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 quarterly period ended       September 30, 1999
                                     -------------------------------------------


                                       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  0-13356
                           ----------


                        MCNEIL REAL ESTATE FUND XXI, L.P.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



         California                                  33-0030615
--------------------------------------------------------------------------------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                       Identification No.)



             13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip code)



Registrant's telephone number, including area code         (972) 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
                                      ---  ---



<PAGE>
                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
------- --------------------

                        MCNEIL REAL ESTATE FUND XXI, L.P.

                                 BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     September 30,         December 31,
                                                                           1999               1998
                                                                     -------------        -------------
ASSETS
------
Real estate investments:
<S>                                                                  <C>                  <C>
   Land .....................................................        $  1,842,544         $  1,842,544
   Buildings and improvements ...............................          22,928,723           22,468,887
                                                                     ------------         ------------
                                                                       24,771,267           24,311,431
   Less:  Accumulated depreciation and amortization .........         (13,520,921)         (12,611,818)
                                                                     ------------         ------------
                                                                       11,250,346           11,699,613

Cash and cash equivalents ...................................           1,457,534            1,253,238
Cash segregated for security deposits .......................             151,042              181,524
Accounts receivable .........................................              21,846               25,391
Escrow deposits .............................................             416,851              470,958
Deferred borrowing costs, net of accumulated amortiz-
   ation of $305,338 and $255,111 at September
   30, 1999 and December 31, 1998, respectively .............             255,590              305,817
Prepaid expenses and other assets ...........................              57,886               35,922
                                                                     ------------         ------------
                                                                     $ 13,611,095         $ 13,972,463
                                                                     ============         ============

LIABILITIES AND PARTNERS' DEFICIT
---------------------------------

Mortgage notes payable, net .................................        $ 12,220,609         $ 12,372,597
Accounts payable and accrued expenses .......................             193,458              172,803
Accrued property taxes ......................................             313,294              304,699
Payable to affiliates .......................................           5,788,442            5,446,918
Security deposits and deferred rental revenue ...............             164,341              170,108
                                                                     ------------         ------------
                                                                       18,680,144           18,467,125
                                                                     ------------         ------------
Partners' deficit:
   Limited  partners  -  50,000  Units  authorized;
     46,898  and  46,948  Units outstanding  at September
     30, 1999 and  December  31,  1998,  respectively
     (24,863 Current Income Units and 22,035 Growth/
     Shelter Units outstanding at September 30, 1999
     and 24,863 Current Income Units and 22,085 Growth/
     Shelter Units outstanding at December 31, 1998) ........          (4,700,746)          (4,132,103)
   General Partner ..........................................            (368,303)            (362,559)
                                                                     ------------         ------------
                                                                       (5,069,049)          (4,494,662)
                                                                     ------------         ------------
                                                                     $ 13,611,095         $ 13,972,463
                                                                     ============         ============
</TABLE>


The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND XXI, L.P.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended                     Nine Months Ended
                                                                 September 30,                          September 30,
                                                       -------------------------------         -------------------------------
                                                          1999                 1998                1999                1998
                                                       -----------         -----------         -----------         -----------
Revenue:
<S>                                                    <C>                 <C>                 <C>                 <C>
   Rental revenue .............................        $ 1,293,466         $ 1,292,514         $ 3,875,370         $ 4,394,825
   Interest ...................................             17,833              14,508              40,309              47,420
   Gain on sale of real estate ................                 --                  --                  --             863,350
                                                       -----------         -----------         -----------         -----------
     Total revenue ............................          1,311,299           1,307,022           3,915,679           5,305,595
                                                       -----------         -----------         -----------         -----------

Expenses:
   Interest ...................................            278,334             281,497             838,613           1,092,453
   Interest - affiliates ......................                 --                  --                  --             137,371
   Depreciation and amortization ..............            301,807             309,064             909,103           1,048,140
   Property taxes .............................            105,600             105,126             318,399             357,424
   Personnel costs ............................            188,427             195,270             599,590             580,916
   Utilities ..................................             99,783             103,234             301,181             326,160
   Repairs and maintenance ....................            188,681             197,069             545,594             560,181
   Property management
     fees - affiliates ........................             62,842              63,456             191,735             228,479
   Other property operating
     expenses .................................             69,446              91,108             226,290             276,917
   General and administrative .................             67,025              99,634             171,553             343,669
   General and administrative -
     affiliates ...............................            130,888             151,035             388,008             483,169
                                                       -----------         -----------         -----------         -----------
     Total expenses ...........................          1,492,833           1,596,493           4,490,066           5,434,879
                                                       -----------         -----------         -----------         -----------

Loss before
   extraordinary items ........................           (181,534)           (289,471)           (574,387)           (129,284)
Extraordinary items ...........................                 --                  --                  --           1,816,152
                                                       -----------         -----------         -----------         -----------
Net income (loss) .............................        $  (181,534)        $  (289,471)        $  (574,387)        $ 1,686,868
                                                       ===========         ===========         ===========         ===========

Net income (loss) allocable to:
   Current Income Unit ........................        $   (16,338)        $   (26,053)        $   (51,695)        $   151,818
   Growth/Shelter Unit ........................           (163,381)           (260,524)           (516,948)          1,518,181
   General Partner ............................             (1,815)             (2,894)             (5,744)             16,869
                                                       -----------         -----------         -----------         -----------
Net income (loss) .............................        $  (181,534)        $  (289,471)        $  (574,387)        $ 1,686,868
                                                       ===========         ===========         ===========         ===========

Net income (loss) per limited partnership unit:
Current Income Unit Holders:
   Loss before
     extraordinary items ......................        $      (.66)        $     (1.04)        $     (2.08)        $      (.46)
   Extraordinary items ........................                 --                  --                  --                6.57
                                                       -----------         -----------         -----------         -----------
   Net income (loss) ..........................        $      (.66)        $     (1.04)        $     (2.08)        $      6.11
                                                       ===========         ===========         ===========         ===========

Growth/Shelter Unit Holders:
   Loss before
     extraordinary items ......................        $     (7.41)        $    (11.80)        $    (23.46)        $     (5.27)
   Extraordinary items ........................                 --                  --                  --               74.01
                                                       -----------         -----------         -----------         -----------
   Net income (loss) ..........................        $     (7.41)        $    (11.80)        $    (23.46)        $     68.74
                                                       ===========         ===========         ===========         ===========
</TABLE>



The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND XXI, L.P.

                         STATEMENTS OF PARTNERS' DEFICIT
                                   (Unaudited)

              For the Nine Months Ended September 30, 1999 and 1998

<TABLE>
<CAPTION>
                                                                                       Total
                                                 General           Limited           Partners'
                                                 Partner           Partners           Deficit
                                               -----------       ------------       ------------
<S>                                            <C>               <C>                <C>
Balance at December 31, 1997...........        $ (376,608)       $(5,522,974)       $(5,899,582)

Net income
   General Partner ....................            16,869                 --             16,869
   Current Income Units ...............                --            151,818            151,818
   Growth/Shelter Units ...............                --          1,518,181          1,518,181
                                                ---------        -----------        -----------
Total net income ......................            16,869          1,669,999          1,686,868
                                                ---------        -----------        -----------

Balance at September 30, 1998 .........        $ (359,739)       $(3,852,975)       $(4,212,714)
                                               ==========        ===========        ===========


Balance at December 31, 1998 ..........        $ (362,559)       $(4,132,103)       $(4,494,662)

Net loss
   General Partner ....................            (5,744)                --             (5,744)
   Current Income Units ...............                --            (51,695)           (51,695)
   Growth/Shelter Units ...............                --           (516,948)          (516,948)
                                               ----------        -----------        -----------
Total net loss ........................            (5,744)          (568,643)          (574,387)
                                               ----------        -----------        -----------

Balance at September 30, 1999 .........        $ (368,303)       $(4,700,746)       $(5,069,049)
                                               ==========        ===========        ===========
</TABLE>





The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND XXI, L.P.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                                        Nine Months Ended
                                                                           September 30,
                                                                 --------------------------------
                                                                     1999                1998
                                                                 ------------        ------------
Cash flows from operating activities:
<S>                                                              <C>                 <C>
   Cash received from tenants ...........................        $ 3,889,382         $ 4,427,771
   Cash paid to suppliers ...............................         (1,756,178)         (2,067,593)
   Cash paid to affiliates ..............................           (238,219)           (234,298)
   Interest received ....................................             40,309              47,420
   Interest paid ........................................           (772,985)           (888,130)
   Interest paid to affiliates ..........................                 --            (407,432)
   Property taxes paid and escrowed .....................           (329,706)           (419,753)
                                                                 -----------         -----------
Net cash provided by operating activities ...............            832,603             457,985
                                                                 -----------         -----------

Cash flows from investing activities:
   Additions to real estate investments .................           (459,836)           (284,204)
   Proceeds from disposition of real estate .............                 --           3,698,365
                                                                 -----------         -----------
Net cash provided by (used in) investing activities .....           (459,836)          3,414,161
                                                                 -----------         -----------

Cash flows from financing activities:
   Principal payments on mortgage notes
     payable ............................................           (168,471)           (171,491)
   Principal payments on mortgage notes
     payable - affiliate ................................                 --              (5,482)
   Retirement of mortgage notes payable -
     affiliate ..........................................                 --          (3,534,157)
   Repayment of advances from affiliates ................                 --            (630,574)
                                                                 -----------         -----------
Net cash used in financing activities ...................           (168,471)         (4,341,704)
                                                                 -----------         -----------

Net increase (decrease) in cash
 and cash equivalents ...................................            204,296            (469,558)

Cash and cash equivalents at beginning of
   period ...............................................          1,253,238           1,817,585
                                                                 -----------         -----------

Cash and cash equivalents at end of period ..............        $ 1,457,534         $ 1,348,027
                                                                 ===========         ===========

</TABLE>


The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>

                        McNEIL REAL ESTATE FUND XXI, L.P.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

           Reconciliation of Net Income (Loss) to Net Cash Provided by
                              Operating Activities

<TABLE>
<CAPTION>

                                                                     Nine Months Ended
                                                                        September 30,
                                                              -------------------------------
                                                                  1999                1998
                                                              ------------        -----------
<S>                                                           <C>                 <C>
Net income (loss) ....................................        $  (574,387)        $ 1,686,868
                                                              -----------         -----------

Adjustments to reconcile net income (loss) to net
   cash  provided by operating activities:
   Depreciation and amortization .....................            909,103           1,048,140
   Amortization of deferred borrowing costs ..........             50,227              46,888
   Amortization of discounts on mortgage
     notes payable ...................................             16,483              15,666
   Accrued interest on advances from affiliates ......                 --            (164,407)
   Gain on sale of real estate .......................                 --            (863,350)
   Extraordinary items ...............................                 --          (1,816,152)
   Changes in assets and liabilities:
     Cash segregated for security deposits ...........             30,482             (24,432)
     Accounts receivable .............................              3,545              85,750
     Escrow deposits .................................             54,107              66,596
     Prepaid expenses and other assets ...............            (21,964)              4,819
     Accounts payable and accrued expenses ...........             20,655             (30,009)
     Accrued property taxes ..........................              8,595             (59,693)
     Payable to affiliates ...........................            341,524             477,350
     Security deposits and deferred rental
       revenue .......................................             (5,767)            (16,049)
                                                              -----------         -----------

       Total adjustments .............................          1,406,990          (1,228,883)
                                                              -----------         -----------

Net cash provided by operating activities ............        $   832,603         $   457,985
                                                              ===========         ===========

</TABLE>



The  financial  information  included  herein has been  prepared  by  management
without audit by independent public accountants.

                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND XXI, L.P.

                          Notes to Financial Statements
                                   (Unaudited)

                               September 30, 1999

NOTE 1.
-------

McNeil  Real  Estate  Fund XXI,  L.P.  (the  "Partnership"),  formerly  known as
Southmark Realty Partners, Ltd., was organized on November 23, 1983 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 600, 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, 1999
are not necessarily indicative of the results to be expected for the year ending
December 31, 1999.

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,  1998,  and the  notes  thereto,  as  filed  with the
Securities and Exchange  Commission,  which is available upon request by writing
to McNeil Real Estate Fund XXI, L.P., c/o McNeil Real Estate  Management,  Inc.,
Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.

NOTE 3.
-------

Certain reclassifications have been made to prior period amounts to conform with
the current period presentation.

NOTE 4.
-------

The  Partnership  pays  property  management  fees  equal to 5% of 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.




<PAGE>
The  Partnership  reimburses  McREMI  for  its  costs,  including  overhead,  of
administering the Partnership's  affairs.  Total accrued but unpaid  Partnership
general and administration fees of $1,604,537 and $1,443,393 were outstanding at
September 30, 1999 and December 31, 1998, respectively.

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  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. The fee percentage decreases to .75% in 2000,
 .50% in 2001 and .25% thereafter. Total accrued but unpaid asset management fees
of $3,817,203 and $3,636,836 were outstanding at September 30, 1999 and December
31, 1998, respectively.

The Partnership pays a disposition fee to the General Partner equal to 3% of the
gross sales price for brokerage  services  performed in connection with the sale
of the Partnership's properties. The fee is due and payable at the time the sale
closes.  In connection with the sales of Suburban Plaza and Wyoming Mall,  total
accrued but unpaid  disposition  fees of $346,050 were  outstanding at September
30, 1999 and December 31, 1998. In connection with the sale of Fort Meigs Plaza,
the General  Partner waived its right to receive a disposition  fee, which would
have totaled $114,000.

Prior  to the  restructuring  of the  Partnership,  affiliates  of the  Original
General  Partner  advanced  funds to enable the  Partnership to meet its working
capital requirements. These advances were purchased by, and were payable to, the
General  Partner.  These advances  totaling  $630,574,  and accrued  interest of
$182,091, were repaid in full in April 1998.

Compensation  and  reimbursements  paid to or  accrued  for the  benefit  of the
General Partner and its affiliates are as follows:

<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                                    September 30,
                                                              ------------------------
                                                                1999            1998
                                                              --------        --------
<S>                                                           <C>             <C>
Property management fees .............................        $191,735        $228,479
Charged to interest - affiliates:
   Interest on advances from affiliates ..............              --          17,684
   Interest on mortgage notes payable - affiliate ....              --         119,687
Charged to general and administrative -affiliates:
   Partnership administration ........................         184,546         210,373
   Asset management fee ..............................         203,462         272,796
                                                              --------        --------
                                                              $579,743        $849,019
                                                              ========        ========
</TABLE>




<PAGE>
Payable to  affiliates  at September  30, 1999 and  December 31, 1998  consisted
primarily of unpaid asset management fees, property management fees, disposition
fees and partnership general and administrative  expenses and is due and payable
from current operations.

The mortgage  notes payable - affiliate  secured by Fort Meigs Plaza were repaid
in full when the property was sold in April 1998. See Note 5.

NOTE 5.
-------

On April 20,  1998,  the  Partnership  sold Fort Meigs  Plaza  Shopping  Center,
located in Perrysburg,  Ohio, to an  unaffiliated  purchaser for a cash purchase
price of  $3,800,000.  Cash  proceeds  from the sale,  after payment of prorated
rents and  property  taxes,  were used to repay the  mortgage  notes  payable to
McNeil Real Estate Fund XX, L.P.  ("Fund XX"), an affiliate.  Cash proceeds,  as
well as the gain on sale, are detailed on the following page.

<TABLE>
<CAPTION>
                                                               Gain              Cash
                                                              on Sale          Proceeds
                                                            ------------     -------------
<S>                                                         <C>              <C>
Sales price..........................................       $  3,800,000     $  3,800,000

Selling costs........................................           (101,635)        (101,635)
Straight-line rents receivable written off...........            (28,979)
Prepaid leasing commissions written off..............            (10,048)
Carrying value.......................................         (2,795,988)
                                                            ------------     ------------

Gain on sale of real estate..........................       $    863,350
                                                            ============

Proceeds from sale...................................                           3,698,365

Prorated rents and property taxes paid at
   closing...........................................                             (83,012)

Repayment of mortgage notes payable to
   Fund XX and related accrued interest..............                          (3,615,353)
                                                                              -----------

Net cash proceeds....................................                         $        --
                                                                              ===========
</TABLE>


<PAGE>

The  Partnership  recognized a $190,437  extraordinary  gain on repayment of the
mortgage notes payable to Fund XX, as follows:

First lien mortgage note payable - affiliate.........       $   2,990,694
Second lien mortgage note payable - affiliate........             733,900
Accrued interest payable   ..........................              81,196
                                                            -------------
   Total principal and interest payable to
     Fund XX  .......................................           3,805,790

Cash for repayment in full of principal and
   interest payable to Fund XX.......................          (3,615,353)
                                                            -------------

Extraordinary gain on repayment of mortgage
   notes payable - affiliate.........................       $     190,437
                                                            =============


Under the terms of its partnership  agreement,  the Partnership  normally pays a
disposition  fee to the General Partner equal to 3% of the gross sales price for
brokerage  services  performed in connection with the sale of the  Partnership's
properties.  The  fee is due  and  payable  at the  time  the  sale  closes.  In
connection  with the sale of Fort Meigs Plaza,  the General  Partner  waived its
right to receive such fee, which would have totaled $114,000.

NOTE 6.
-------

The mortgage  notes  payable  secured by Wise County Plaza  matured on August 1,
1997 and the Partnership was unable to negotiate a modification and extension of
the loans. On May 29, 1998, Wise County Plaza was foreclosed on by the lender in
full  settlement  of the  mortgage  indebtedness  secured  by the  property.  In
connection with this  transaction,  the Partnership  recognized an extraordinary
gain on retirement of mortgage note payable as set forth on the following page.

Estimated fair value of real estate..................     $  4,535,814

Accounts receivable written off......................          (61,910)
Prepaid expenses written off.........................          (10,855)
Accrued property taxes written off...................           20,335
Deferred rental revenue written off..................              750
Carrying value  .....................................       (4,484,134)
                                                          ------------

   Gain on disposition  .............................     $         --
                                                          ============

Amount of mortgage note payable settled..............     $  5,957,419
Amount of accrued interest payable settled...........          222,172
Escrow deposits applied    ..........................          (18,062)
Estimated fair value of real estate..................       (4,535,814)
                                                          ------------

Extraordinary gain on repayment of mortgage
   note payable .....................................     $  1,625,715
                                                          ============

<PAGE>
NOTE 7.
-------

On June 24, 1999, the Partnership and 18 affiliated  partnerships,  collectively
(the "Partnerships"),  the General Partner, McNeil Investors,  Inc., McNeil Real
Estate Management, Inc. ("McREMI"), McNeil Summerhill, Inc. and Robert A. McNeil
entered into a definitive  acquisition  agreement (the "Master  Agreement") with
WXI/McN Realty L.L.C.  ("Newco"),  an affiliate of Whitehall  Street Real Estate
Limited Partnership XI, a real estate investment fund managed by Goldman,  Sachs
& Co., whereby Newco and its  subsidiaries  will acquire the  Partnerships.  The
Master Agreement provides that the Partnerships will be merged with subsidiaries
of Newco.  The Master  Agreement also provides for the  acquisition by Newco and
its  subsidiaries of the assets of McREMI.  The aggregate  consideration  in the
transaction,  including the assumption or prepayment of all outstanding mortgage
debt of the Partnerships, is approximately $644,440,000.

Pursuant  to the terms of the Master  Agreement,  the  limited  partners  in the
Partnership  will  receive  cash on the  closing  date of the  transaction  (the
"Closing  Date")  in  exchange  for  their  limited  partnership  interests.  In
addition,  the  Partnership  will declare a special  distribution to its limited
partners  on the Closing  Date equal to its then  positive  net working  capital
balance, if any. The estimated  aggregate  consideration and net working capital
distribution  to be  received  per unit of limited  partnership  interest in the
Partnership were estimated as $99 (Current Income Units only).

The above estimates of the Partnership per unit estimated  merger  consideration
and working capital  distribution and the interest of McNeil Partners,  L.P. are
based upon, among other things, the balance sheet of the Partnership as of March
31, 1999,  adjusted for intangible  assets,  non-cash  liabilities,  transaction
expenses  and the McNeil  Partners,  L.P.  interest in the  Partnership.  Actual
amounts,  including the estimate  allocable to McNeil Partners,  L.P., will vary
with the performance of the Partnership and McNeil  Partners,  L.P.  through the
closing date.  The above  estimated  merger  consideration  and special  working
capital  distribution  will be adjusted  at closing to reflect the then  working
capital position of the Partnership.

On the Closing Date,  the General  Partner of the  Partnership,  will receive an
equity  interest  in  Newco in  exchange  for its  contribution  to Newco of the
general  partnership  interests  in the  Partnerships,  the limited  partnership
interests in Fairfax Associates II L.P. and McNeil Summerhill Associates and the
assets of McREMI.

The  Partnership's  participation  in the transaction is subject to, among other
conditions,  the  approval  by  a  majority  of  the  limited  partners  of  the
Partnership.

In some circumstances,  as defined in the Master Agreement, the Partnerships may
be subject to a break-up fee, up to an aggregate maximum of $18,000,000,  if the
Master Agreement is terminated with respect to one or more of the  Partnerships.
In the case of termination of the Master Agreement in these circumstances,  each
of the  Partnerships  with  respect  to  which  the  Master  Agreement  has been
terminated  will be severally,  but not jointly,  liable for payment to Newco of
its  respective  break-up  fee.  The  break-up  fee ratably  calculated  for the
Partnership is $575,226.





<PAGE>
All previous costs associated with this transaction had been allocated among the
Partnerships  and McREMI based on the relative  number of  properties  contained
therein.  On June 24, 1999,  a fairness  opinion (the  "Fairness  Opinion")  was
rendered by Robert A. Stanger & Co., Inc., an independent  financial advisor, to
the  effect  that  the  aggregate  consideration  to be  paid  for  the  general
partnership   interests  and  limited  partnership   interests  in  all  of  the
Partnerships  and the assets of McREMI is fair from a financial point of view to
the  holders  of each  class  of  limited  partnership  interests.  Based on the
relative values as set forth in the Fairness Opinion,  the Partnership  recorded
an adjustment to general and  administrative  expenses and prepaid  expenses and
other assets  during the second  quarter of 1999 in the amount of  $(293,841) to
reflect  the  reallocation  of  previously  paid  transaction  costs  among  the
Partnerships and McREMI.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
        RESULTS OF OPERATIONS
        ---------------------

FINANCIAL CONDITION
-------------------

Fort Meigs Plaza Shopping  Center was sold on April 20, 1998.  Wise County Plaza
Shopping Center was foreclosed on by the lender on May 29, 1998.  There has been
no significant  change in the  operations of the remainder of the  Partnership's
properties since December 31, 1998. The Partnership  reported a net loss for the
first nine months of 1999 of $574,387,  as compared to net income of  $1,686,868
for the first nine months of 1998. Revenues decreased to $3,915,679 in the first
nine months of 1999 from  $5,305,595  for the first nine  months of 1998,  while
expenses  decreased to $4,490,066  for the nine months ended  September 30, 1999
from $5,434,879 for the same period in 1998.

Net cash provided by operating activities was $832,603 for the first nine months
of 1999. The Partnership expended $459,836 for capital improvements and $168,471
for regularly scheduled  principal payments on its mortgage notes payable.  Cash
and cash  equivalents  increased  by  $204,296 in the first nine months of 1999,
leaving a balance of $1,457,534 at September 30, 1999.

The Partnership  has had little ready cash reserves since its inception.  It has
been largely dependent on deferring  affiliate  payables in order to support its
operations.  At September 30, 1999, the Partnership  owed payables to affiliates
for property management fees,  Partnership general and administrative  expenses,
asset management fees and disposition fees totaling $5,788,442.

RECENT DEVELOPMENTS
-------------------

On June 24, 1999, McNeil Partners, L.P. (the General Partner of the Partnership)
and WXI/McN Realty L.L.C.,  an affiliate of Whitehall Street Real Estate Limited
Partnership XI ("Whitehall"),  a real estate investment fund managed by Goldman,
Sachs & Co.,  announced  that they have entered  into a  definitive  acquisition
agreement  whereby the Whitehall  affiliate will acquire by merger nineteen real
estate  limited  partnerships  operated by McNeil  Partners,  L.P. and Robert A.
McNeil.  The limited  partnerships  involved are the Partnership and McNeil Real
Estate Funds IX, X, XI, XII,  XIV,  XV, XX, XXII,  XXIII,  XXIV,  XXV,  XXVI and
XXVII,  Hearth Hollow  Associates,  McNeil Midwest  Properties I, L.P.,  Regency



<PAGE>
North Associates,  Fairfax Associates and McNeil Summerhill  (collectively,  the
"Partnerships").  The  Partnerships  (other than Fairfax  Associates  and McNeil
Summerhill  which are wholly-owned by Robert A. McNeil and related parties) will
be merged with  subsidiaries of WXI/McN Realty L.L.C. The acquisition  agreement
also provides for the  acquisition  by WXI/McN  Realty  L.L.C.  of the assets of
McNeil Real Estate Management,  Inc. ("McREMI").  The aggregate consideration in
the transaction, including all outstanding mortgage debt of the Partnerships, is
approximately $644,440,000.

Pursuant to the terms of the acquisition agreement, the limited partners in each
of the  Partnerships  (other than those  wholly-owned  by Robert A. McNeil) will
receive  cash on the  closing  date of the  transaction  in  exchange  for their
limited partnership interests. In addition, each Partnership will make a special
distribution  to its limited  partners on the  closing  date of the  transaction
equal to its then net positive  working capital balance.  McNeil Partners,  L.P.
will receive an equity  interest in WXI/McN  Realty  L.L.C.  in exchange for its
contribution  of its general  partnership  interests  in the  Partnerships,  the
limited partnership interests in its wholly-owned Partnerships and the assets of
McREMI.

The proposed  transaction  follows an extensive  marketing effort by PaineWebber
Incorporated, exclusive financial advisor to the Partnerships.

The  transaction  has been  unanimously  approved by the Board of  Directors  of
McNeil  Investors,  Inc.,  the general  partner of McNeil  Partners,  L.P.,  the
general partner of each of the Partnerships other than Regency North Associates,
Fairfax  Associates and McNeil  Summerhill.  The respective  general partners of
Regency North  Associates,  Fairfax  Associates and McNeil  Summerhill also have
approved the transaction. The Board of Directors of McNeil Investors, Inc. based
its approval upon, among other things, the recommendation of a Special Committee
of the Board,  appointed at the beginning of the  discussions  with Whitehall to
represent the interests of holders of limited  partnership  interests in each of
the Partnerships.  In addition,  the Special Committee and the Board relied upon
fairness  opinions given by Robert A. Stanger & Co., Inc.  ("Stanger & Co."), an
independent  financial  advisor  to the  Partnerships,  to the  effect  that the
aggregate  consideration  is  fair  to the  holders  of each  class  of  limited
partnership  interests  in each of the  Partnerships.  The  Special  Committee's
recommendation  was also  based upon the  separate  opinions  of Eastdil  Realty
Company ("Eastdil"), the independent financial advisor to the Special Committee.
Stanger & Co. and Eastdil have each also  rendered an opinion that the aggregate
consideration  to be paid for the  general  partnership  interests  and  limited
partnership  interests  in all of the  Partnerships  and the assets of McREMI is
fair from a  financial  point of view to the  holders  of each  class of limited
partnership interests in each of the Partnerships.

Each of the Partnerships'  participation in the transaction is subject to, among
other  conditions,  the  approval by a majority  of the limited  partners of the
respective   Partnerships.   The  approval  of  the  limited   partners  of  the
Partnerships  will be sought at meetings to be held in the coming  months  after
the filing of proxy statements with the Securities and Exchange  Commission with
respect to the publicly traded Partnerships, and the subsequent mailing of proxy
statements to the limited partners. Preliminary proxy statements were filed with
the SEC on August 3, 1999 and amended proxy  statements were filed September 30,
1999, October 21, 1999 and November 10, 1999.





<PAGE>
The aggregate  consideration in the transaction has been allocated preliminarily
among the general partnership interests and the limited partnership interests in
each of the Partnerships and McREMI,  based upon an allocation analysis prepared
by Stanger & Co. and confirmed by Eastdil.  Based upon this allocation  analysis
and the fairness  opinions  rendered by Stanger & Co. and  Eastdil,  the Special
Committee,  the Board of Directors of McNeil  Investors,  Inc.,  the  respective
general  partners of Regency North  Associates,  Fairfax  Associates  and McNeil
Summerhill  have each  unanimously  approved  the  allocation  of the  aggregate
consideration.   The  estimated  aggregate  consideration  and  working  capital
distribution  to be  received  per unit of limited  partnership  interest of the
Partnership were estimated as $99 (Current Income Units only).

McNeil Partners,  L.P. will contribute its real estate investment and management
company  business to a  subsidiary  of WXI/McN  Realty,  L.L.C.,  along with its
general  partnership  interests in the Partnerships and its limited  partnership
interests in the wholly-owned Partnerships, having an aggregate allocated value,
as  determined  by  Stanger  &  Co.,  of  approximately  $58,640,000,  of  which
approximately  $29,400,000  reflects  balances due to McNeil Partners,  L.P. and
McREMI as reflected on the  Partnerships'  financial  statements as of March 31,
1999.

The above estimates of the Partnership per unit estimated  merger  consideration
and working capital  distribution and the interest of McNeil Partners,  L.P. are
based upon, among other things, the balance sheet of the Partnership as of March
31, 1999,  adjusted for intangible  assets,  non-cash  liabilities,  transaction
expenses  and the McNeil  Partners,  L.P.  interest in the  Partnership.  Actual
amounts,  including the estimate  allocable to McNeil Partners,  L.P., will vary
with the performance of the Partnership and McNeil  Partners,  L.P.  through the
closing date.  The above  estimated  merger  consideration  and special  working
capital  distribution  will be adjusted  at closing to reflect the then  working
capital position of the Partnership.

Whitehall is a $2.26 billion equity fund and is the seventh in a series of funds
sponsored and capitalized by Goldman, Sachs & Co. and its affiliates, along with
public and private investors, to acquire real estate worldwide.

RESULTS OF OPERATIONS
---------------------

Revenue:

Total revenue  increased by $4,277 and decreased by $1,389,916 for the three and
nine months  ended  September  30, 1999,  respectively,  as compared to the same
periods in 1998, as discussed below.

Rental revenue for the three and nine months ended  September 30, 1999 increased
by $952 and decreased by $519,455, respectively, in relation to the same periods
in the prior  year.  Excluding  rental  revenue  from Fort Meigs  Plaza and Wise
County Plaza, which were disposed of in 1998, rental revenue increased by $6,626
and  $48,088  for  the  three  and  nine  months  ending   September  30,  1999,
respectively,  as compared to the same periods in 1998. Rental revenue increased
by approximately $29,000, $25,000, $17,000 and $14,000 at Woodcreek, Governour's
Square, Breckenridge, and Bedford Green Apartments,  respectively, mainly due to
an increase in rental rates charged to tenants. This increase in rental revenues
was partially offset by an  approximately  $35,000 decrease in rental revenue at
Evergreen Square Apartments due to a decrease in occupancy at the property.



<PAGE>
Interest  income  increased by $3,325 and  decreased by $7,111 for the three and
nine  months  ended  September  30,  1999,  respectively,  in  relation  to  the
comparable  periods in 1998.  The overall  decrease  was mainly due to a greater
average amount of cash and cash equivalents held by the Partnership in the first
half of 1998.

In the second quarter of 1998, the Partnership recognized a $863,350 gain on the
sale of Fort Meigs Plaza Shopping Center as further discussed in Item 1, Note 5.
No such gain was recognized in the first nine months of 1999.

Expenses:

Total expenses  decreased by $103,660 and $944,813 for the three and nine months
ended September 30, 1999, respectively, as compared to the same periods in 1998.
Excluding the sale of Fort Meigs Plaza and the  foreclosure of Wise County Plaza
in 1998, total expenses  decreased by $75,562 and $222,726 during the same three
and nine month periods. This decrease in expenses was mainly due to decreases in
interest - affiliates, general and administrative and general and administrative
- affiliates, as discussed below.

Interest  expense  for the  three  and nine  months  ended  September  30,  1999
decreased by $3,163 and $253,840,  respectively, in relation to the same periods
in the prior year. The decrease was mainly due to the foreclosure of Wise County
Plaza in May 1998.

Interest - affiliates  decreased by $137,371 for the nine months ended September
30, 1999, as compared to September 30, 1998.  The decrease was mainly the result
of the April 1998 payoff of the  affiliate  loans  secured by Fort Meigs  Plaza.
Additionally,  in April 1998 the Partnership repaid $630,574 of interest-bearing
advances from affiliates  ($17,684 of interest was recorded on these advances in
the first nine months of 1998).

In the  three  and nine  months  ended  September  30,  1999,  depreciation  and
amortization  decreased  by $7,257  and  $139,037,  property  management  fees -
affiliates  decreased by $614 and $36,744 and other property  operating expenses
decreased by $21,662 and $50,627,  respectively, as compared to the same periods
in 1998.  These decreases were mainly  attributable to Fort Meigs Plaza and Wise
County Plaza, which were disposed of in 1998.

Property taxes for the three and nine months ended  September 30, 1999 increased
by $474 and decreased by $39,025,  respectively, as compared to the same periods
in 1998 due to the disposition of Fort Meigs Plaza and Wise County Plaza.

General and  administrative  expenses  decreased by $32,609 and $172,116 for the
three and nine months ended September 30, 1999, respectively, as compared to the
same  periods in the prior year.  The  decrease  was mainly due to a  $(293,841)
reallocation of previously paid  transaction  costs among the  Partnerships  and
McREMI in the second quarter of 1999 (see Item 1, Note 7),  partially  offset by
an increase in costs related to this transaction in the first half of 1999.

For  the  three  and  nine  months  ended   September  30,  1999,   general  and
administrative - affiliates decreased by $20,147 and $95,161,  respectively,  as
compared to the same periods in 1998.  The decrease was mainly due to a decrease
in asset  management  fees due to a decline in the  tangible  asset value of the
Partnership, on which the fees are based, as a result of the disposition of Fort
Meigs Plaza and Wise County Plaza in 1998. In addition,  there was a decrease in
overhead expenses allocated to the Partnership by McREMI. The amount of expenses
allocated  by McREMI is  partly a  function  of the  number  of  properties  the
Partnership  owns,  which decreased in 1999 due to the disposition of Fort Meigs
Plaza and Wise County Plaza in 1998.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

At  September  30,  1999,  the  Partnership  held cash and cash  equivalents  of
$1,457,534.

Cash of $832,603  was  provided by  operating  activities  during the first nine
months of 1999 as compared to $457,985  provided during the same period in 1998.
Excluding  cash  provided  by  operations  of Fort Meigs Plaza which was sold in
April 1998 and Wise  County  Plaza  which was  foreclosed  on in May 1998,  cash
provided by operating  activities increased by $452,741 in the first nine months
of 1999.  The  increase  was  partially  due to a decrease in  interest  paid to
affiliates.  The  Partnership  paid  $182,091 of interest  accrued on  affiliate
advances in the first half of 1998. Cash received from tenants  increased due to
an increase in rental  revenue and security  deposits  collected from tenants in
1999. In addition, there was a decrease in cash paid to suppliers in 1999 due to
a decline in general and administrative expenses, as previously discussed.

Cash used for  additions  to real estate  investments  totaled  $459,836 for the
first nine months of 1999 as compared to $284,204 for the same period in 1998. A
greater  amount  was  expended  in  1999  for  windows  at  Governour's   Square
Apartments,  repaving of the parking lot at Woodcreek Apartments and replacement
of roofs and exterior carpentry at Evergreen Square Apartments.

In  April  1998,  the  Partnership  received  $3,698,365  in  proceeds  from the
disposition  of Fort Meigs  Plaza,  $3,534,157  of which was used to pay off the
principal balance of its mortgage notes payable - affiliate.

The  Partnership  repaid  $630,574 of advances from affiliates in the first nine
months of 1998.  No such  advances  were repaid  during the first nine months of
1999.

Short-term liquidity

In 1999,  present cash balances and operations of the properties are expected to
provide sufficient cash for normal operating expenses, debt service payments and
budgeted capital improvements.

The  Partnership  has no  established  lines of  credit  from  outside  sources.
Although  affiliates of the Partnership  have  previously  funded cash deficits,
affiliates are not obligated to advance funds to the  Partnership  and there can
be no assurance the Partnership will receive  additional  funds.  Other possible
actions  to resolve  cash  deficiencies  include  refinancing,  deferring  major
capital  or  repair   expenditures  on  Partnership   properties   except  where
improvements are expected to enhance the  competitiveness  and  marketability of
the properties,  deferring payables to or arranging financing from affiliates or
the ultimate sale of Partnership properties.

For the  Partnership  as a whole,  management  projects  positive cash flow from
operations in 1999. The  Partnership has budgeted  approximately  $1,017,000 for
necessary capital improvements for all properties in 1999, which are expected to
be funded from available cash reserves or from operations of the properties.

Additional efforts to maintain and improve  Partnership  liquidity have included
continued attention to property management activities. The objective has been to
obtain maximum  occupancy  rates while holding  expenses to levels  necessary to
maximize  cash flows.  The  Partnership  has made  capital  expenditures  on its
properties where improvements were expected to increase the  competitiveness and
marketability of the properties.
<PAGE>
Long-term liquidity

Operations of the  Partnership's  properties are expected to provide  sufficient
cash flow for operating expenses, debt service payments and capital improvements
in the foreseeable  future.  The  Partnership's  working capital needs have been
supported by deferring certain affiliate payables. The Partnership owed payables
to  affiliates   for  property   management   fees,   Partnership   general  and
administrative  expenses,  asset  management fees and disposition  fees totaling
$5,788,442 at September 30, 1999. See "Recent Developments" above.

Distributions

To maintain adequate cash balances of the Partnership,  distributions to Current
Income Unit holders were suspended in 1989.  There have been no distributions to
Growth/Shelter  Units  holders.   Distributions  to  Unit  holders  will  remain
suspended  for the  foreseeable  future.  The General  Partner will  continue to
monitor  the cash  reserves  and working  capital  needs of the  Partnership  to
determine when cash flows will support distributions to the Unit holders.

Forward-Looking Information

Within this document,  certain  statements are made as to the expected occupancy
trends,  financial  condition,  results  of  operations,  and cash  flows of the
Partnership  for periods after  September 30, 1999. All of these  statements are
forward-looking  statements  made pursuant to the safe harbor  provisions of the
Private  Securities  Litigation  Reform Act of 1995.  These  statements  are not
historical  and  involve  risks  and  uncertainties.  The  Partnership's  actual
occupancy trends, financial condition, results of operations, and cash flows for
future  periods may differ  materially  due to several  factors.  These  factors
include,  but are not limited to, the  Partnership's  ability to control  costs,
make necessary  capital  improvements,  negotiate  sales or  refinancings of its
properties, and respond to changing economic and competitive factors.

YEAR 2000 DISCLOSURE
--------------------

State of readiness
------------------

The year 2000 problem is the result of computer programs being written using two
digits rather than four to define the  applicable  year.  Any programs that have
time-sensitive  software may recognize a date using "00" as the year 1900 rather
than  the  year  2000.   This  could   result  in  major   systems   failure  or
miscalculations.

Management has assessed its  information  technology  ("IT")  infrastructure  to
identify  any systems  that could be affected by the year 2000  problem.  The IT
used by the  Partnership  for  financial  reporting and  significant  accounting
functions was made year 2000 compliant  during recent systems  conversions.  The
software  utilized for these  functions  is licensed by third party  vendors who
have warranted that their systems are year 2000 compliant.








<PAGE>
Management  is  in  the  process  of  evaluating  the  mechanical  and  embedded
technological systems at the various properties.  Management has inventoried all
such systems and queried suppliers,  vendors and manufacturers to determine year
2000  compliance.  Based on this review,  management  believes these systems are
substantially compliant. In circumstances of non-compliance management will work
with the vendor to remedy the problem or seek alternative  suppliers who will be
in compliance.  Management believes that the remediation of any outstanding year
2000  conversion  issues  will not have a  material  or  adverse  effect  on the
Partnership's operations.  However, no estimates can be made as to the potential
adverse impact  resulting from the failure of third party service  providers and
vendors to be year 2000 compliant.

Cost
----

The cost of IT and  embedded  technology  systems  testing  and  upgrades is not
expected to be material to the Partnership. Because all the IT systems have been
upgraded  over the last three years,  all such systems were  compliant,  or made
compliant at no additional cost by third party vendors.  Management  anticipates
the costs of assessing,  testing, and if necessary replacing embedded technology
components will be less than $50,000.  Such costs will be funded from operations
of the Partnership.

Risks
-----

Ultimately,  the potential impact of the year 2000 issue will depend not only on
the corrective measures the Partnership undertakes, but also on the way in which
the year 2000 issue is  addressed  by  government  agencies  and  entities  that
provide services or supplies to the  Partnership.  Management has not determined
the most likely worst case scenario to the  Partnership.  As management  studies
the findings of its property  systems  assessment and testing,  management  will
develop  a better  understanding  of what  would  be the  worst  case  scenario.
Management  believes  that  progress  on all  areas is  proceeding  and that the
Partnership  will  experience  no  adverse  effect  as a result of the year 2000
issue. However, there is no assurance that this will be the case.

Contingency plans
-----------------

Management  is  developing  contingency  plans to  address  potential  year 2000
non-compliance of IT and embedded technology  systems.  Management believes that
failure of any IT system could have an adverse  impact on  operations.  However,
management  believes  that  alternative  systems  are  available  that  could be
utilized to minimize  such impact.  Management  believes that any failure in the
embedded  technology  systems  could have an adverse  impact on that  property's
performance. Management has assessed these risks and expects to have contingency
plans in place by December 31, 1999 for any material potential failures.


<PAGE>
                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
-------  -----------------

1)   James   F. Schofield,  Gerald   C. Gillett,  Donna    S.  Gillett,  Jeffrey
     Homburger, Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil
     Partners L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc.,
     Robert A. McNeil,  Carole J. McNeil,  McNeil  Pacific  Investors Fund 1972,
     Ltd.,  McNeil Real Estate Fund IX,  Ltd.,  McNeil Real Estate Fund X, Ltd.,
     McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil
     Real Estate Fund XIV, Ltd.,  McNeil Real Estate Fund XV, Ltd.,  McNeil Real
     Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate
     Fund XXII, L.P.,  McNeil Real Estate Fund XXIII,  L.P.,  McNeil Real Estate
     Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund
     XXVI,  L.P.,  and McNeil  Real  Estate  Fund  XXVII,  L.P.,  Hearth  Hollow
     Associates, McNeil Midwest Properties I, L.P. and Regency North Associates,
     L.P.,  - Superior  Court of the State of  California  for the County of Los
     Angeles, Case No. BC133799 (Class and Derivative Action Complaint).

     The action  involves  purported  class and  derivative  actions  brought by
     limited  partners  of each of the limited  partnerships  that were named as
     nominal defendants as listed above (the "Partnerships").  Plaintiffs allege
     that McNeil Investors,  Inc., its affiliate McNeil Real Estate  Management,
     Inc.  ("McREMI")  and  three  of their  senior  officers  and/or  directors
     (collectively,  the  "Defendants")  breached  their  fiduciary  duties  and
     certain  obligations under the respective  Amended  Partnership  Agreement.
     Plaintiffs  allege that Defendants have rendered such Units highly illiquid
     and  artificially  depressed the prices that are available for Units on the
     resale market.  Plaintiffs also allege that Defendants  engaged in a course
     of conduct to prevent  the  acquisition  of Units by an  affiliate  of Carl
     Icahn  by  disseminating   purportedly  false,  misleading  and  inadequate
     information.  Plaintiffs  further allege that  Defendants  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.

     On December 16,  1996,  the  Plaintiffs  filed a  consolidated  and amended
     complaint.  Plaintiffs  are suing for breach of fiduciary  duty,  breach of
     contract  and  an  accounting,  alleging,  among  other  things,  that  the
     management  fees paid to the McNeil  affiliates over the last six years are
     excessive,  that these fees  should be reduced  retroactively  and that the
     respective Amended  Partnership  Agreements  governing the Partnerships are
     invalid.

     Defendants filed a demurrer to the consolidated and amended complaint and a
     motion to strike on February 14, 1997,  seeking to dismiss the consolidated
     and  amended  complaint  in all  respects.  The Court  granted  Defendants'
     demurrer,  dismissing the consolidated and amended  complaint with leave to
     amend. On October 31, 1997, the Plaintiffs filed a second  consolidated and
     amended  complaint.  The case was stayed  pending  settlement  discussions.
     Because the settlement contemplated a transaction which included all of the
     Partnerships  and plaintiffs  claimed that an effort should be made to sell
     all of the  Partnerships,  in or around September 1998,  plaintiffs filed a
     third  consolidated and amended  complaint which included  allegations with
     respect to the  Partnerships  which had not been named in previously  filed
     complaints.


<PAGE>
     On September 15, 1998, the parties signed a Stipulation of Settlement.  For
     purposes of settlement,  the parties stipulated to a class comprised of all
     owners of  limited  partner  units in the  Partnerships  during  the period
     beginning June 21, 1991, the earliest date that proxy materials began to be
     issued in connection with the  restructuring of the  Partnerships,  through
     September 15, 1998. As structured,  the Stipulation of Settlement  provided
     for the payment of over $35 million in distributions  and the commitment to
     market the Partnerships for sale, together with McREMI,  through a fair and
     impartial bidding process overseen by a national  investment  banking firm.
     To ensure the integrity of that  process,  defendants  agreed,  among other
     things, to involve  plaintiffs'  counsel in oversight of that process,  and
     plaintiffs'  counsel  retained  an  independent  advisor to  represent  the
     interests  of  limited  partners  of the  Partnerships  in the  event  of a
     transaction. The transaction described in Item 2 - Recent Developments is a
     result  of  that  process.  The  settlement  was  not  conditioned  on  the
     consummation of this transaction.

     On October 6, 1998, the court gave preliminary  approval to the settlement.
     It granted final  approval to the  settlement on July 8, 1999 and entered a
     Final Order and Judgment dismissing the consolidated action with prejudice.
     As a condition  of final  approval,  the court  requested,  and the parties
     agreed  to, a slight  modification  of the  release in the  Stipulation  of
     Settlement  with respect to future claims.  Plaintiffs'  counsel intends to
     seek an order awarding  attorneys' fees and reimbursing their out-of-pocket
     expenses in an amount which is as yet undetermined. Fees and expenses shall
     be  allocated  amongst the  Partnerships  on a pro rata  basis,  based upon
     tangible  asset  value of each such  partnership,  less total  liabilities,
     calculated in accordance  with the Amended  Partnership  Agreements for the
     quarter most recently ended. A Notice of Appeal was filed September 3, 1999
     by High River  Limited  Partnership,  Unicorn  Associates  Corporation  and
     Longacre Corporation.

2)   High  River  Limited   Partnership,  Unicorn  Associates  Corporation   and
     Longacre  Corporation,  et al. v. McNeil Partners,  L.P.  ("MPLP"),  McNeil
     Investors, Inc., McNeil Real Estate Management,  Inc. (McREMI"),  Robert A.
     McNeil  and  Carole J.  McNeil,  - Supreme  Court of the State of New York,
     County of New York, - Index No. 99 603526.

     On July 23,  1999,  High  River and two other  affiliates  of Carl C. Icahn
     (Unicorn  Associates  Corporation  and  Longacre   Corporation),   filed  a
     complaint for damages in the Supreme Court of the State of New York, County
     of New York.  Plaintiffs allege that the defendants  improperly  interfered
     with  tender  offers made by High River for  limited  partner  units in the
     Partnership  and other  affiliated  partnerships  in which  MPLP  serves as
     General Partner (the "McNeil Partnerships"), by, among other things, filing
     purportedly  frivolous  litigation  to delay High River's  offers,  issuing
     purportedly  false  and  misleading  statements  opposing  the  offers  and
     purportedly  forcing  High River itself to file  litigation  to enforce its
     rights. High River also alleges that as a result the defendants caused High
     River to incur undue expense and that the defendants  ultimately  prevented
     High River  from  acquiring  a greater  number of  limited  partner  units.
     Plaintiffs also allege that the defendants  improperly  excluded High River
     from  participating  in the  auction  process  for the  sale of the  McNeil
     Partnerships,  and otherwise took steps to prevent its participation in the
     auction.  In  addition,  plaintiffs,  who are limited  partners  in,  among
     others,  McNeil  Funds IX, X, XI, XII,  XIV, XV, XX,  XXIV,  XXV,  XXVI and
     XXVII, have also sued the defendants based on their status as opt-outs from
     the  Schofield  settlement.  Plaintiffs  seek  undisclosed  damages  and an
     accounting.
<PAGE>
     On July 30, 1999,  defendants  filed an answer to the High River Complaint,
     denying  each and every  material  allegation  contained  in the High River
     Complaint   and  asserting   several   affirmative   defenses.   Settlement
     negotiations are underway.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-------  --------------------------------

(a)      Exhibits.

         Exhibit
         Number                     Description
         -------                    -----------

         4.                         Amended and  Restated   Limited  Partnership
                                    Agreement     dated    March    26,    1992.
                                    (Incorporated  by  reference  to the Current
                                    Report of the  Registrant  on Form 8-K dated
                                    March 26, 1992, as filed on April 9, 1992).

         11.                        Statement  regarding  computation   of   Net
                                    Income (Loss) per Limited  Partnership Unit:
                                    Net income  (loss) per  limited  partnership
                                    unit is  computed  by  dividing  net  income
                                    (loss)  allocated to the limited partners by
                                    the  weighted   average  number  of  limited
                                    partnership  units  outstanding.   Per  unit
                                    information   has  been  computed  based  on
                                    24,863 Current  Income Units  outstanding in
                                    1999  and  1998,   and   22,035  and  22,085
                                    Growth/Shelter Units outstanding in 1999 and
                                    1998, respectively.

         27.                        Financial    Data   Schedule for the quarter
                                    ended September 30, 1999.


(b)       Reports  on Form 8-K.  A Report  on Form  8-K  dated  July 8, 1999 was
          filed on July 9, 1999  regarding  the letter received from High  River
          Limited Partnership.

<PAGE>
                        MCNEIL REAL ESTATE FUND XXI, 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 XXI, L.P.

                              By:  McNeil Partners, L.P., General Partner

                                   By: McNeil Investors, Inc., General Partner






November 15, 1999                  By: /s/  Ron K. Taylor
-----------------                     ------------------------------------------
Date                                   Ron K. Taylor
                                       President and Director of McNeil
                                         Investors, Inc.
                                       (Principal Financial Officer)




November 15, 1999                  By: /s/  Carol A. Fahs
-----------------                     ------------------------------------------
Date                                   Carol A. Fahs
                                       Vice President of McNeil Investors, Inc.
                                       (Principal Accounting Officer)