 1999,
adjusted for intangible assets, non-cash liabilities, transaction expenses and
the McNeil Partners, L.P. interest in each Partnership. The McNeil Partners,
L.P. interest in each Partnership includes all amounts payable to McNeil
Partners, L.P. as reflected on the balance sheet as of March 31, 1999, the
McNeil Partners, L.P. general partnership interest in respect of its capital
contribution less the deficit restoration obligation of McNeil Partners, L.P.
pursuant to the partnership agreements. Actual amounts, including the estimate
allocable to McNeil Partners, L.P., will vary with the performance of the
Partnership and McNeil Partners, L.P. through the closing date. The above
estimated merger consideration and special working capital distribution will be
adjusted at closing to reflect the then working capital position of each
Partnership.
Robert and Carole McNeil stated that: "We are very pleased to have entered into
this transaction that will result in the McNeil Partnerships being sold to
Whitehall on a basis which we believe is very favorable to our limited partners.
The price reflects the quality and dedication of our management team who, over
the past 8 years, have worked to optimize the value of these properties. We also
believe that this transaction will provide shorter term liquidity to our limited
partners than would have been obtainable had the partnerships been liquidated on
an individual basis."
Whitehall Street Real Estate Limited Partnership XI is a $2.26 billion equity
fund and is the seventh in a series of funds sponsored and capitalized by
Goldman, Sachs & Co. and its affiliates, along with public and private
investors, to acquire real estate worldwide.
This release contains statements based on current expectations. All of these
statements are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are not historical and involve risks and uncertainties. Each
Partnership's financial results for future periods may differ materially due to
several factors. These factors include, but are not limited to, the
Partnership's ability to control costs, make necessary capital improvements and
respond to changing economic and competitive factors. With respect to each
publicly held Partnership, further information on the factors that could affect
such Partnership's financial results is included in such Partnership's SEC
filings.
SOURCE McNeil Partners, L.P.