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, 1995
-------------------------------------------------
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 0-14007
MCNEIL REAL ESTATE FUND XX, L.P.
- - - - - -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 33-0050225
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240
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(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
--- ---
MCNEIL REAL ESTATE FUND XX, L.P.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- - - - - ------ --------------------
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
--------- ----------
ASSETS
- - - - - ------
Real estate investments:
Land..................................................... $ 699,697 $ 699,697
Buildings and improvements............................... 6,012,114 6,001,172
---------- ---------
6,711,811 6,700,869
Less: Accumulated depreciation.......................... (843,882) (762,675)
---------- ---------
5,867,929 5,938,194
Mortgage loan investments, net of allowance of
$792,013 at March 31, 1995 and
December 31, 1994........................................ 3,645,126 3,684,406
Mortgage loan investment - affiliate........................ 733,900 733,900
Cash and cash equivalents .................................. 3,666,121 3,734,020
Cash segregated for security deposits....................... 62,764 56,480
Interest and other accounts receivable...................... 59,990 50,244
Escrow deposits............................................. 163,371 128,642
Deferred borrowing costs, net of accumulated
amortization of $21,322 and $18,137 at March 31,
1995 and December 31, 1994, respectively................. 140,172 143,357
Prepaid expenses and other assets........................... 8,245 14,868
---------- ----------
$14,347,618 $14,484,111
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- - - - - -----------------------------------------
Mortgage note payable, net.................................. $2,792,289 $2,802,303
Accounts payable and other accrued expenses................. 89,337 79,726
Accrued property taxes...................................... 153,237 112,216
Payable to affiliates - General Partner..................... 23,055 19,449
Deferred gain............................................... 175,994 150,053
Security deposits and deferred rental income................ 73,736 54,851
--------- ---------
3,307,648 3,218,598
--------- ---------
Partners' equity (deficit):
Limited partners - 60,000 limited partnership units
authorized; 49,512 limited partnership units issued
and outstanding at March 31, 1995 and December 31, 1994.. 11,360,396 11,586,184
General Partner........................................... (320,426) (320,671)
---------- ----------
11,039,970 11,265,513
---------- ----------
$14,347,618 $14,484,111
========== ==========
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
MCNEIL REAL ESTATE FUND XX, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
----------------------------
1995 1994
-------- --------
Revenue:
Rental revenue............................................... $ 328,983 $ 272,450
Interest income on mortgage loan investments................. 68,220 141,621
Interest income on mortgage loan investment - affiliate...... 15,137 15,136
Other interest income........................................ 50,453 28,949
-------- --------
Total revenue.............................................. 462,793 458,156
-------- --------
Expenses:
Interest..................................................... 63,421 61,371
Depreciation................................................. 81,207 62,741
Property taxes............................................... 46,788 37,371
Personnel costs.............................................. 49,543 35,763
Utilities.................................................... 20,333 24,068
Repairs and maintenance...................................... 29,783 23,952
Property management fees - affiliates........................ 15,500 12,867
Other property operating expenses............................ 19,671 13,931
General and administrative................................... 16,610 15,737
General and administrative - affiliates...................... 95,479 92,153
-------- --------
Total expenses............................................. 438,335 379,954
-------- --------
Net income..................................................... $ 24,458 $ 78,202
======== =======
Net income allocable to limited partners....................... $ 24,213 $ 77,420
Net income allocable to General Partner........................ 245 782
-------- --------
Net income..................................................... $ 24,458 $ 78,202
======== ========
Net income per limited partnership unit........................ $ .49 $ 1.56
======== ========
Distributions per limited partnership unit...................... $ 5.05 $ -
======== ========
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
MCNEIL REAL ESTATE FUND XX, L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Three months Ended March 31, 1995 and 1994
Total
General Limited Partners'
Partner Partners Equity
-------- ---------- ----------
Balance at December 31, 1993.............. $(321,560) $11,748,097 $11,426,537
Net income................................ 782 77,420 78,202
-------- ---------- ----------
Balance at March 31, 1994................. $(320,778) $11,825,517 $11,504,739
======== ========== ==========
Balance at December 31, 1994.............. $(320,671) $11,586,184 $11,265,513
Net income................................ 245 24,213 24,458
Distributions............................. - (250,001) (250,001)
-------- ---------- ----------
Balance at March 31, 1995................. $(320,426) $11,360,396 $11,039,970
======== ========== ==========
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
MCNEIL REAL ESTATE FUND XX, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
Three Months Ended
March 31,
--------------------------------
1995 1994
-------- --------
Cash flows from operating activities:
Cash received from tenants........................ $ 340,881 $ 268,776
Cash paid to suppliers............................ (118,172) (135,075)
Cash paid to affiliates........................... (107,373) (118,277)
Interest received................................. 138,982 143,672
Interest received from affiliates................. 12,221 12,221
Interest paid..................................... (58,551) (56,773)
Property taxes paid............................... (5,767) (15,718)
Property taxes escrowed........................... (36,678) (25,467)
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Net cash provided by operating activities............ 165,543 73,359
--------- ---------
Cash flows from investing activities:
Additions to real estate investments.............. (10,942) (60,559)
Collection of principal on mortgage loan
investments..................................... 39,280 15,166
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Net cash provided by (used in) investing
activities...................................... 28,338 (45,393)
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage note payable....... (11,779) (10,835)
Distributions paid................................ (250,001) -
--------- ---------
Net cash used in financing activities................ (261,780) (10,835)
--------- ---------
Net increase (decrease) in cash and cash
equivalents....................................... (67,899) 17,131
Cash and cash equivalents at beginning of
period............................................ 3,734,020 3,811,021
--------- ---------
Cash and cash equivalents at end of period........... $3,666,121 $3,828,152
========= =========
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
MCNEIL REAL ESTATE FUND XX, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income to Net Cash Provided by
Operating Activities
Three Months Ended
March 31,
------------------------------
1995 1994
------ ------
Net income........................................... $ 24,458 $78,202
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Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation...................................... 81,207 62,741
Amortization of deferred borrowing costs.......... 3,185 2,994
Amortization of discount on mortgage note
payable......................................... 1,765 1,678
Changes in assets and liabilities:
Cash segregated for security deposits........... (6,284) (8,439)
Interest and other accounts receivable.......... (9,746) (30,070)
Escrow deposits................................. (34,729) (13,782)
Prepaid expenses and other assets............... 6,623 (3,213)
Accounts payable and other accrued
expenses...................................... 9,611 (30,170)
Accrued property taxes.......................... 41,021 21,652
Payable to affiliates - General Partner......... 3,606 (13,257)
Deferred gain................................... 25,941 -
Security deposits and deferred rental
income........................................ 18,885 5,023
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Total adjustments............................. 141,085 (4,843)
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Net cash provided by operating activities............ $165,543 $73,359
======= ======
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
MCNEIL REAL ESTATE FUND XX, L.P.
Notes to Financial Statements
March 31, 1995
(Unaudited)
NOTE 1.
- - - - - ------
McNeil Real Estate Fund XX, L.P. (the "Partnership"), formerly known as
Southmark Income Investors, Ltd., was organized on July 19, 1984 as a limited
partnership under the provisions of the California Revised Uniform Limited
Partnership Act. 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 three months ended March 31, 1995 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1995.
NOTE 2.
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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, 1994, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XX, L.P., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, Dallas, Texas 75240.
NOTE 3.
- - - - - ------
Certain prior period amounts have been reclassified to conform to the current
period presentation.
NOTE 4.
- - - - - ------
The Partnership pays property management fees equal to 5% of the gross rental
receipts for its properties to McNeil Real Estate Management, Inc. ("McREMI"),
an affiliate of the General Partner, for providing property management services.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The Partnership is paying an asset management fee which is payable to the
General Partner. Through 1999, the asset management fee is calculated as 1% of
the Partnership's tangible asset value. Tangible asset value is determined by
using the greater of (i) an amount calculated by applying a capitalization rate
of 9% to the annualized net operating income of each property or (ii) a value of
$10,000 per apartment unit to arrive at the property tangible asset value or
(iii) on 1130 Sacramento, the net book value of the property is used. 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 and its affiliates are as follows:
Three Months Ended
March 31,
------------------------------
1995 1994
------ ------
Property management fees............................. $ 15,500 $ 12,867
Charged to general and administrative - affiliates:
Partnership administration........................ 53,417 50,869
Asset management fee.............................. 42,062 41,284
------ ------
$110,979 $105,020
======= =======
Payable to affiliates - General Partner at March 31, 1995 and December 31, 1994
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 May 1994, the Idlewood Nursing Home mortgage loan investment was modified,
extending the maturity date to March 1999 and reducing the interest rate on the
loan from 12% to 8.5%. Unpaid accrued interest of $82,566 for November 1993
through February 1994 was added to the principal balance at March 1, 1994 and is
no longer considered interest. Monthly payments of principal and interest were
reduced from $25,067 to $17,286 beginning April 1, 1994. In February 1995, the
Idlewood Nursing Home mortgage loan investment was again modified. The interest
rate remained at 8.5% and the maturity date was changed to February 1, 1998. The
borrower paid the Partnership $33,200 in cash at the date of modification and
the monthly payments on the loan were changed such that cash flow from
operations of the property, with a minimum payment of $9,130, are due monthly.
In February 1995, the Lakeland Nursing Home mortgage loan investment was
modified extending the maturity date to February 1, 1999. The interest rate and
monthly payment amount remain the same. The borrower paid a $25,941 extension
fee which the Partnership recorded as a deferred gain.
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 Sterling Springs
Apartments or 1130 Sacramento since December 31, 1994.
The Partnership reported net income of $24,458 for the first three months of
1995 as compared to $78,202 for the same period in 1994. Revenues in 1995 were
$462,793 as compared to $458,156 in 1994, while expenses increased to $438,335
from $379,954.
Net cash provided by operating activities was $165,543 for the three months
ended March 31, 1995, a change from the $73,359 provided during the same three
month period in 1994. The Partnership expended $10,942 for capital improvements,
made $11,779 in principal payments on its mortgage note payable, and collected
$39,280 of principal on mortgage loan investments. After distributions of
$250,001 to the limited partners, cash and cash equivalents totaled $3,666,121
at March 31, 1995, a net decrease of $67,899 from the balance at December 31,
1994.
RESULTS OF OPERATIONS
- - - - - ---------------------
Revenue:
Total revenue increased by $4,637 for the three month period ended March 31,
1995, as compared to the same period in 1994. The increase was due to an
increase in rental revenue which was offset by a decrease in interest income on
mortgage loan investments as discussed below.
Rental revenue for the three month period ended March 31, 1995 increased by
$56,533 as compared to the same period in 1994. The increase was due to an
increase in rental rates at Sterling Springs Apartments in February 1995. Also
contributing to the increase in rental revenue was the increase in the occupancy
rate at 1130 Sacramento from 25% at March 31, 1994 to 100% at March 31, 1995.
Interest income on mortgage loan investments decreased by $73,401 for the three
months ended March 31, 1995, as compared to the same period in 1994 due to the
modification of the Idlewood Nursing Home mortgage loan investment in February
1995 (See Item 1-Note 5). In accordance with Statement of Financial Accounting
Standards No. 114 "Accounting by Creditors for Impairment of a Loan"
("SFAS 114"), which the Partnership adopted in 1994, the Partnership has ceased
accruing interest on the loan and all payments received are recorded as a
reduction of principal.
Other interest income earned on short-term investments of cash and cash
equivalents increased by $21,504 for the three month period ended March 31, 1995
as compared to the respective period in 1994. The increase was mainly due to an
increase in interest rates earned on invested cash during the first quarter of
1995.
Expenses:
Total expenses for the three month period ended March 31, 1995 increased
by $58,381, as compared to the respective period in 1994.
Depreciation expense increased by $18,466 for the three months ended March 31,
1995, as compared to the same period in 1994. The increase was primarily due to
the addition of depreciable capital improvements at Sterling Springs Apartments
and 1130 Sacramento Condominiums.
Property taxes for the three months ended March 31, 1995 increased by $9,417, as
compared to the same period in 1994. The increase was mainly due to an increase
in the property tax liability at 1130 Sacramento due to an increase in the
assessed taxable value of the property after its completion in early 1994.
Personnel costs increased by $13,780 for the three months ended March 31, 1995
as compared to the respective period in 1994. The increase was due to an
increase in bonuses paid at Sterling Springs and 1130 Sacramento, the result of
an increase in the overall performance of the properties in the first quarter of
1995.
Repairs and maintenance expense increased by $5,831 for the first three months
of 1995, as compared to the first three months of 1994, due to an increase in
parking lot repairs and electrical repairs at 1130 Sacramento.
Property management fees increased by $2,633 in the three months ended March 31,
1995, as compared to 1994, due to an increase in gross rental receipts, on which
the fees are based, at 1130 Sacramento Condominiums and Sterling Springs
Apartments.
Other property operating expenses increased by $5,740 for the first quarter of
1995 as compared to the same quarter in 1994. The increase was mainly due to an
increase in property insurance at Sterling Springs, the result of a refund
received from the insurance company in the first quarter of 1994. No such refund
was received in the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
- - - - - -------------------------------
The Partnership generated $165,543 through operating activities for the first
three months of 1995 as compared to $73,359 for the first three months of 1994.
The increase in 1995 was mainly due to an increase in cash received from tenants
(see discussion of increase in rental revenue above).
The Partnership expended $10,942 and $60,559 for capital improvements to its
properties in the first quarter of 1995 and 1994, respectively. 1994 includes
improvements to 1130 Sacramento for which construction was completed early in
1994.
The Partnership collected $39,280 of principal on its mortgage loan investments
in the first three months of 1995 as compared to $15,166 collected in the same
period in 1994. As previously discussed, in accordance with SFAS 114, all
payments received on the Idlewood Nursing Home mortgage loan investment have
been recorded as a reduction of principal in 1995.
The Partnership distributed $250,001 to the limited partners in the first
quarter of 1995 from cash from operations. No distributions were made in the
first quarter of 1994.
Short-term liquidity:
- - - - - --------------------
At March 31, 1995, the Partnership held cash and cash equivalents of $3,666,121.
This balance provides a reasonable level of working capital for the Partnerships
immediate needs in operating its properties.
In 1995, operations of Sterling Springs Apartments and 1130 Sacramento are
expected to provide sufficient positive cash flow for normal operations.
Management will perform routine repairs and maintenance on the properties to
preserve and enhance their value and competitiveness in the market. The
Partnership has budgeted to spend approximately $86,000 on capital improvements
to its properties in 1995, which are expected to be funded from operations of
the properties.
For 1995, management expects that cash from operations of its properties and
principal and interest collections on the mortgage loan investments, along with
the present balance of cash and cash equivalents held, will allow the
Partnership to meet its obligations as they come due.
Long-term liquidity:
- - - - - -------------------
Only one property, Sterling Springs Apartments, is encumbered with mortgage
debt. The mortgage on this property is not due until 2003.
In the event that the Partnership acquires ownership of other properties through
foreclosure, the cash and cash equivalent balances presently held will provide a
source for the maintenance and improvement of the properties. Because the timing
and number of properties which may be foreclosed is uncertain, there is no
assurance that the balances presently held will be sufficient for needed capital
improvements. At present, there are no commitments nor any known needs for
improvements to the properties securing the Partnership's loans. The Partnership
has no existing lines of credit from outside sources.
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, 1995,
$2,102,530 remained available for borrowing under the facility; however,
additional funds could become available as other partnerships repay existing
borrowings.
Another possible source of funds is the sale of the Partnership's mortgage loan
investments or properties securing the Partnership's mortgage loans. Such sales
are possibilities only, and since the Partnership does not control the
properties securing its loans, sales of those properties may occur only if
initiated by the borrower or in the event of foreclosure by the Partnership.
There is no assurance that any sales can be contracted or closed to coincide
with the Partnership's future cash needs. For the long term, the Partnership
will remain dependent on operations of the properties it owns or of the
properties securing its loans as the primary source of debt repayment, until the
properties can be sold.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - - - - ------ --------------------------------
(a) Exhibits.
Exhibit
Number Document Description
------- --------------------
4. Amended and Restated Limited Partnership Agreement dated March 30, 1992.
(Incorporated by reference to the Current Report of the registrant on Form 8-K
dated March 30, 1992, as filed on April 10, 1992).
11. Statement regarding computation of Net Income per Limited Partnership Unit: Net
income perlimited partnership unit is computed by dividing net income allocated
to the limited partners by the weighted average number of limited partnership
units outstanding. Per unit information has been computed based on 49,512 and
49,524 limited partnership units outstanding in 1995 and 1994, respectively.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended March 31, 1995.
MCNEIL REAL ESTATE FUND XX, 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 XX, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
May 15, 1995 By: /s/ Donald K. Reed
- - - - - ------------------------------ -------------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
May 15, 1995 By: /s/ Robert C. Irvine
- - - - - ------------------------------ -------------------------------------------
Date Robert C. Irvine
Chief Financial Officer of McNeil Investors, Inc.
Principal Financial Officer
May 15, 1995 By: /s/ Carol A. Fahs
- - - - - ------------------------------ -------------------------------------------
Date Carol A. Fahs
Chief Accounting Officer of McNeil Real Estate
Management, Inc.