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, 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 0-14258
MCNEIL REAL ESTATE FUND XV, LTD.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2941516
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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 XV, LTD.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1995 1994
------------- ------------
ASSETS
Real estate investments:
Land..................................................... $ 7,087,195 $ 7,087,195
Buildings and improvements............................... 44,485,693 43,721,466
----------- -----------
51,572,888 50,808,661
Less: Accumulated depreciation.......................... (19,905,545) (18,472,016)
----------- -----------
31,667,343 32,336,645
Cash and cash equivalents................................... 4,537,638 3,284,547
Cash segregated for security deposits....................... 240,174 244,994
Accounts receivable......................................... 27,046 11,488
Prepaid expenses and other assets........................... 46,351 85,623
Escrow deposits............................................. 487,173 278,490
Deferred borrowing costs (net of accumulated
amortization of $179,225 and $124,350 at
September 30, 1995 and December 31, 1994,
respectively)............................................ 855,890 788,384
----------- -----------
$ 37,861,615 $ 37,030,171
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Mortgage notes payable, net................................. $ 26,524,157 $ 25,443,252
Accounts payable............................................ 103,540 26,499
Accrued property taxes...................................... 239,337 212,148
Accrued expenses............................................ 216,873 79,404
Accrued interest............................................ 193,616 188,816
Payable to affiliates - General Partner..................... 66,308 56,915
Security deposits and deferred rental income................ 273,583 267,359
----------- -----------
27,617,414 26,274,393
----------- -----------
Partners' equity (deficit):
Limited partners - 120,000 limited partnership units
authorized; 102,836 and 102,846 limited partnership
units issued and outstanding at September 30, 1995
and December 31, 1994, respectively.................... 10,616,878 11,104,028
General Partner.......................................... (372,677) (348,250)
----------- -----------
10,244,201 10,755,778
----------- -----------
$ 37,861,615 $ 37,030,171
=========== ===========
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 XV, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Revenue:
Rental revenue................ $1,970,982 $2,104,782 $5,802,600 $5,735,546
Interest...................... 59,585 26,473 160,925 87,273
Gain on legal settlement...... - - 35,263 -
--------- --------- --------- ---------
Total revenue............... 2,030,567 2,131,255 5,998,788 5,822,819
--------- --------- --------- ---------
Expenses:
Interest...................... 605,922 598,178 1,793,579 1,800,758
Depreciation.................. 477,843 494,284 1,433,529 1,424,182
Property taxes................ 100,455 100,341 301,365 301,023
Personnel expenses............ 230,980 212,111 650,127 607,033
Utilities..................... 100,610 91,778 280,112 270,261
Repair and maintenance........ 228,267 206,670 600,536 595,244
Property management
fees - affiliates........... 98,560 95,739 291,064 281,131
Other property operating
expenses.................... 120,645 106,226 364,161 318,993
General and administrative.... 167,459 26,933 200,964 70,545
General and administrative -
affiliates.................. 60,408 60,177 185,006 176,392
--------- --------- --------- ---------
Total expenses.............. 2,191,149 1,992,437 6,100,443 5,845,562
--------- --------- --------- ---------
Net income (loss)................ $ (160,582) $ 138,818 $ (101,655) $ (22,743)
========= ========= ========= =========
Net income (loss) allocable to
limited partners.............. $ (71,861) $ 43,275 $ (487,150) $ (309,959)
Net income allocable to
General Partner............... 127,222 95,543 385,495 287,216
--------- --------- --------- ---------
Net income (loss)................ $ 55,361 $ 138,818 $ (101,655) $ (22,743)
========= ========= ========= =========
Net loss per limited
partnership unit.............. $ (.70) $ (.42) $ (4.74) $ (3.01)
========= ========= ========= =========
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 XV, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Nine Months Ended September 30, 1995 and 1994
Total
General Limited Partners'
Partner Partners Equity
--------- ----------- -----------
Balance at December 31, 1993.............. $(331,992) $12,137,721 $11,805,729
Net income (loss)......................... 287,216 (309,959) (22,743)
Contingent Management Incentive
Distribution........................... (385,297) - (385,297)
Limited partner distribution.............. - (500,000) (500,000)
-------- ---------- ----------
Balance at September 30, 1994............. $(430,073) $11,327,762 $10,897,689
======== ========== ==========
Balance at December 31, 1994.............. $(348,250) $11,104,028 $10,755,778
Net income (loss)......................... 385,495 (487,150) (101,655)
Contingent Management Incentive
Distribution........................... (409,922) - (409,922)
-------- ---------- ---------
Balance at September 30, 1995............. $(372,677) $10,616,878 $10,244,201
======== ========== ==========
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 XV, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
Nine Months Ended
September 30,
-----------------------------------
1995 1994
----------- -----------
Cash flows from operating activities:
Cash received from tenants........................ $ 5,791,655 $ 5,738,106
Cash received from legal settlement............... 35,263 -
Cash paid to suppliers............................ (1,942,825) (1,774,666)
Cash paid to affiliates........................... (476,769) (457,341)
Interest received................................. 160,925 87,273
Interest paid..................................... (1,696,984) (1,751,410)
Property taxes paid............................... (375,721) (234,127)
Deferred borrowing costs paid..................... (122,381) -
---------- ----------
Net cash provided by operating activities............ 1,373,163 1,607,835
---------- ----------
Cash flows from investing activities:
Additions to real estate investments.............. (764,227) (642,556)
---------- ----------
Cash flows from financing activities:
Proceeds from refinancing of mortgage notes
payable......................................... 1,367,557 -
Principal payments on mortgage notes
payable......................................... (323,572) (308,680)
Contingent Management Incentive
Distribution.................................... (399,830) (301,458)
---------- ----------
Net cash provided by (used in) financing
activities........................................ 644,155 (610,138)
---------- ----------
Net increase in cash and cash equivalents............ 1,253,091 355,141
Cash and cash equivalents at beginning of
period............................................ 3,284,547 3,610,676
---------- ----------
Cash and cash equivalents at end of period........... $ 4,537,638 $ 3,965,817
========== ==========
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 XV, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Loss to Net Cash Provided by
Operating Activities
Nine Months Ended
September 30,
-----------------------------------
1995 1994
----------- -----------
Net loss............................................. $ (101,655) $ (22,743)
--------- ---------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation...................................... 1,433,529 1,424,182
Amortization of discounts on mortgage
notes payable................................... 36,920 35,195
Amortization of deferred borrowing costs.......... 54,875 50,352
Changes in assets and liabilities:
Cash segregated for security deposits........... 4,820 (35,507)
Accounts receivable............................. (15,558) 16,040
Prepaid expenses and other assets............... 39,272 (30,739)
Escrow deposits................................. (208,683) (66,746)
Deferred borrowing costs........................ (122,381) -
Accounts payable................................ 77,041 82,455
Accrued property taxes.......................... 27,189 159,394
Accrued expenses................................ 137,469 (2,625)
Accrued interest................................ 4,800 (36,199)
Payable to affiliates - General Partner......... (699) 182
Security deposits and deferred rental
income........................................ 6,224 34,594
--------- ---------
Total adjustments............................. 1,474,818 1,630,578
--------- ---------
Net cash provided by operating activities............ $1,373,163 $1,607,835
========= =========
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 XV, LTD.
Notes to Financial Statements
(Unaudited)
September 30, 1995
NOTE 1.
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McNeil Real Estate Fund XV, Ltd. (the "Partnership") was organized June 26, 1984
as a limited partnership organized under the provisions of the California
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. The Partnership is governed by an amended and
restated limited partnership agreement, dated October 11, 1991 (the "Amended
Partnership Agreement"). The principal place of business for the Partnership and
the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the nine months ended September 30, 1995
are not necessarily indicative of the results to be expected for the year ending
December 31, 1995.
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, 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 XV, Ltd., c/o McNeil Real Estate Management, Inc.,
Investor Relations, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
Certain reclassifications have been made to prior period amounts to conform with
current year presentation.
NOTE 4.
- -------
The Partnership pays property management fees equal to 5% of gross rental
receipts of the Partnership's properties to McNeil Real Estate Management, Inc.
("McREMI"), an affiliate of the General Partner, for providing property
management services and leasing services.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
Under terms of the Amended Partnership Agreement, the Partnership is paying a
Management Incentive Distribution ("MID") to the General Partner. The maximum
MID is calculated as 1% of the tangible asset value of the Partnership. The
maximum MID percentage decreases subsequent to 1999. 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 property 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. Prior to July 1,
1993, the MID consists of two components: (i) the fixed portion which is payable
without respect to the net income of the Partnership and is equal to 25% of the
maximum MID (the "Fixed MID") and (ii) a contingent portion which is payable
only to the extent of the lesser of the Partnership's excess cash flow, as
defined, or net operating income (the "Entitlement Amount") and is equal to up
to 75% of the maximum MID (the "Contingent MID").
Effective July 1, 1993, the General Partner amended the Amended Partnership
Agreement as a settlement to a class action complaint. This amendment eliminates
the Fixed MID portion and makes the entire MID payable to the extent of the
Entitlement Amount. In all other respects the calculation and payment of the MID
remain the same.
Fixed MID was payable in limited partnership units ("Units") unless the
Entitlement Amount exceeded the amount necessary to pay the Contingent MID, in
which case, at the General Partner's option, the Fixed MID could have been paid
in cash to the extent of such excess.
Contingent MID will be paid to the extent of the Entitlement Amount, and may be
paid (i) in cash, unless there is insufficient cash to pay the distribution in
which event any unpaid portion not taken in Units will be deferred and is
payable, without interest, from the first available cash and/or (ii) Units. A
maximum of 50% of the MID may be paid in Units. The number of Units issued in
payment of the MID is based on the greater of $50 per Unit or the net tangible
asset value, as defined, per Unit.
Any amount of the MID that is paid to the General Partner in Units will be
treated as if cash was distributed to the General Partner. The Fixed MID was
treated as a fee payable to the General Partner by the Partnership for services
rendered. The Contingent MID represents a return of equity to the General
Partner for increasing cash flow, as defined, and accordingly is treated as a
distribution.
Compensation, reimbursements and distributions paid to or accrued for the
benefit of the General Partner and its affiliates are as follows:
Nine Months Ended
September 30,
-------------------------------
1995 1994
-------- --------
Property management fees - affiliates................ $291,064 $281,131
Charged to general and administrative -
affiliates:
Partnership administration........................ 185,006 176,392
------- -------
$476,070 $457,523
======= =======
Charged to General Partner's deficit:
Contingent MID.................................... $409,922 $385,297
======= =======
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, $26,655 in
cash, and common and preferred stock in the reorganized Southmark currently
valued at approximately $8,600, which amounts represent the Partnership's
pro-rata share of Southmark assets available for Class 8 Claimants. The
Partnership sold the Southmark common and preferred stock in May for $8,608
which, combined with the cash proceeds from Southmark, resulted in a gain on
legal settlement of $35,263.
NOTE 6.
- -------
On August 11, 1995, the Partnership refinanced the mortgage notes payable on
Woodcreek. The new loan bears an interest rate of 8.54% and will mature August
11, 2002. Following is a summary of the transaction:
New loan proceeds...................... $ 5,250,000
Existing debt retired................... (3,882,443)
----------
Cash proceeds from refinancing.. $ 1,367,557
=========
The Partnership deposited $131,656 into property tax and deferred maintenance
escrows and incurred loan costs of $122,381 relating to the refinancing.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership was formed to acquire, operate and ultimately dispose of a
portfolio of income-producing real properties. At September 30, 1995, the
Partnership owned four apartment properties, which are all subject to mortgage
notes.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Partnership revenues increased by $175,969 or 3% for the nine months
ended September 30, 1995. Rental revenue and interest income increased by
$67,054 or 1% and $73,652 or 84%, respectively.
Rental revenue for the first nine months of 1995 was $5,802,600 as compared to
$5,735,546 for the same period in 1994. The increase in rental revenue for the
nine months ended September 30, 1995 is due to an increase in rental rates at
all of the Partnership's properties. Rental income, however, for the three
months ended September 30, 1995 decreased by $133,800 or 6%. This decrease is
due to a decline in the occupancy rates at Cedar Run and Mountain Shadows by 2%
and 4%, respectively.
Interest income for the nine months and three months increased by $73,652 or 84%
and $33,112 or 125% due to larger average cash balances invested in
interest-bearing accounts and an increase in the interest rates.
The Partnership also recognized a gain on legal settlement of $35,263 as a
result of the settlement with Southmark received in 1995.
Expenses:
Partnership expenses increased by $254,881 or 4% and $198,712 or 10% for the
first nine months and three months of 1995 as compared to the same period last
year, respectively.
Personnel expenses increased $43,094 or 7% and $18,869 or 9% for the nine months
and three ended September 30, 1995 as compared to the same period in 1994,
respectively. This increase is due to an increase in compensation paid and costs
related to the hiring and relocating personnel, as well as the use of temporary
services.
Other property operating expenses increased $45,168 or 14% for the first nine
months of 1995 and $14,419 or 14% for the three months ended September 30, 1995.
This increase can be attributed to increases in hazard insurance at Arrowhead
and Mountain Shadows, as well as increases in office supplies and marketing at
all four properties.
General and administrative expenses increased $130,419 and $140,526 for the nine
months and three of 1995 as compared to the same period last year, respectively.
The increase was due to costs incurred by the Partnership in the third quarter
of 1995 to evaluate and disseminate information regarding an unsolicited tender
offer as discussed in Item 5 - Other Information.
Terms of the Amended Partnership Agreement specify that income before
depreciation is allocated to the General Partner to the extent of Contingent MID
paid in cash. Depreciation is allocated in the ratio of 99:1 to the limited
partner and General Partner, respectively. Therefore, for the three month and
nine month period ended September 30, 1995, $127,222 and $385,495, respectively,
was allocated to the General Partner. The limited partners received allocations
of a net loss of $(71,861) and $(487,150) for the three month and nine month
period ended September 30, 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities
which generated $1,373,163 of cash in the first nine months of 1995 as compared
to $1,607,835 for the same period in 1994. The decrease in cash provided by
operating activities in 1995 was mainly the result of cash paid to establish
escrows on the refinanced mortgage payable for Woodcreek.
The Partnership expended $764,227 and $642,556 for capital improvements to its
properties in the first nine months of 1995 and 1994, respectively.
During the first nine months of 1995, the Partnership experienced cash flow from
financing activities of $644,155 as compared to expending $610,138 for the same
period in 1994. The change in cash flow is due to proceeds of $1,367,557 for the
refinancing of Woodcreek.
Short Term liquidity:
At September 30, 1995, the Partnership held cash and cash equivalents of
$4,537,638 up $1,253,091 from the balance at December 31, 1994. This balance
provides a comfortable level of working capital for the Partnership's
operations.
During 1995, operations of the Partnership's properties are expected to provide
positive cash flow from operations. Management will perform routine repairs and
maintenance on the properties to preserve and enhance their value in the market.
In 1995, the Partnership has budgeted to spend approximately $1,122,000 on
capital improvements, which are expected to be funded from operations of the
properties.
The Partnership was faced with mortgage maturities at Woodcreek in August and
December 1995; however, management successfully refinanced Woodcreek on August
11, 1995. The new 7 year note, in the amount of $5,250,000, retired the maturing
mortgages of $3,882,443 and yielded $1,367,557 in proceeds to the Partnership.
Management anticipates using the refinancing proceeds and the current cash
reserves to payoff the mortgage on Cedar Run, which is at an unfavorable
interest rate.
Long Term liquidity:
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. The Partnership has not
received, nor is there any assurance that the Partnership will receive, any
funds under the facility because no amounts will be reserved for any particular
partnership. As of September 30, 1995, $2,362,004 remained available for
borrowing under the facility; however, additional funds could become available
as other partnerships repay borrowings.
For the long term, property operations will remain the primary source of funds.
While the present outlook for Partnership's liquidity is favorable, market
conditions may change and property operations can deteriorate. In that event,
the Partnership would require other sources of working capital. No such other
sources have been identified, and the Partnership has no established lines of
credit. Other possible actions to resolve working capital deficiencies include
refinancing or renegotiating terms of existing
loans, deferring major capital expenditures on Partnership properties except
where improvements are expected to enhance the competitiveness or marketability
of the properties, or arranging working capital support from affiliates. All or
a combination of these steps may be inadequate or unfeasible in resolving such
potential working capital deficiencies. No affiliate support has been required
in the past, and there is no assurance that support would be provided in the
future, since neither the General Partner nor any affiliates have any obligation
in this regard in excess of the $5,000,000 revolving credit facility discussed
above.
Distributions:
During 1994 , the limited partners received a cash distribution of $499,993.
This distribution consisted of funds from the sale of Riverway V. A distribution
of $409,922 for the contingent portion of the MID was accrued by the Partnership
for the General Partner in September 30, 1995. In light of the Cedar Run payoff,
management does not anticipate making further distributions to the limited
partners during 1995. The General Partner will continue to monitor the cash
reserves and working capital needs of the Partnership to determine when cash
flow will support distributions to the limited partners.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
1) 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, BDO Seidman, for
negligence and fraud in failing to detect and/or report overcharges of
fees/expenses by Southmark, the former general partner. The former auditors
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 original petition also alleged
causes of action against certain former officers and directors of the
Partnership's original general partner for breach of fiduciary duty, fraud
and conspiracy relating to the improper assessment and payment of certain
administrative fees/expenses. On January 11, 1994 the allegations against
the former officers and directors were dismissed.
The trial court granted summary judgment in favor of Ernst & Young and BDO
Seidman on the fraud and negligence claims based on the statute of
limitations. The Affiliated Partnerships appealed the summary judgment to
the Dallas Court of Appeals. In August 1995, the Appeals Court upheld all
of the summary judgments in favor of BDO Seidman. In exchange for the
plaintiff's agreement not to file any motions for rehearing or further
appeals, BDO Seidman agreed that it will not pursue the counterclaims
against the Partnership.
2) High River Limited Partnership vs. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A. McNeil and
Carole J. McNeil (L95012) - High River ("HR") filed this action in the
United States District Court for the Southern District of New York against
McNeil Partners, McNeil Investors and Mr. and Mrs. McNeil requesting, among
other things, names and addresses of the Partnership's limited partners.
The District Court issued a preliminary injunction against the Partnerships
requiring them to commence mailing materials relating to High River tender
offer materials on August 14, 1995.
On August 18, 1995, McNeil Partners, McNeil Investors, the Partnerships,
and Mr. and Mrs. McNeil filed an Answer and Counterclaim. The Counterclaim
principally asserts (1) the HR tender offers have been undertaken in
violation of the federal securities laws, on the basis of material,
non-public, and confidential information, and (2) that the HR offer
documents omit and/or misrepresent certain material information about the
HR tender offers. The counterclaim seeks a preliminary and permanent
injunction against the continuation of the HR tender offers and,
alternatively, ordering corrective disclosure with respect to allegedly
false and misleading statements contained in the tender offer documents.
The High River tender offer expired on October 6, 1995. The Defendants
believe that the action is moot and expect the matter to be dismissed
shortly.
3) Robert Lewis vs. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil et al - In the District Court of Dallas County, Texas, A-14th
Judicial District, Cause No. 95-08535 (Class Action)
Plaintiff, Robert Lewis, is a limited partner with McNeil Pacific Investors
Fund 1972, McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV,
Ltd. Plaintiff brings this action on his own behalf and as a class action
on behalf of the class of all limited partners of McNeil Pacific Investors
Fund 1972, McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX,
Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd.,
McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil
Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P. and McNeil
Real Estate Fund XXV, Ltd. (the "Partnerships") as of August 4, 1995.
Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil and other senior officers (collectively, the "Defendants")
breached their fiduciary duties by, among other things, (1) failing to
attempt to sell the properties owned by the Partnerships ("Properties") and
extending the lives of the Partnerships indefinitely, contrary to the
Partnerships' business plans, (2) paying distributions to themselves and
generating fees for their affiliates, (3) refusing to make significant
distributions to the class members, despite the fact that the Partnerships
have positive cash flows and substantial cash balances, and (4) failing to
take steps to create an auction market for Partnership equity interests,
despite the fact that a third party bidder filed tender offers for
approximately forty-five percent (45%) of the outstanding units of each of
the Partnerships. Plaintiff also claims that Defendants have breached the
Partnership Agreements by failing to take steps to liquidate the Properties
and by their alteration of the Partnerships' primary purposes, their acts
in contravention of these agreements, and their use of the Partnership
assets for their own benefit instead of for the benefit of the
Partnerships.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
4) James F. Schofield, Gerald C. Gillett and Donna S. Gillett vs. McNeil
Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management,
Inc., Robert A. McNeil, Carole J. McNeil, McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, 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) and United States
District Court, Southern District of New York, Case No. 95CIV.6711
(Class and Derivative Action Complaint)
These are corporate/securities class and derivative actions brought in
state and federal court by limited partners of each of the nine (9) limited
partnerships that are named as Nominal Defendants as listed above
("Partnerships"). Plaintiffs allege that Defendants McNeil Investors, Inc.,
its affiliate McNeil Real Estate Management, Inc. and four (4) of their
senior officers and/or directors have breached their fiduciary duties.
Specifically, Plaintiffs allege that Defendants have caused the
Partnerships to enter into several wasteful transactions that have no
business purpose or benefit to the Partnerships and which have rendered
such units highly illiquid and artificially depressed the prices that are
available for units on the limited resale market. Plaintiffs also allege
that Defendants
have engaged in a course of conduct to prevent the acquisition of units by
Carl Icahn by disseminating false, misleading and inadequate information.
Plaintiffs further allege that Defendants have 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 and, thereby, have breached the Partnership Agreements.
The Defendants deny that there is any merit to Plaintiff's allegations
and intend to vigorously defend these actions.
5) Alfred Napoletano vs. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P. - Superior Court of the State of California, County of Los
Angeles, Case No. BC133849 (class action complaint)
Plaintiff brings this class action on behalf of a class of all persons
and entities who are current owners of units and/or are limited partners in
one or more of the partnerships referenced above ("Partnerships").
Plaintiff alleges that Defendants have breached their fiduciary duties to
the class members by, among other things, (1) taking steps to prevent the
consummation of the High River tender offers, (2) failing to take steps to
maximize unitholders' or limited partners' values, including failure to
liquidate the properties owned by the Partnerships, (3) managing the
Partnerships so as to extend indefinitely the present fee arrangements, and
(4) paying itself and entities owned and controlled by the general partner
excessive fees and reimbursements of general and administrative expenses.
The Defendants deny that there is any merit to Plaintiff's allegations
and intend to vigorously defend this action.
6) Warren Heller vs. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P. - Superior Court of the State of California, County of Los
Angeles, Case No. BC133957 (class action complaint)
Plaintiff brings this class action on behalf of a class of all persons
and entities who are current owners of units and/or are limited partners in
one or more of the partnerships referenced above ("Partnerships").
Plaintiff alleges that Defendants have breached their fiduciary duties to
the class members by, among other things, (1) taking steps to prevent the
consummation of the High River tender offers, (2) failing to take steps to
maximize unitholders' or limited partners' values, including failure to
liquidate the properties owned by the Partnerships, (3) managing the
Partnerships so as to extend indefinitely the present fee arrangements, and
(4) paying itself and entities owned and controlled by the general partner
excessive fees and reimbursements of general and administrative expenses.
The Defendants deny that there is any merit to Plaintiff's allegations
and intend to vigorously defend this action.
7) High River Limited Partnership v. McNeil Partners L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V,
Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd.,
McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil
Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A.
McNeil and Carole J. McNeil - United States District Court for the Southern
District of New York, (Case No. 95 Civ. 9488) (Second Action).
On November 7, 1995, High River commenced a second complaint which alleges,
inter alia, that McNeil's Schedule 14D-9 filed in connection with the High
River tender offers was materially false and misleading, in violation of
Sections 14(d) and 14(e) of the Securities Exchange Act of 1934, 15 U.S.C.
Section 78n(d) and (e), and the SEC Regulations promulgated thereunder; and
that High River further alleges that McNeil has wrongfully refused to admit
High River as a limited partner to the Funds. Additionally, High River
purports to assert claims derivatively on behalf of Funds IX, XI, XV, XXIV
and XXV, for breach of contract and breach of fiduciary duty, asserting
that McNeil has charged these Partnerships excessive fees. High River's
complaint seeks, inter alia, preliminary injunctive relief requiring McNeil
to admit High River as a limited partner in each of the ten Partnerships
and to transfer the tendered units of interest in the Partnerships to High
River; an unspecified award of damages payable to High River and an
additional unspecified award of damages payable to certain of the
Partnerships; an order that defendants must discharge their fiduciary
duties and must account for all fees they have received from certain of the
Partnerships; and attorneys' fees.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
ITEM 5. OTHER INFORMATION
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As previously disclosed, on an unsolicited basis, High River Limited Partnership
("High River"), a partnership controlled by Carl Icahn, announced that it had
commenced an offer to purchase 46,276 units of limited partnership interest in
the Partnership (approximately 45% of the Partnership's units) at $95 per unit.
The tender offer was originally due to expire on August 31, 1995. In connection
therewith, the parties entered into certain negotiations and discussions
regarding, among other things, possible transactions between the parties and
their affiliates, McNeil Partners, McNeil Investors, and McREMI. On September
19, 1995, the parties having not reached any resolution on the terms of the
proposed transactions, McNeil Partners terminated the parties' discussion. High
River had extended its offer several times until the final expiration date of
October 6, 1995. On October 11, 1995 High River announced that based on
preliminary information furnished by the depositary for the tender offer,
approximately 10,703 units of the Partnership were tendered and not withdrawn
prior to the expiration of the tender offer. On October 12, 1995, McNeil
Partners announced that it would continue to explore potential avenues to
enhance the value of the Partnership units, which may include, among other
things, asset sales, refinancings of Partnership properties followed by
distributions or tender offers for units of limited partnership. There can be no
assurance that any such plans will develop or that any such transactions will be
consummated.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits.
Exhibit
Number Description
3.1 Amended and Restated Partnership Agreement
dated October 11, 1991. (1)
11. Statement regarding computation of net loss
per limited partnership unit: Net loss per
limited partnership unit is computed by
dividing net loss allocated to the limited
partners by the number of limited
partnership units outstanding. Per unit
information has been computed based on
102,836 and 102,846 limited partnership
units outstanding in 1995 and 1994,
respectively.
27. Financial Data Schedule for the quarter
ended September 30, 1995.
(1) Incorporated by reference to the Annual Report of Registrant,
on Form 10-K for the period ended December 31, 1991, as filed
on March 30, 1992.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended September 30, 1995.
McNEIL REAL ESTATE FUND XV, LTD.
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 XV, Ltd.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
November 13, 1995 By: /s/ Donald K. Reed
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Date Donald K. Reed
President and Chief Executive Officer
November 13, 1995 By: /s/ Robert C. Irvine
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Date Robert C. Irvine
Chief Financial Officer of McNeil Investors, Inc.
Principal Financial Officer
November 13, 1995 By: /s/ Brandon K. Flaming
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Date Brandon K. Flaming
Chief Accounting Officer of McNeil Real Estate
Management, Inc.