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
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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 0-14267
MCNEIL REAL ESTATE FUND XXIV, L.P.
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(Exact name of registrant as specified in its charter)
California 74-2339537
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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
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MCNEIL REAL ESTATE FUND XXIV, L.P.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
---------- ----------
ASSETS
- - - - - ------
Real estate investments:
Land..................................................... $ 7,039,867 $ 7,039,867
Buildings and improvements............................... 29,328,389 29,272,835
---------- ----------
36,368,256 36,312,702
Less: Accumulated depreciation and amortization......... (11,397,444) (11,061,009)
---------- ----------
24,970,812 25,251,693
Cash and cash equivalents................................... 1,883,430 1,720,161
Cash segregated for security deposits....................... 82,797 85,851
Accounts receivable, net of allowance for doubtful
accounts of $77,044 at March 31, 1995 and
December 31, 1994........................................ 440,989 401,525
Prepaid expenses and other assets, net...................... 198,325 215,741
---------- ----------
$27,576,353 $27,674,971
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
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Mortgage note payable....................................... $ 5,614,426 $ 5,660,558
Accounts payable and accrued expenses....................... 209,930 194,613
Payable to affiliates - General Partner..................... 48,271 38,716
Advances from affiliates.................................... 642,581 642,581
Deferred gain............................................... 11,900 17,000
Security deposits and deferred rental income................ 88,747 87,413
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6,615,855 6,640,881
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Partners' equity (deficit):
Limited partners - 40,000 limited partnership
units authorized and outstanding at March 31,
1995 and December 31, 1994............................. 20,967,066 21,039,922
General Partner.......................................... (6,568) (5,832)
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20,960,498 21,034,090
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$27,576,353 $27,674,971
========== ==========
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 XXIV, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
----------------------------
1995 1994
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Revenue:
Rental revenue............................................... $ 982,327 $1,093,650
Interest..................................................... 25,452 11,135
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Total revenue.............................................. 1,007,779 1,104,785
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Expenses:
Interest..................................................... 100,492 100,885
Depreciation and amortization................................ 336,435 315,177
Property taxes............................................... 124,986 118,328
Personnel costs.............................................. 84,996 64,230
Utilities.................................................... 47,826 63,367
Repairs and maintenance...................................... 95,335 109,908
Property management fees - affiliates........................ 53,028 55,311
Other property operating expenses............................ 71,284 59,569
General and administrative................................... 10,206 10,614
General and administrative - affiliates...................... 156,783 159,793
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Total expenses............................................. 1,081,371 1,057,182
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Net income (loss).............................................. $ (73,592) $ 47,603
========= =========
Net income (loss) allocable to limited partners................ $ (72,856) $ 47,127
Net income (loss) allocable to General Partner................. (736) 476
--------- ---------
Net income (loss).............................................. $ (73,592) $ 47,603
========= =========
Net income (loss) per thousand limited partnership units....... $ (1.82) $ 1.18
========= =========
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 XXIV, 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.............. $ (5,177) $21,104,778 $21,099,601
Net income................................ 476 47,127 47,603
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Balance at March 31, 1994................. $ (4,701) $21,151,905 $21,147,204
========= ========== ==========
Balance at December 31, 1994.............. $ (5,832) $21,039,922 $21,034,090
Net loss.................................. (736) (72,856) (73,592)
--------- ---------- ----------
Balance at March 31, 1995................. $ (6,568) $20,967,066 $20,960,498
========= ========== ==========
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 XXIV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase in Cash and Cash Equivalents
Three Months Ended
March 31,
--------------------------------
1995 1994
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Cash flows from operating activities:
Cash received from tenants........................ $ 939,441 $1,024,040
Cash paid to suppliers............................ (328,551) (320,597)
Cash paid to affiliates........................... (200,256) (194,146)
Interest received................................. 25,452 11,135
Interest paid..................................... (90,996) (93,143)
Property taxes paid............................... (80,135) (188,257)
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Net cash provided by operating activities............ 264,955 239,032
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Cash flows from investing activities:
Additions to real estate investments.............. (55,554) (76,966)
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Cash flows from financing activities:
Principal payments on mortgage note
payable......................................... (46,132) (55,104)
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Net increase in cash and cash
equivalents....................................... 163,269 106,962
Cash and cash equivalents at beginning of
period............................................ 1,720,161 1,435,591
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Cash and cash equivalents at end of period........... $1,883,430 $1,542,553
========= =========
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 XXIV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
Three Months Ended
March 31,
-------------------------------
1995 1994
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Net income (loss).................................... $(73,592) $ 47,603
------- -------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization..................... 336,435 315,177
Amortization of deferred borrowing costs.......... 7,770 7,770
Amortization of deferred gain..................... (5,100) (5,100)
Changes in assets and liabilities:
Cash segregated for security deposits........... 3,054 (4,655)
Accounts receivable, net........................ (39,464) (64,276)
Prepaid expenses and other assets, net.......... 9,646 (10,456)
Accounts payable and accrued expenses........... 15,317 (73,969)
Payable to affiliates - General Partner......... 9,555 20,958
Security deposits and deferred rental
income........................................ 1,334 5,980
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Total adjustments............................. 338,547 191,429
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Net cash provided by operating activities............ $264,955 $239,032
======= =======
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 XXIV, L.P.
Notes to Financial Statements
March 31, 1995
(Unaudited)
NOTE 1.
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McNeil Real Estate Fund XXIV, L.P. (the "Partnership"), formerly known as
Southmark Equity Partners, Ltd., was organized on October 19, 1984, as a limited
partnership under the provisions of the California Revised Limited Partnership
Act to acquire and operate commercial and residential properties. The general
partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a
Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 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 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 XXIV, L.P., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
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Certain prior period amounts have been reclassified to conform to the current
period presentation.
NOTE 4.
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The Partnership pays property management fees equal to 5% of the gross rental
receipts for its residential properties and 6% of gross rental receipts for its
commercial properties to McNeil Real Estate Management, Inc. ("McREMI"), an
affiliate of the General Partner, for providing property management services for
the Partnership's residential and commercial properties and leasing services for
its residential properties. McREMI may also choose to provide leasing services
for the Partnership's commercial properties, in which case McREMI will receive
property management fees from such commercial properties equal to 3% of the
property's gross rental receipts plus leasing commissions based on the
prevailing market rate for such services where the property is located.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The Partnership is paying an asset management fee which is payable to the
General Partner. Through 1999, the asset management fee is calculated as 1% of
the Partnership's tangible asset value. Tangible asset value is determined by
using the greater of (i) an amount calculated by applying a capitalization rate
of 9% to the annualized net operating income of each property or (ii) a value of
$10,000 per apartment unit for residential properties 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:
Three Months Ended
March 31,
-------------------------------
1995 1994
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Property management fees............................. $ 53,028 $ 55,311
Charged to general and administrative -
affiliates:
Partnership administration........................ 78,680 73,829
Asset management fee.............................. 78,103 85,964
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$209,811 $215,104
======= =======
The 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
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There has been no significant change in the operations of the Partnership's
properties since December 31, 1994. The Partnership reported net loss for the
first three months of 1995 of $73,592 as compared to net income of $47,603 for
the first three months of 1994. Revenues were $1,007,779 in 1995, down from
$1,104,785 for the same period in 1994. Expenses increased to $1,081,371
in 1995, up from $1,057,182 in 1994.
Net cash provided by operating activities was $264,955 for the first three
months of 1995, an increase from the $239,032 provided during the first three
months of 1994. After principal payments on the Partnership's mortgage loan of
$46,132 and capital improvements of $55,554, cash and cash equivalents at March
31, 1995 were $1,883,430, up by $163,269 since December 31, 1994.
RESULTS OF OPERATIONS
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Revenue:
Total revenue decreased by $97,006 for the first three months of 1995 as
compared to the first three months in 1994. The decrease was primarily due to an
decrease in rental revenue, as discussed below.
Rental revenue decreased by $111,323 for the first three months of 1995 in
relation to the respective period in 1994. The decrease was primarily due to a
decrease of approximately $57,000 in common area maintenance costs billed to
tenants at Southpointe Plaza Shopping Center. In addition, there was a slight
decrease in occupancy at Island Plaza and Springwood Plaza from 84% and 77%,
respectively, at March 31, 1994 to 80% and 72%, respectively, at March 31, 1995.
Interest income increased by $14,317 in the three months ended March 31, 1995 as
compared to the same period in 1994. The increase was due to the fact that in
1995 there was a greater amount of cash available for short-term investment. The
partnership had approximately $1.9 million in cash and cash equivalents at March
31, 1995, as compared to $1.5 million at March 31, 1994. In addition, there was
an increase in interest rates earned on invested cash in 1995.
Expenses:
Total expenses increased by $24,189 for the first three months of 1995, as
compared to the first three months of 1994. The increase was primarily the
result of an increase in personnel costs and other property operating expenses,
partially offset by a decrease in utilities and repairs and maintenance, as
discussed below.
Personnel costs increased by $20,766 for the three months ended March 31, 1995,
as compared to the same period in 1994. The increase was due to the an increase
in compensation to on-site personnel at all of the properties in 1995.
Utilities decreased by $15,541 for the first three months in 1995 as compared to
the same period in 1994. The decrease was mainly due to the lower occupancy at
Southpointe Plaza, which meant there were fewer tenants using the property's
utilities in 1995.
Repairs and maintenance expense decreased by $14,573 for the first quarter of
1995 in relation to the first quarter of 1994. The decrease was due to a
decrease in the replacement of carpet and appliances at Pine Hills and Sleepy
Hollow Apartments, which were expensed in 1994.
Other property operating expenses increased by $11,715 for the three months
ended March 31, 1995 as compared to the three months ended March 31, 1994. The
increase was mainly due to increased legal fees at Southpointe Plaza Shopping
Center relating to a lawsuit involving a tenant's lease.
LIQUIDITY AND CAPITAL RESOURCES
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The Partnership's primary source of cash flows is from operating activities
which generated $264,955 of cash in the first three months of 1995 as compared
to $239,032 for the same period in 1994. The increase in cash provided by
operating activities in 1995 was mainly due to a decrease in property taxes paid
in the first quarter of 1995 as compared to the first quarter of 1994, due to
the timing of the payment of invoices.
Short-term liquidity:
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At March 31, 1995, the Partnership held cash and cash equivalents of $1,883,430.
This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its properties.
For the remainder of 1995, Partnership properties are expected to provide
positive cash flow from operations after payment of debt service and capital
improvements. The Partnership has budgeted $436,000 for necessary capital
improvements for all properties in 1995 which is expected to be funded from
available cash reserves or from operations of the properties. The present cash
balance is believed to provide an adequate reserve for property operations. At
the present time, the Partnership does not anticipate making distributions to
the limited partners in 1995. There can be no assurance as to when the
Partnership will rebuild cash reserves judged adequate to resume distributions
to the partners.
Long-term liquidity:
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Only one property, Southpointe Plaza Shopping Center, is encumbered with
mortgage debt. the Partnership will attempt to obtain refinancing or extension
of the mortgage note when it matures in 1997.
While the outlook for maintenance of adequate levels of liquidity is favorable,
should operations deteriorate and present cash resources become insufficient to
fund current needs, the Partnership would require other sources of working
capital. No such sources have been identified. The Partnership has no
established lines of credit from outside sources. Other possible actions to
resolve cash deficiencies include refinancings, deferral of capital expenditures
on Partnership properties except where improvements are expected to increase the
competitiveness and marketability of the properties, arranging financing from
affiliates or the ultimate sale of the properties. Sales and refinancings are
possibilities only, and there are at present no plans for any such sales or
refinancings.
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.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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Henry Lim, Charles Chen, Paul Van dba Shangri-La Restaurant & Bar, Robert
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Narayan and Jackie Kim vs. McNeil Real Estate Fund XXIV, L.P. and McNeil Real
- - - - - -------------------------------------------------------------------------------
Estate Management, Inc. ("McREMI") et al. This was a complaint for breach of
- - - - - -------------------------------------------
contract, breach of covenant to extend term of lease, intentional and negligent
interference with respective economic relationships, civil rights violations,
intentional and negligent misrepresentation, injurious false suit and negligent
and intentional infliction of emotional distress brought by former tenants of
the Southpointe Plaza Shopping Center, based on a purported claim that both the
Partnership and McREMI orally promised to agree to extend the lease and approve
an assignment of lease from three of the plaintiffs to two of the other
plaintiffs for a restaurant and bar. On April 10, 1995, a settlement was reached
such that the Partnership agreed to pay the first three plaintiffs $42,500, of
which $20,000 will be paid by the Partnership's insurance carrier. The remaining
two plaintiffs are free to continue to pursue their action.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits.
Exhibit
Number Description
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4. Amended and Restated Limited Partnership dated March 30, 1992. (Incorporated by reference to
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
per limited partnership unit is computed by dividing net income allocated to the limited
partners by the number of limited partnership units outstanding. Per unit information has been
computed based on 40,000 limited partnership units outstanding in 1995 and 1994.
(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 XXIV, 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 XXIV, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
May 15, 1995 By: /s/ Donald K. Reed
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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.