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            March 31, 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>

                                                                         March 31,         December 31,
                                                                           1999                 1998
                                                                       -------------       --------------
ASSETS
------

Real estate investments:
<S>                                                                    <C>                  <C>         
   Land .......................................................        $  1,842,544         $  1,842,544
   Buildings and improvements .................................          22,535,805           22,468,887
                                                                       ------------         ------------
                                                                         24,378,349           24,311,431
   Less:  Accumulated depreciation and amortization ...........         (12,915,466)         (12,611,818)
                                                                       ------------         ------------
                                                                         11,462,883           11,699,613

Cash and cash equivalents .....................................           1,315,755            1,253,238
Cash segregated for security deposits .........................             171,727              181,524
Accounts receivable ...........................................              22,459               25,391
Escrow deposits ...............................................             414,801              470,958
Deferred borrowing costs, net of accumulated amortiz-
   ation of $271,853 and $255,111 at March 31, 1999
   and December 31, 1998, respectively ........................             289,075              305,817
Prepaid expenses and other assets .............................              35,922               35,922
                                                                       ------------         ------------
                                                                       $ 13,712,622         $ 13,972,463
                                                                       ============         ============

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

Mortgage notes payable, net ...................................        $ 12,323,090         $ 12,372,597
Accounts payable and accrued expenses .........................             178,303              172,803
Accrued property taxes ........................................             218,510              304,699
Payable to affiliates .........................................           5,533,168            5,446,918
Security deposits and deferred rental revenue .................             179,977              170,108
                                                                       ------------         ------------
                                                                         18,433,048           18,467,125
                                                                       ------------         ------------
Partners' deficit:
   Limited  partners - 50,000 Units authorized; 46,898
     and 46,948 Units outstanding at March 31, 1999 and 
     December 31, 1998,  respectively  (24,863 Current
     Income Units and 22,035 Growth/Shelter Units out-
     standing at March 31, 1999 and 24,863 Current
     Income Units and 22,085 Growth/Shelter
     Units outstanding at December 31,1998) ...................          (4,355,609)          (4,132,103)
   General Partner ............................................            (364,817)            (362,559)
                                                                       ------------         ------------
                                                                         (4,720,426)          (4,494,662)
                                                                       ------------         ------------
                                                                       $ 13,712,622         $ 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
                                                                                  March 31,
                                                                       -------------------------------
                                                                           1999                1998
                                                                       -----------         -----------
Revenue:
<S>                                                                    <C>                 <C>        
   Rental revenue .............................................        $ 1,280,114         $ 1,654,081
   Interest ...................................................             10,658              16,801
                                                                       -----------         -----------
     Total revenue ............................................          1,290,772           1,670,882
                                                                       -----------         -----------

Expenses:
   Interest ...................................................            280,751             420,825
   Interest - affiliates ......................................                 --             125,780
   Depreciation and amortization ..............................            303,648             387,258
   Property taxes .............................................            105,600             137,585
   Personnel costs ............................................            199,318             202,934
   Utilities ..................................................            105,406             116,969
   Repairs and maintenance ....................................            156,363             163,906
   Property management fees - affiliates ......................             64,134              86,281
   Other property operating expenses ..........................             81,032             103,910
   General and administrative .................................             88,649              92,496
   General and administrative - affiliates ....................            131,635             170,591
                                                                       -----------         -----------
     Total expenses ...........................................          1,516,536           2,008,535
                                                                       -----------         -----------

Net loss ......................................................        $  (225,764)        $  (337,653)
                                                                       ===========         ===========

Net loss allocable to limited partners -
   Current Income Unit ........................................        $   (20,319)        $   (30,389)
Net loss allocable to limited partners -
   Growth/Shelter Unit ........................................           (203,187)           (303,888)
Net loss allocable to General Partner .........................             (2,258)             (3,376)
                                                                       -----------         -----------
Net loss ......................................................        $  (225,764)        $  (337,653)
                                                                       ===========         ===========

Net loss per limited partnership unit:
Current Income Units ..........................................        $      (.82)        $     (1.22)
                                                                       ===========         ===========

Growth/Shelter Units ..........................................        $     (9.22)        $    (13.76)
                                                                       ===========         ===========
</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 Three Months Ended March 31, 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 loss
   General Partner .........................             (3,376)                 --              (3,376)
   Current Income Units ....................                 --             (30,389)            (30,389)
   Growth/Shelter Units ....................                 --            (303,888)           (303,888)
                                                    -----------         -----------         -----------
Total net loss .............................             (3,376)           (334,277)           (337,653)
                                                    -----------         -----------         -----------

Balance at March 31, 1998 ..................        $  (379,984)        $(5,857,251)        $(6,237,235)
                                                    ===========         ===========         ===========


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

Net loss
   General Partner .........................             (2,258)                 --              (2,258)
   Current Income Units ....................                 --             (20,319)            (20,319)
   Growth/Shelter Units ....................                 --            (203,187)           (203,187)
                                                    -----------         -----------         -----------
Total net loss .............................             (2,258)           (223,506)           (225,764)
                                                    -----------         -----------         -----------

Balance at March 31, 1999 ..................        $  (364,817)        $(4,355,609)        $(4,720,426)
                                                    ===========         ===========         ===========
</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>
                                                                    Three Months Ended
                                                                          March 31,
                                                              --------------------------------
                                                                  1999               1998
                                                              ------------        ------------

Cash flows from operating activities:
<S>                                                           <C>                 <C>        
   Cash received from tenants ........................        $ 1,296,740         $ 1,631,609
   Cash paid to suppliers ............................           (640,521)           (787,618)
   Cash paid to affiliates ...........................           (109,519)            (83,284)
   Interest received .................................             10,658              16,801
   Interest paid .....................................           (258,818)           (365,004)
   Interest paid to affiliates .......................                 --            (108,131)
   Property taxes paid and escrowed ..................           (114,104)           (153,371)
                                                              -----------         -----------
Net cash provided by operating activities ............            184,436             151,002
                                                              -----------         -----------

Cash flows from investing activities:
   Additions to real estate investments ..............            (66,918)            (41,363)
                                                              -----------         -----------

Cash flows from financing activities:
   Principal payments on mortgage notes
     payable .........................................            (55,001)            (66,979)
   Principal payments on mortgage notes
     payable - affiliate .............................                 --              (4,090)
                                                              -----------         -----------
Net cash used in financing activities ................            (55,001)            (71,069)
                                                              -----------         -----------

Net increase in cash and cash equivalents ............             62,517              38,570

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

Cash and cash equivalents at end of period ...........        $ 1,315,755         $ 1,856,155
                                                              ===========         ===========
</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 Loss to Net Cash Provided by
                              Operating Activities

<TABLE>
<CAPTION>

                                                                       Three Months Ended
                                                                           March 31,
                                                                    1999              1998
                                                                 ----------        ----------
<S>                                                              <C>               <C>       
Net loss ................................................        $(225,764)        $(337,653)
                                                                 ---------         ---------

Adjustments to reconcile net loss to net cash 
   provided by operating activities:
   Depreciation and amortization ........................          303,648           387,258
   Amortization of deferred borrowing costs .............           16,742            15,629
   Amortization of discounts on mortgage
     notes payable ......................................            5,494             5,222
   Accrued interest on advances from affiliates .........               --            14,777
   Changes in assets and liabilities:
     Cash segregated for security deposits ..............            9,797           (15,653)
     Accounts receivable ................................            2,932              (453)
     Escrow deposits ....................................           56,157            91,890
     Prepaid expenses and other assets ..................               --            (5,641)
     Accounts payable and accrued expenses ..............            5,500           (44,095)
     Accrued property taxes .............................          (86,189)         (129,496)
     Payable to affiliates ..............................           86,250           173,588
     Security deposits and deferred rental
       revenue ..........................................            9,869            (4,371)
                                                                 ---------         ---------

       Total adjustments ................................          410,200           488,655
                                                                 ---------         ---------

Net cash provided by operating activities ...............        $ 184,436         $ 151,002
                                                                 =========         =========
</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)

                                 March 31, 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 three months ended March 31, 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.
-------

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.

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 $1,483,244 and $1,443,393 were outstanding at
March 31, 1999 and December 31, 1998, respectively.





<PAGE>
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 $3,682,123 and $3,636,836 were outstanding at March 31, 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 March 31,
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>
                                                                     Three Months Ended
                                                                         March 31,
                                                                 ------------------------
                                                                   1999            1998
                                                                 --------        --------
<S>                                                              <C>             <C>     
Property management fees ................................        $ 64,134        $ 86,281
Charged to interest - affiliates:
   Interest on advances from affiliates .................              --          14,777
   Interest on mortgage notes payable - affiliate .......              --         111,003
Charged to general and administrative -affiliates: ......
   Partnership administration ...........................          63,253          69,374
   Asset management fee .................................          68,382         101,217
                                                                 --------        --------
                                                                 $195,769        $382,652
                                                                 ========        ========
</TABLE>

Payable  to  affiliates  at March  31,  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.




<PAGE>
The mortgage  notes payable - affiliate  secured by Fort Meigs Plaza were repaid
in full when the property was sold in April 1998. See Note 4.

NOTE 4.
-------

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.

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 5.
-------

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.

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 three months of 1999 of $225,764 as compared to a net loss of $337,653 for
the first three months of 1998.  Revenues  decreased to  $1,290,772 in the first
quarter of 1999 from  $1,670,882  in the first quarter of 1998,  while  expenses
decreased to  $1,516,536  in the first  quarter of 1999 from  $2,008,535  in the
first quarter of 1998.

Net cash  provided by  operating  activities  was  $184,436  for the first three
months of 1999. The Partnership  expended  $66,918 for capital  improvements and
$55,001  for  regularly  scheduled  principal  payments  on its  mortgage  notes
payable.  Cash and cash  equivalents  increased  by $62,517  in the first  three
months of 1999, leaving a balance of $1,315,755 at March 31, 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 March 31, 1999 the  Partnership  owed payables to affiliates for
property management fees, Partnership general and administrative expenses, asset
management fees and disposition fees totaling $5,533,168.



<PAGE>
RESULTS OF OPERATIONS
---------------------

Revenue:

Total revenue decreased by $380,110 for the three months ended March 31, 1999 as
compared to the same period in 1998, as discussed below.

Rental revenue in the first quarter of 1999 decreased by $373,967 in relation to
the prior year.  Excluding  rental revenue from Fort Meigs Plaza and Wise County
Plaza,  which were  disposed of in 1998,  rental  revenue  increased by $33,562.
Rental revenue increased at all of the Partnership's remaining properties in the
first  quarter of 1999,  mainly due to an increase in rental rates at all of the
properties.  The  largest  increases,  of  approximately  $12,000  and  $10,000,
occurred at Woodcreek and Breckenridge apartments, respectively.

Interest income decreased by $6,143 for the three months ended March 31, 1999 in
relation to the comparable period in 1998, mainly due to a decline in the amount
of cash  available for  short-term  investment in the first quarter of 1999. The
Partnership  held cash and cash  equivalents of  approximately  $1.32 million at
March 31, 1999 as compared to approximately $1.86 million at March 31, 1998.

Expenses:

Total  expenses  decreased  by  $491,999  in the first  three  months of 1999 as
compared to the same period in 1998.  Excluding the sale of Fort Meigs Plaza and
the  foreclosure  of Wise County  Plaza in 1998,  total  expenses  decreased  by
$37,714.  This  decrease in expenses  was mainly due to  decreases in interest -
affiliates and general and administrative - affiliates, as discussed below.

Interest expense for the first quarter of 1999 decreased by $140,074 in relation
to the first quarter of 1998. The decrease was mainly due to the  foreclosure of
Wise County Plaza in May 1998.

Interest - affiliates decreased by $125,780 in the first three months of 1999 as
compared  to the same  period in the prior  year.  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  ($14,778 of interest was recorded on
these advances in the first quarter of 1998).

Depreciation  and  amortization,  property  taxes,  property  management  fees -
affiliates and other property operating expenses decreased by $83,610,  $31,985,
$22,147 and $22,878, respectively, in the first three months of 1999 as compared
to the same period in 1998.  These  decreases were mainly  attributable  to Fort
Meigs  Plaza  and Wise  County  Plaza,  which  were  disposed  of in  1998,  but
subsequent to March 31, 1998.

For the three  months  ended  March  31,  1999,  general  and  administrative  -
affiliates  decreased  by $38,956 as compared  to the same  period 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.






<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

At March 31, 1999, the Partnership held cash and cash equivalents of $1,315,755.

Cash of $184,436  was provided by  operating  activities  during the first three
months of 1999 as compared to $151,002  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 $88,865 in the first  quarter of
1999.  The increase was mainly due to an increase in cash  received from tenants
and a decrease  in cash paid to  suppliers,  partially  offset by an increase in
cash paid to affiliates in 1999.  The increase in cash received from tenants was
due to an  increase in rental  revenue  and  security  deposits  collected  from
tenants in 1999.  The timing of the payment of invoices at the end of the period
was the primary  factor in the decrease in cash paid to suppliers.  In the first
quarter of 1999,  the  Partnership  paid an affiliate  approximately  $46,000 of
previously  accrued asset  management fees and reimbursable  expenses.  No asset
management fees or  reimbursable  expenses were paid during the first quarter of
1998.

Cash used for additions to real estate investments totaled $66,918 for the first
three  months of 1999 as  compared  to $41,363  for the same  period in 1998.  A
greater amount was expended in 1999 for windows at Governour's Square Apartments
and for appliances at Breckenridge Apartments and Evergreen Square Apartments.

The  foreclosure of Wise County Plaza in May 1998 resulted in a decrease in cash
used for  principal  payments on mortgage  notes payable to $55,001 in the first
quarter of 1999 from $66,979 in the first quarter of 1998.

No principal payments on mortgage notes payable - affiliate were made in 1999 as
Fort Meigs Plaza was sold and the affiliate loans were repaid in April 1998.

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.






<PAGE>
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.

Long-term liquidity

As previously announced, the Partnership has retained PaineWebber,  Incorporated
as its exclusive financial advisor to explore alternatives to maximize the value
of the  Partnership,  including,  without  limitation,  a  transaction  in which
limited partnership interests in the Partnership are converted into cash. During
the last full week of March,  the Partnership  entered into a 45 day exclusivity
agreement  with a  well-financed  bidder with whom it had commenced  discussions
with respect to a sale  transaction.  The  Partnership  and such party have made
significant  progress in negotiating the terms of a proposed transaction and are
continuing to have intensive discussions with respect to a transaction. In light
on these continuing  negotiations,  the exclusivity  agreement has been extended
for an  additional  21 days until June 4, 1999.  It is possible that the General
Partner  and its  affiliates  will  receive  non-cash  consideration  for  their
ownership  interests in connection  with any such  transaction.  There can be no
assurance  regarding  whether any such  agreement  will be reached nor the terms
thereof.

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
$5,533,168 at March 31, 1999.

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 March 31,  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.


<PAGE>
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.

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.




<PAGE>
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  will assess these risks and develop  plans to mitigate
possible failures by July 1999.

                           PART II. OTHER INFORMATION

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 March 31, 1999.


(b)      Reports on Form 8-K.  There were no reports on Form  8-K  filed  during
         the quarter ended March 31, 1999.



<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






May 17, 1999                    By: /s/  Ron K. Taylor
------------                       ---------------------------------------------
Date                                Ron K. Taylor
                                    President and Director of McNeil 
                                     Investors, Inc.
                                    (Principal Financial Officer)




May 17, 1999                    By: /s/  Carol A. Fahs
------------                       ---------------------------------------------
Date                                Carol A. Fahs
                                    Vice President of McNeil Investors, Inc.
                                    (Principal Accounting Officer)