AMENDMENT NO. 1
                                     TO THE
               AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
                                       OF
                       McNEIL REAL ESTATE FUND XXVI, L.P.


         This Amendment No. 1 ("Amendment")  to the Amended and Restated Limited
                                ---------
Partnership  Agreement  of McNeil  Real  Estate Fund XXVI,  L.P.,  a  California
limited partnership (the "Partnership"), dated as of the 30th day of March, 1992
                          -----------
(the "Partnership  Agreement"),  is made as of the date hereinafter set forth by
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and among McNeil  Partners,  L.P., a Deleware  limited  partnership,  as general
partner (the "General Partner") and the limited partners of the Partnership (the
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"Limited  Partners").  Capitalized terms not otherwise defined herein shall have
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the meanings ascribed to them in the Partnership Agreement.

                                    RECITALS

         WHEREAS,  the General Partner and the Limited Partners entered into the
Partnership Agreement as of the Restructuring Date following the approval by the
Limited Partners of a restructuring of the Partnership; and

         WHEREAS,  pursuant to Paragraph 16.7 of the Partnership Agreement,  the
General Partner has the authority to amend the Partnership Agreement without the
consent of the Limited Partners to cure an ambiguity or correct or supplement an
inconsistency in the Partnership Agreement; and

         WHEREAS, the General Partner desires to amend the Partnership Agreement
to cure and correct an  ambiguity/inconsistency  with respect to  distributions;
and

         WHEREAS,  pursuant to the authority  granted to the General  Partner in
Paragraphs 16.7 and 21 of the Partnership  Agreement,  the General  Partner,  on
behalf of all Partners, is permitted to make this Amendment, without the consent
of the Limited Partners;

         NOW, THEREFORE, the Partnership Agreement is hereby amended as follows:

         1.      Paragraphs 2.1.6 and 2.1.13 are hereby amended and restated in
their entirety as follows:

                  "2.1.6. "Cash Flow" for any year shall mean the excess of cash
         receipts from all sources  (other than cash  receipts from  Partnership
         Advances  and from any  Sale or  Refinancing)  over the sum of (A) cash
         disbursements,   including   cash   disbursements   for   (i)   capital
         improvements,   (ii)  unscheduled   principal  reductions  and  balloon
         payments and payments upon maturity of any mortgage notes payable,  and
         (iii)  repayment  of  Partnership  Advances  and (B) an  allowance  for
         reserves as determined in the discretion of the General Partner.


                  2.1.13.          "Distributable Cash" shall mean for any year
         an amount equal to the sum of (i) the Partnership's cash balance at the
         beginning  of  the year,  (ii) Cash  Flow  and (iii) Cash From Sales or
         Refinancing."

         2.      This Amendment shall be effective as of the Restructuring Date.

         3.      Except as modified by this Amendment, the Partnership Agreement
remains  in full force and effect.

         IN WITNESS WHEREOF,  the parties hereto have executed this Amendment as
of the ___ day of June, 1995.


                                                       
GENERAL PARTNER:                                          LIMITED PARTNERS:

McNEIL PARTNERS, L.P.                                     All Limited Partners pursuant
                                                          to Powers of Attorney and
By:      McNEIL INVESTORS, INC.,                          authorization granted and
         its general partner                              delivered to the General Partner
                                                          pursuant to Paragraph 21 of the
By:      /s/  Donald K. Reed                              Partnership Agreement
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         Name:   Donald K. Reed
         Title:  President                                By:   McNEIL PARTNERS, L.P.

                                                          By:   McNEIL INVESTORS, INC.,
                                                                its general partner


                                                          By: /s/  Donald K. Reed
                                                              ------------------------------
                                                                Name:  Donald K. Reed
                                                                Title: President