MCNEIL REAL ESTATE FUND XXVII, L.P.
Question: [Did you see the] liquidation values [of the McNeil
Partnerships] published ...?
ICAHN: "I DIDN'T LOOK AT THEM AT ALL .... I DIDN'T LOOK AT
IT BECAUSE I DIDN'T CARE. I FIGURED--"
Question: You just throw out $150 million and you don't care?
ICAHN: "75% OF LIQUIDATING VALUE IS GOOD ENOUGH FOR ME.
THAT'S WHAT I WANT TO PAY. GOOD RETURN ON MY
MONEY."
Excerpt from cross-examination of
Carl C. Icahn, October 2, 1996
Dear Unitholder:
By now you should be very familiar with the name Carl C. Icahn.
Mr. "GOOD RETURN ON MY MONEY" Icahn, and his affiliate, High River
Limited Partnership, are attempting through a "hostile" tender
offer, litigation and bluster, to acquire control of McNeil Real
Estate Fund XXVII, L.P. (the "Partnership"). In this regard, he is
offering to buy your Units at prices below their values and making
unfounded allegations about the Partnership and its General
Partner.
You should be aware that Mr. Icahn has a long record of this type
of "VULTURE" investing -- that is, acquiring large blocks of Units
at prices that are inadequate and not in the best interests of
either the respective Partnership or Unitholders. He's now trying
this same investment tactic with the Partnership. HE'S TRYING TO
TAKE ADVANTAGE OF YOU BY CONVINCING YOU THAT THE UNITS ARE A BAD
INVESTMENT, WHILE AT THE SAME TIME BUYING THEM FOR $5.62 PER UNIT*,
SIGNIFICANTLY LESS THAN THE RANGE OF PRESENT ESTIMATED LIQUIDATION
VALUE DETERMINED BY AN INDEPENDENT FINANCIAL ADVISOR TO THE
PARTNERSHIP. MR. ICAHN'S OWN ADMISSION IN HIS CROSS-EXAMINATION ON
OCTOBER 2 THAT HE IS OFFERING ONLY 75% OF HIS OWN LOW-BALL ESTIMATE
of the value of the Units, and thereby realizing a "good return" at
YOUR expense, speaks for itself. IN FACT, MR. ICAHN'S OFFER PRICE
IS ONLY BETWEEN 65.0% AND 67.1% OF THE PRESENT ESTIMATED
LIQUIDATION VALUE OF THE UNITS DISCUSSED BELOW.
* STATEMENTS MADE BY MR. ICAHN AND HIGH RIVER IN THEIR RECENT
LETTER TO YOU ARE FALSE AND INTENTIONALLY MISLEADING. For
instance, the amount of fees they claim McNeil Partners
received includes money paid to affiliates of Southmark
Corporation, an entity which is not affiliated with McNeil
Partners and which filed for bankruptcy in 1989. McNeil
Partners replaced Southmark as the General Partner in the
early 1990's. At that time, Robert A. McNeil established a
revolving credit facility which permitted the Partnership and
other McNeil partnerships to borrow from the General Partner
up to $5,000,000 in order to stabilize the Partnership and
avoid a fire-sale of its assets in a depressed real estate
market. Under the stewardship of a well-capitalized McNeil
Partners since 1991, the Partnership's financial condition has
recovered significantly from its pre-1991 condition.
* Mr. Icahn is certainly not offering to buy your Units because
he thinks they are a bad investment. Fellow holders of 98.0%
of the outstanding Units have chosen not to tender their Units
as of November 1 and have rejected Mr. Icahn's offer. IF YOU
ARE ONE OF THE FEW WHO HAVE TENDERED YOUR UNITS AND HAVE
________________________
* The offer price is $5.62 per Unit, not $6.19, because of the
August, 1996 distribution to Unitholders of $0.57 per Unit.
SECOND THOUGHTS ABOUT YOUR DECISION, WE HAVE INCLUDED FOR YOUR
CONVENIENCE A FORM TO WITHDRAW YOUR TENDER.
IN LIGHT OF ALL RELEVANT CIRCUMSTANCES, INCLUDING THE INDEPENDENT
OPINION OF CROSSON DANNIS, INC. THAT MR. ICAHN'S OFFER PRICE IS
INADEQUATE FROM A FINANCIAL POINT OF VIEW, THE PARTNERSHIP
DETERMINED THAT THE OFFER IS INADEQUATE, NOT IN THE BEST INTERESTS
OF EITHER THE PARTNERSHIP OR UNITHOLDERS AND WE STRONGLY RECOMMEND
THAT YOU REJECT IT.
We urge you to consider the following points in making your
determination whether to reject the offer:
THE PRESENT ESTIMATED LIQUIDATION VALUE FOR THE UNITS AS OF OCTOBER
3, 1996 IS BETWEEN $8.37 AND $8.64 PER UNIT. Crosson Dannis, Inc.,
an independent financial advisor to the Partnership, prepared an
estimate of the present value (the "Present Estimated Liquidation
Value") of a Unit based on the assumption that the Partnership
completes an orderly liquidation by December 1999 (the
"Liquidation"), during which time the Partnership will be
distributing cash proceeds from the sale of the Partnership's
properties as they are sold. The Present Estimated Liquidation
Value represents Crosson Dannis' estimate of the present value of
the gross cash distributions, approximately $10.94 per Unit, that a
Unitholder would receive between now and the completion of the
Liquidation. It should be noted that the Present Estimated
Liquidation Value does not represent an estimate by Crosson Dannis
of the fair market value of a Unit. OF COURSE, IN HIS LETTER TO
UNITHOLDERS, MR. ICAHN FAILED TO ADDRESS THE PRESENT ESTIMATED
LIQUIDATION VALUE OF THE UNITS.
AS WE HAVE STATED BEFORE, THE PARTNERSHIP HAS DETERMINED TO BEGIN
AN ORDERLY LIQUIDATION OF ALL THE PARTNERSHIP'S ASSETS. Although
there can be no assurance as to the timing of any liquidation, it
is anticipated that such liquidation would result in distributions
to all Unitholders of the cash proceeds from the sale of the
Partnership's properties as they are sold and the dissolution of
the Partnership followed by a liquidating distribution to all
Unitholders before December 1999. THE PARTNERSHIP'S LIQUIDATION
PLAN IS ONE OF THE MAJOR REASONS THAT THE UNITS ARE AN ATTRACTIVE
INVESTMENT FOR MR. ICAHN -- IT GIVES HIM THE ABILITY TO MAKE - IN
HIS OWN WORDS -- A "GOOD RETURN" ON HIS MONEY FROM PURCHASING YOUR
UNITS.
ON OCTOBER 17, 1996, THE PARTNERSHIP ANNOUNCED THAT IT HAD RECEIVED
AN UNSOLICITED OFFER FROM AN UNAFFILIATED THIRD PARTY TO ACQUIRE
ALL OUTSTANDING UNITS OF THE PARTNERSHIP AT $6.50 PER UNIT, WHICH
IS 15% MORE THAN MR. ICAHN IS OFFERING FOR SUCH UNITS. After
meeting with the offeror in Dallas and considering the $6.50 offer,
the Partnership rejected it as being inadequate because the Present
Estimated Liquidation Value of the Partnership's Units is between
$8.37 and $8.64 per Unit.
UNITHOLDERS OF MCNEIL REAL ESTATE FUND V, LTD. WHO DID NOT TENDER
THEIR UNITS TO MR. ICAHN ARE EXPECTED TO RECEIVE APPROXIMATELY 82%
MORE THAN HIS 1995 OFFER PRICE FOR THEIR UNITS. Last August, Mr.
Icahn offered $400 per unit for McNeil Real Estate Fund V, Ltd.
Since then, Fund V distributed $83.40 cash to unitholders and, on
September 10, 1996, holders of Fund V's units approved the
liquidation and dissolution of Fund V, pursuant to which it is
anticipated that all unitholders will receive a cash distribution
of approximately $643.07 per Unit, subject to reserves and
adjustment. Although there can be no assurance that a similar
result will occur with the Partnership or that any particular
distribution per Unit will be obtained, THE LIQUIDATION AND
DISSOLUTION OF FUND V PROVIDES SOLID SUPPORT FOR OUR VIEW THAT MR.
ICAHN'S CURRENT OFFER PRICE FOR YOUR UNITS IS INADEQUATE AND NOT IN
THE BEST INTERESTS OF EITHER THE PARTNERSHIP OR UNITHOLDERS AND WE
STRONGLY RECOMMEND THAT YOU REJECT IT.
IN THE EVENT YOU HAVE ANY QUESTIONS, PLEASE CONTACT THE HERMAN
GROUP, INC. AT (800) 658-2007.
Very truly yours,
Donald K. Reed
McNeil Partners, L.P.
General Partner
P.S. If you are one of the few who tendered your Units
and have second thoughts about your decision, we
have included a withdrawal form for your
convenience.