UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q



[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES 
      EXCHANGE ACT OF 1934


      For the period ended        September 30, 1996
                           -----------------------------------------------------


                                       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  0-14268
                           ----------


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




         California                                 33-0085680
--------------------------------------------------------------------------------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                       Identification No.)




             13760 Noel Road, Suite 700, 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>
                       MCNEIL REAL ESTATE FUND XXII, L.P.

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
------- --------------------
                                 BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                        September 30,       December 31,
                                                                            1996                1995
                                                                       ---------------      --------------

ASSETS
------

Real estate investments:
<S>                                                                    <C>                  <C>           
   Land.....................................................           $       380,414      $      380,414
   Buildings and improvements...............................                10,058,677           9,842,846
                                                                        --------------       -------------
                                                                            10,439,091          10,223,260
   Less:  Accumulated depreciation and amortization.........                (5,033,814)         (4,718,722)
                                                                        --------------       -------------
                                                                             5,405,277           5,504,538

Cash and cash equivalents...................................                   783,554             629,747
Cash segregated for security deposits.......................                    66,170              76,490
Accounts receivable.........................................                     6,716               4,683
Escrow deposits.............................................                   121,893             180,537
Prepaid expenses and other assets, net......................                    11,864              11,936
                                                                        --------------       -------------
                                                                       $     6,395,474      $    6,407,931
                                                                        ==============       =============

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

Mortgage note payable, net..................................           $     5,991,809      $    6,026,515
Accounts payable and accrued expenses.......................                    80,518             133,150
Accrued property taxes .....................................                    61,770              65,931
Payable to affiliates - General Partner.....................                 1,695,764           1,527,935
Security deposits and deferred rental revenue...............                    66,635              73,424
                                                                        --------------       -------------
                                                                             7,896,496           7,826,955
                                                                        --------------       -------------

Partners' deficit:
   Limited  partners - 55,000,000  Units  authorized; 
    33,176,117 and 33,208,117 Units issued and  out-
    standing at September 30, 1996 and December 31, 1995,
    respectively (19,818,088 and 19,825,588 Current 
    Income Units outstanding at September 30, 1996 and
    December 31, 1995, respectively,  and 13,358,029 and
    13,382,529  Growth/Shelter  Units  outstanding  at
    September  30, 1996 and December 31, 1995,
    respectively)...........................................                (1,249,494)         (1,168,315)
   General Partner..........................................                  (251,528)           (250,709)
                                                                        --------------       -------------
                                                                            (1,501,022)         (1,419,024)
                                                                        --------------       -------------
                                                                       $     6,395,474      $    6,407,931
                                                                        ==============       =============
</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 XXII, L.P.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                           Three Months Ended                      Nine Months Ended
                                               September 30,                         September 30,
                                      ---------------------------------    ---------------------------------
                                          1996               1995               1996                1995
                                      --------------    ---------------    --------------     --------------
Revenue:
<S>                                   <C>                <C>               <C>                <C>           
   Rental revenue................     $      570,705     $      555,388    $    1,687,006     $    1,897,441
   Interest......................              7,889              6,041            23,714             18,983
   Gain on legal settlement......                  -                  -                 -             38,749
                                       -------------      -------------     -------------      -------------
     Total revenue...............            578,594            561,429         1,710,720          1,955,173
                                       -------------      -------------     -------------      -------------

Expenses:
   Interest......................            145,202            146,345           436,708            537,671
   Interest - affiliates.........                  -                  -                 -             18,568
   Depreciation and
     amortization................            106,128            112,055           315,092            366,571
   Property taxes................             54,813             53,901           148,661            175,906
   Personnel costs...............             74,615             77,176           226,969            250,021
   Utilities.....................             20,728             24,609            89,876            103,791
   Repair and maintenance........             65,374             50,167           184,246            185,176
   Property management
     fees - affiliates...........             28,247             27,846            83,848             99,459
   Other property operating
     expenses....................             27,661             39,816            79,526            111,495
   General and administrative....             18,229             14,103            60,017             53,783
   General and administrative -
     affiliates..................             52,518             67,832           167,775            198,384
   Loss on disposition of real
     estate......................                  -                  -                 -            245,637
                                       -------------      -------------     -------------      -------------
     Total expenses..............            593,516            613,850         1,792,718          2,346,462
                                       -------------      -------------     -------------      -------------

Net income (loss)................     $      (14,921)    $      (52,421)   $      (81,998)    $     (391,289)
                                       =============      =============     =============      =============

Net income (loss) allocable
   to limited partners - Current
   Income Unit...................     $       (1,343)    $       (4,718)   $       (7,380)    $      (35,216)
Net income (loss) allocable
   to limited partners - Growth
   Shelter Unit..................            (13,429)           (47,179)          (73,798)          (352,160)
Net income (loss) allocable
   to General Partner............               (149)              (524)             (820)            (3,913)
                                       -------------      -------------     -------------      -------------
Net income (loss)................     $      (14,921)    $      (52,421)   $      (81,998)    $     (391,289)
                                       =============      =============     =============      =============

Net income (loss) per thousand 
 limited partnership units:
Current Income Units.............     $         (.07)    $         (.24)   $         (.37)    $       (1.78)
                                       =============      =============     =============      ============

Growth/Shelter Units.............     $        (1.00)    $        (3.52)   $        (5.52)    $      (26.31)
                                       =============      =============     =============      ============
</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 XXII, L.P.

                         STATEMENTS OF PARTNERS' DEFICIT
                                   (Unaudited)

              For the Nine Months Ended September 30, 1996 and 1995


<TABLE>
<CAPTION>
                                                                                                  Total
                                                    General                 Limited               Partners'
                                                    Partner                 Partners              Deficit
                                                 ---------------        ----------------       ---------------
<S>                                              <C>                    <C>                    <C>            
Balance at December 31, 1994..............       $     (247,625)        $      (863,021)       $   (1,110,646)

Net loss
   General Partner........................               (3,913)                      -                (3,913)
   Current Income Units...................                    -                 (35,216)              (35,216)
   Growth/Shelter Units...................                    -                (352,160)             (352,160)
                                                  -------------           -------------         -------------
Total net loss............................               (3,913)               (387,376)             (391,289)
                                                  -------------           -------------         -------------

Balance at September 30,1995..............       $     (251,538)         $   (1,250,397)       $   (1,501,935)
                                                  =============           =============         =============


Balance at December 31, 1995..............       $     (250,709)         $   (1,168,315)       $   (1,419,024)

Net loss
   General Partner........................                 (820)                      -                  (820)
   Current Income Units...................                    -                  (7,380)               (7,380)
   Growth/Shelter Units...................                    -                 (73,798)              (73,798)
                                                  -------------           -------------         -------------
Total net loss............................                 (820)                (81,178)              (81,998)
                                                  -------------           -------------         -------------

Balance at September 30, 1996.............       $     (251,529)         $   (1,249,494)       $   (1,501,022)
                                                  =============           =============         =============

</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 XXII, L.P.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>

                                                                             Nine Months Ended
                                                                                 September 30,
                                                                 ------------------------------------------
                                                                        1996                     1995
                                                                 ------------------        ----------------
Cash flows from operating activities:
<S>                                                              <C>                       <C>            
   Cash received from tenants........................            $       1,695,554         $     1,975,284
   Cash received from legal settlement...............                            -                  38,749
   Cash paid to suppliers............................                     (701,953)               (691,320)
   Cash paid to affiliates...........................                      (83,794)               (352,931)
   Interest received.................................                       23,714                  18,983
   Interest paid.....................................                     (409,159)               (539,765)
   Interest paid to affiliates.......................                            -                (149,043)
   Property taxes paid and escrowed..................                      (92,104)               (118,904)
                                                                  ----------------          --------------
Net cash provided by operating activities............                      432,258                 181,053
                                                                  ----------------          --------------

Cash flows from investing activities:
   Additions to real estate investments..............                     (215,831)               (208,526)
   Proceeds from sale of real estate.................                            -                 738,914
                                                                  ----------------          --------------
Net cash provided by (used in) investing activities..                     (215,831)                530,388
                                                                  ----------------          --------------

Cash flows from financing activities:
   Principal payments on mortgage notes
     payable.........................................                      (62,620)                (71,364)
   Repayment of advances from affiliates -
     General Partner.................................                            -                (784,654)
                                                                  ----------------          --------------
Net cash used in financing activities................                      (62,620)               (856,018)
                                                                  ----------------          --------------

Net increase (decrease) in cash and cash equivalents.                      153,807                (144,577)

Cash and cash equivalents at beginning of
   period............................................                      629,747                 589,211
                                                                  ----------------          --------------

Cash and cash equivalents at end of period...........            $         783,554         $       444,634
                                                                  ================          ==============
</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 XXII, L.P.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

               Reconciliation of Net Loss to Net Cash Provided by
                              Operating Activities


<TABLE>
<CAPTION>
                                                                            Nine Months Ended
                                                                                September 30,
                                                                  -----------------------------------------
                                                                        1996                     1995
                                                                  -----------------        ----------------
<S>                                                               <C>                      <C>             
Net loss.............................................             $        (81,998)        $      (391,289)
                                                                   ---------------          --------------

Adjustments to reconcile net loss to net cash
   provided by operating activities:
   Depreciation and amortization.....................                      315,092                 366,571
   Amortization of deferred borrowing costs..........                            -                   2,936
   Amortization of discounts on mortgage
     note payable....................................                       27,914                  26,715
   Interest added to advances from affiliates -
     General Partner, net of payments................                            -                (130,475)
   Loss on disposition of real estate................                            -                 245,637
   Changes in assets and liabilities:
     Cash segregated for security deposits...........                       10,320                   9,688
     Accounts receivable.............................                       (2,033)                 55,323
     Escrow deposits.................................                       58,644                 216,550
     Prepaid expenses and other assets...............                           72                   2,420
     Accounts payable and accrued expenses...........                      (52,632)                (23,397)
     Accrued property taxes..........................                       (4,161)               (157,842)
     Payable to affiliates - General Partner.........                      167,829                 (55,088)
     Security deposits and deferred rental
       revenue.......................................                       (6,789)                 13,304
                                                                   ---------------          --------------
       Total adjustments.............................                      514,256                 572,342
                                                                   ---------------          --------------

Net cash provided by operating activities............             $        432,258         $       181,053
                                                                   ===============          ==============
</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 XXII, L.P.

                          Notes to Financial Statements
                                   (Unaudited)

                               September 30, 1996

NOTE 1.
-------

McNeil Real Estate  Fund XXII,  L.P.,  (the  "Partnership"),  formerly  known as
Southmark  Realty  Partners  II, Ltd.,  was  organized on November 30, 1984 as a
limited  partnership  under the  provisions of the  California  Revised  Limited
Partnership Act to acquire and operate  commercial and  residential  properties.
The general  partner of the Partnership is McNeil  Partners,  L.P. (the "General
Partner"),  a Delaware  limited  partnership,  an  affiliate of Robert A. McNeil
("McNeil").  The principal place of business for the Partnership and the General
Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.

In the opinion of management,  the financial  statements reflect all adjustments
necessary for a fair  presentation of the Partnership's  financial  position and
results  of  operations.  All  adjustments  were of a normal  recurring  nature.
However,  the results of operations for the nine months ended September 30, 1996
are not necessarily indicative of the results to be expected for the year ending
December 31, 1996.

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,  1995,  and the  notes  thereto,  as  filed  with the
Securities and Exchange  Commission,  which is available upon request by writing
to McNeil Real Estate Fund XXII, L.P., c/o McNeil Real Estate Management,  Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.

NOTE 3.
-------

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  The  Partnership  has suffered
recurring losses from operations and the Partnership's  only property is in need
of major capital improvements in order to maintain occupancy and rental rates at
a level to continue to support  operations and debt service.  Additionally,  the
property is part of a four phase  complex.  Phase I of the complex  defaulted on
the  mortgage  loan  to the  United  States  Department  of  Housing  and  Urban
Development  in January 1993.  The property is subject to  foreclosure  unless a
refinancing  agreement  can be reached  with the  lender.  If Phase I is lost to
foreclosure,  it would have a significant impact on the operations of Phase III,
owned by the  Partnership,  as the pool and clubhouse are located in Phase I. As
of September 30, 1996, no steps have been taken towards the foreclosure of Phase
I. These conditions raise substantial  doubt about the Partnership's  ability to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of these uncertainties.





<PAGE>
NOTE 4.
-------

The  Partnership  pays property  management fees equal to 5% of the gross rental
receipts for its  residential  property and paid 6% of gross rental revenues for
its commercial property to McNeil Real Estate Management,  Inc.  ("McREMI"),  an
affiliate of McNeil, for providing property management and leasing services.

The  Partnership  reimburses  McREMI  for  its  costs,  including  overhead,  of
administering the Partnership's affairs.

The  Partnership  is incurring 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  subsequent to
1999.  Total  accrued  but  unpaid  asset  management  fees of  $1,093,465  were
outstanding at September 30, 1996.

The  Partnership  pays a disposition  fee to an affiliate of 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.  The Partnership  incurred $138,750 of such
fees in  connection  with the sale of Wyoming  Mall on March 31,  1995 which was
paid in April 1995.

The  General  Partner  has,  in its  discretion,  advanced  funds to enable  the
Partnership  to  meet  its  working  capital  requirements.  The  advances  were
unsecured,  due on demand  and  accrued  interest  at a rate  equal to the prime
lending rate plus 1%.

McNeil Real Estate Fund XXI, L.P., an affiliate of the General Partner and joint
owner  of  Wyoming  Mall  had  advanced  funds  to the  Partnership  for  tenant
improvements and operations at Wyoming Mall. The advances were unsecured, due on
demand and accrued interest at a rate of prime plus 3 1/2%.

In April 1995,  the  Partnership  utilized the proceeds from the sale of Wyoming
Mall to  repay  all  outstanding  affiliate  advances  and the  related  accrued
interest.
















<PAGE>
Compensation  and  reimbursements  paid to or  accrued  for the  benefit  of the
General Partner and its affiliates are as follows:
                                                           Nine Months Ended
                                                              September 30,
                                                         ---------------------
                                                           1996         1995
                                                         ---------   ---------

Property management fees.............................    $  83,848   $  99,459
Charged to interest - affiliates:
   Interest on advances from affiliates - General
     Partner........................................             -       18,568
Charged to loss on disposition of real estate:
   Disposition fee..................................             -      138,750
Charged to general and administrative -
   affiliates:
   Partnership administration.......................         63,101      86,930
   Asset management fee.............................        104,674     111,454
                                                           --------    --------
                                                          $ 251,623   $ 455,161
                                                           ========    ========


NOTE 6.
-------

Martha Hess; et al. vs. Southmark Equity Partners II, Ltd. (MREF XXV), Southmark
Income Investors,  Ltd. (MREF XX), Southmark Equity Partners,  Ltd. (MREF XXIV),
Southmark Realty Partners III, Ltd. (MREF XXIII),  Southmark Realty Partners II,
Ltd. (MREF XXII), McNeil Partners, L.P. et al. ("Hess");  Kotowski vs. Southmark
Equity  Partners,  Ltd.  (MREF  XXIV) and  Donald  Arceri vs.  Southmark  Income
Investors,  Ltd. (MREF XX) - Illinois  Appellate  Court for the First  District,
Fifth Division,  as consolidated Case No. 90-107 (remanded back to Trial Court -
Circuit Court of Cook County, Illinois County Department,  Chancery Division, as
consolidated Case No. 88 CH 4670 (L92026).

Consolidated  with these cases were an additional 14 matters  against  unrelated
partnership  entities.  The Hess case was filed on May 20, 1988, by Martha Hess,
individually,  and on behalf of a putative class of parties similarly  situated.
The  original,  first,  second  and  third  amended  complaints  in Hess  sought
rescission,  pursuant to the  Illinois  Securities  Act, of over $2.7 million of
principal   invested   in  five  (5)   Southmark   (now   McNeil)   partnerships
("Defendants"),  and other relief including damages for breach of fiduciary duty
and violation of the Illinois  Consumer Fraud and Deceptive  Business  Practices
Act. The  original,  first,  second and third  amended  complaints  in Hess were
dismissed against the defendant-group because the Appellate Court held that they
were not the proper subject of a class action complaint.  Hess was,  thereafter,
amended a fourth time to state causes of action  against  unrelated  partnership
entities.  Hess went to judgment against that unrelated entity and the judgment,
along with the prior  dismissal  of the class  action,  was  appealed.  The Hess
appeal was decided by the  Appellate  Court during  1992.  The  Appellate  Court
affirmed  the  dismissal  of the breach of  fiduciary  duty and  consumer  fraud
claims. The Appellate Court did, however,  reverse in part, holding that certain
putative  class  members  could  file  class  action   complaints   against  the
defendant-group,  which  pursuant  to the  Appellate  Court's  ruling,  included
Southmark  Realty  Partners II, Ltd.  (McNeil Real Estate Fund XXII,  L.P.) (the
"Partnership").  Although  leave to appeal  to the  Illinois  Supreme  Court was
sought, the Illinois Supreme Court refused to hear the appeal. On June 15, 1994,
the Appellate Court issued its mandate sending the case back to Trial Court.
<PAGE>
In late January, 1995, Plaintiffs filed a Motion to File an Amended Consolidated
Class Action Complaint, which amends the complaint to name McNeil Partners, L.P.
as the successor  general  partner to Southmark  Investment  Group. In February,
1995,  Plaintiffs  filed a Motion for Class  Certification.  The  amended  cases
against the defendant-group,  and others are proceeding under the caption George
and Joy Krugler vs. I.R.E.  Real Estate Income Fund,  Jerry and Barbara  Neumann
vs.  Southmark  Equity Partners II (McNeil Real Estate Fund XXV, L.P.),  Richard
and Theresa  Bartoszewski  vs. Southmark Realty Partners III (McNeil Real Estate
Fund XXIII, L.P.), and Edward and Rose Weskerna vs. Southmark Realty Partners II
(McNeil Real Estate Fund XXII, L.P.).

In  September,  1995,  the Court granted  Plaintiffs'  Motion to File an Amended
Complaint,  to Consolidate and for Class Certification.  Defendants answered the
complaint  and plead that the  Plaintiffs  did not give  timely  notice of their
desire to rescind  within six (6) months of knowing  that right,  as required by
law.

Plaintiffs filed a Motion for Summary Judgment against the remaining partnership
defendants,  as well  as the  initial  general  partners.  The  Court  ruled  on
Plaintiffs'  Motion for Summary  Judgment on April 25, 1996 and entered  partial
summary  judgment  against  the  Partnership,  as  well as the  initial  general
partner.  Summary  judgment  against  McNeil  Partners,  L.P.,  as the successor
general partner, was not sought.

On October 22, 1996, the Court entered  judgment  against the Partnership in the
amount of  $347,712,  plus  interest.   Discussions are ongoing with respect  to
the  settlement of the  judgment.  However,  the  Defendants  are  attempting to
negotiate  a  settlement  for a  lesser  amount.  Since  the  final  outcome  is
uncertain, no accrual has been recorded relating to this litigation.

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

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

The Partnership reported a net loss of $81,998 for the first nine months of 1996
as compared to $391,289 for the same period in 1995.

On March 31, 1995,  Wyoming Mall was sold to an unrelated third party for a cash
price of $9,250,000. The Partnership had a 50% undivided interest in the assets,
liabilities  and  operations  of Wyoming  Mall,  owned  jointly with McNeil Real
Estate Fund XXI,  L.P. The  Partnership  received net cash  proceeds of $738,914
from the sale of the property and recorded a loss on  disposition of real estate
of  $245,637.  The  Partnership  recorded  $238,430 of revenue  and  $268,419 of
expense during the first nine months of 1995 for Wyoming Mall.

Harbour  Club  III  is  part  of  a  four-phase  apartment  complex  located  in
Belleville,  Michigan.  Phases I and II of the complex are owned by partnerships
in which McNeil Partners,  L.P. is the general partner;  while Phase IV is owned
by University Real Estate Fund 12, Ltd.,  ("UREF 12").  McREMI had been managing
all four phases of the complex until December 1992, when the property management





<PAGE>
agreement  between  McREMI and UREF 12 was  canceled.  Additionally,  in January
1993,  Phase I defaulted  on the mortgage  loan to HUD and unless a  refinancing
agreement  can  be  reached  with  the  lender,   the  property  is  subject  to
foreclosure.  If Phase I is lost to foreclosure, it would be extremely difficult
to operate Phases II and III because the pool and clubhouse are located in Phase
I.

In  January  1995,  the  Partnership  was able to repay  $220,000  of  affiliate
advances and accrued  interest.  In April 1995,  the  proceeds  from the sale of
Wyoming  Mall enabled the  Partnership  to repay the  remaining  $713,697 of the
affiliate advances and accrued interest.

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

Revenue:

Total  Partnership  revenues  increased  by  $17,220  for the three  months  and
decreased  $244,453 for the nine months ended September 30, 1996,  respectively,
as compared to the same periods of 1995. Rental revenue increased by $15,317 for
the three months and decreased  $210,435  nine months ended  September 30, 1996,
respectively, as compared to the same periods in 1995. The decrease for the nine
months ended  September 30, 1996 is primarily due to the sale of Wyoming Mall in
March 1995.

The Partnership  recorded $38,749 of gain on legal  settlement  during the first
half of 1995. In May 1995, the  Partnership  received cash of $29,292 and common
and preferred stock in the reorganized  Southmark that was subsequently sold for
$9,457, as full satisfaction of claims previously filed in the Bankruptcy Court.

Expenses:

Total  expenses  decreased  $20,334 and  $553,744  for the three months and nine
months  ended  September  30,  1996,  as compared  to the same  periods of 1995,
primarily  due to the sale of Wyoming  Mall.  The effects from this  transaction
were  declines  of  $97,610  for   interest,   $74,256  for   depreciation   and
amortization, $14,203 for property taxes, $21,368 of personnel expenses, $14,700
for  utilities,  $11,659  for  repairs and  maintenance,  $16,412  for  property
management fees - affiliates, and $18,212 for other property operating expenses.
A $245,637 loss on the sale of Wyoming Mall was recorded in March 1995.

In addition to the sale of Wyoming  Mall,  other  factors  affected the level of
expenses reported by Harbor Club III. No interest - affiliates were recorded for
the nine  months  ended  September  30, 1996 as compared to $18,568 for the same
period of 1995.  The sale of Wyoming Mall enabled the  Partnership  to repay all
outstanding affiliate advances, thereby eliminating affiliate interest expense.

Depreciation  expense  increased $22,777 for the nine months ended September 30,
1996 as  compared to the same  period of 1995,  due to the capital  improvements
made at Harbour Club III Apartments.

Property  tax expense  decreased  $13,042  for the three  months and nine months
ended September 30, 1996, respectively, as compared to the same periods of 1995.
This  decrease is due to the  reduction  in property tax expense at Harbour Club
III Apartments that occurred from a successful tax appeal.

Other operating  expenses  decreased $13,757 for the nine months ended September
30 ,1996 as  compared  to the same  period  last year.  This  decrease is due to
reductions in electrical supplies, plumbing supplies and make ready and repairs.
<PAGE>
General and  administrative - affiliates  decreased  $15,314 and $30,609 for the
three months and the nine months ended  September  30,  1996,  respectively,  as
compared to the same periods of 1995.  This is attributable to a decrease in the
number of  properties,  due to the sale of Wyoming  Mall,  to which the overhead
costs are allocated by McREMI.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Partnership was provided $432,258 of cash by operating activities during the
first nine months of 1996 as  compared to $181,053  for the same period in 1995.
Cash received from tenants, cash paid to affiliates, interest paid, and property
taxes paid  decreased due to the sale of Wyoming Mall.  Due to the improved cash
position from the sale of Wyoming Mall, the Partnership was able to pay $149,043
of interest due to  affiliates  during the first half of 1995.  The  Partnership
received  $38,749 of legal  settlement  relating to the claims  previously filed
against Southmark in the Bankruptcy Court during 1995.

Net cash used in investing  activities was $215,831 for the first nine months of
1996 as compared to $530,388 of cash  provided by investing  activities  for the
same period of 1995. The Partnership received $738,914 of cash proceeds from the
sale of Wyoming Mall on March 31, 1995.  Cash used for  additions to real estate
totaled  $215,831  during the first nine  months of 1996 as compared to $208,526
during the same period of 1995.

Net cash used in financing  activities  was $62,620 during the first nine months
of 1996 as compared to $856,018 for the same period of 1995.  Principal payments
on mortgage  notes payable  decreased due to the retirement of the mortgage note
related to Wyoming Mall. During the first nine months of 1995, the improved cash
position  enabled  the  Partnership  to  repay  all  outstanding  advances  from
affiliates of the General Partner.

Short-term liquidity:

At  September  30,  1996,  the  Partnership  held  $783,554  of  cash  and  cash
equivalents,  up $153,807  since December 31, 1995. The balance of cash and cash
equivalents  can be considered no more than a minimum level of cash reserves for
the remaining property's operations.  Harbour Club III Apartments is expected to
provide  sufficient  positive cash flow for normal  operations  and debt service
payments  for the  remainder  of 1996.  However,  Harbour Club III is in need of
major capital  improvements in order to maintain occupancy and rental rates at a
level to continue to support operations and debt service.  The necessary capital
improvements  will have to be funded from outside sources.  No such sources have
been identified.  Management is currently seeking  additional  financing to fund
these  improvements,  however such financing is not assured.  If the property is
unable to obtain  additional funds and cannot maintain  operations at a level to
support its current  debt,  the property may  ultimately be foreclosed on by the
lender.

McNeil Real Estate Fund XXI,  L.P. had  advanced  funds to the  Partnership  for
tenant improvements and operations at Wyoming Mall. The advances were unsecured,
due on demand and  accrued  interest  at a rate of prime  plus 3 1/2%.  In April
1995,  the  proceeds  from the sale of Wyoming  Mall were  utilized to repay the
advances plus the accrued interest due to McNeil Real Estate Fund XXI, L.P.





<PAGE>
The General  Partner has  established a revolving  credit facility not to exceed
$5,000,000 in the aggregate  which is available on a "first-come,  first-served"
basis  to  the  Partnership  and  other  affiliated  partnerships,   if  certain
conditions are met.  Borrowings  under the facility may be used to fund deferred
maintenance,  refinancing  obligations  and working  capital needs.  There is no
assurance  that the  Partnership  will  receive any  additional  funds under the
facility  because no amounts have been reserved for any particular  partnership.
As of September 30, 1996,  $4,082,159 remained available for borrowing under the
facility;  however,  additional  funds could be available as other  partnerships
repay existing borrowings. This commitment will terminate March 26, 1997.

Long-term liquidity:

While the outlook for maintenance of adequate levels of liquidity is adequate in
the short term, should operations  deteriorate and present cash resources become
insufficient to fund current needs, the Partnership  would require other sources
of working capital. No such sources have been identified. The Partnership has no
established  lines of credit from outside  sources.  Other  possible  actions to
resolve cash deficiencies include refinancing,  deferral of capital expenditures
except  where  improvements  are expected to increase  the  competitiveness  and
marketability  of the  properties,  arranging  financing from  affiliates or the
ultimate sale of the property.  A sale or refinancing is a possibility only, and
there are at present no plans for any such sale or refinancing.

These  conditions raise  substantial  doubt about the  Partnership's  ability to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of these uncertainties.

Distributions:

To maintain adequate cash balances of the Partnership,  distributions to Current
Income Unit holders were suspended in 1988.  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.

                           PART II. OTHER INFORMATION

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

1)   HCW Pension Real Estate Fund, Ltd. et al. v. Ernst & Young, BDO  Seidman et
     al. (Case  #92-06560-A).  This suit was filed on behalf of the  Partnership
     and other affiliated  partnerships  (the "Affiliated  Partnerships") on May
     26,  1992,  in the 14th  Judicial  District  Court of  Dallas  County.  The
     petition sought recovery against the Partnership's former auditors, Ernst &
     Young,  for  negligence  and  fraud in  failing  to  detect  and/or  report
     overcharges of fees/expenses by Southmark  Corporation  ("Southmark"),  the
     former   general   partner.   The  former   auditors   initially   asserted
     counterclaims   against  the  Affiliated   Partnerships  based  on  alleged
     fraudulent misrepresentations made to the auditors by the former management
     of  the  Affiliated   Partnerships   (Southmark)  in  the  form  of  client
     representation  letters executed and delivered to the auditors by Southmark
     management.  The counterclaims sought recovery of attorneys' fees and costs
     incurred in defending this action.  The counterclaims  were later dismissed
     on appeal, as discussed below.


<PAGE>
     The trial court granted summary judgment  against the Partnership  based on
     the statute of limitations; however, on appeal, the Dallas Court of Appeals
     reversed   the  trial  court  and   remanded   for  trial  the   Affiliated
     Partnerships'  fraud claims against Ernst & Young.  The Texas Supreme Court
     denied Ernst & Young's  application  for writ of error on January 11, 1996.
     The Partnership is continuing to pursue vigorously its claims against Ernst
     & Young.  Trial is anticipated to be set for early December 1996;  however,
     the final outcome of this litigation cannot be determined at this time.

2)   Martha  Hess; et  al. vs.  Southmark  Equity  Partners II, Ltd. (MREF XXV),
     Southmark Income Investors, Ltd. (MREF XX), Southmark Equity Partners, Ltd.
     (MREF XXIV),  Southmark  Realty Partners III, Ltd. (MREF XXIII),  Southmark
     Realty  Partners  II,  Ltd.  (MREF  XXII),  McNeil  Partners,  L.P.  et al.
     ("Hess");  Kotowski vs.  Southmark  Equity  Partners,  Ltd. (MREF XXIV) and
     Donald Arceri vs.  Southmark  Income  Investors,  Ltd. (MREF XX) - Illinois
     Appellate  Court for the First District,  Fifth  Division,  as consolidated
     Case No.  90-107  (remanded  back to Trial  Court -  Circuit  Court of Cook
     County, Illinois County Department, Chancery Division, as consolidated Case
     No. 88 CH 4670 (L92026).

     Consolidated  with  these  cases  were an  additional  14  matters  against
     unrelated partnership entities. The Hess case was filed on May 20, 1988, by
     Martha  Hess,  individually,  and on behalf of a putative  class of parties
     similarly  situated.   The  original,   first,  second  and  third  amended
     complaints in Hess sought rescission,  pursuant to the Illinois  Securities
     Act, of over $2.7 million of principal  invested in five (5) Southmark (now
     McNeil) partnerships ("Defendants"), and other relief including damages for
     breach of fiduciary  duty and violation of the Illinois  Consumer Fraud and
     Deceptive  Business  Practices Act. The original,  first,  second and third
     amended  complaints  in Hess were  dismissed  against  the  defendant-group
     because the Appellate Court held that they were not the proper subject of a
     class  action  complaint.  Hess was,  thereafter,  amended a fourth time to
     state causes of action against unrelated partnership entities. Hess went to
     judgment  against that  unrelated  entity and the judgment,  along with the
     prior  dismissal of the class  action,  was  appealed.  The Hess appeal was
     decided by the Appellate  Court during 1992.  The Appellate  Court affirmed
     the  dismissal of the breach of fiduciary  duty and consumer  fraud claims.
     The Appellate  Court did,  however,  reverse in part,  holding that certain
     putative  class  members  could file class  action  complaints  against the
     defendant-group,  which pursuant to the Appellate Court's ruling,  included
     Southmark  Realty  Partners II, Ltd.  (McNeil Real Estate Fund XXII,  L.P.)
     (the "Partnership"). Although leave to appeal to the Illinois Supreme Court
     was sought,  the Illinois Supreme Court refused to hear the appeal. On June
     15, 1994, the Appellate  Court issued its mandate  sending the case back to
     Trial Court.

     In late  January,  1995,  Plaintiffs  filed  a  Motion  to File an  Amended
     Consolidated  Class Action  Complaint,  which amends the  complaint to name
     McNeil  Partners,  L.P.  as the  successor  general  partner  to  Southmark
     Investment  Group. In February,  1995,  Plaintiffs filed a Motion for Class
     Certification.  The amended cases against the  defendant-group,  and others
     are  proceeding  under the caption  George and Joy Krugler vs. I.R.E.  Real
     Estate Income Fund, Jerry and Barbara Neumann vs. Southmark Equity Partners
     II (McNeil Real Estate Fund XXV,  L.P.),  Richard and Theresa  Bartoszewski
     vs.  Southmark  Realty Partners III (McNeil Real Estate Fund XXIII,  L.P.),
     and Edward and Rose Weskerna vs.  Southmark Realty Partners II (McNeil Real
     Estate Fund XXII, L.P.).


<PAGE>
     In September, 1995, the Court granted Plaintiffs' Motion to File an Amended
     Complaint, to Consolidate and for Class Certification.  Defendants answered
     the complaint and plead that the  Plaintiffs  did not give timely notice of
     their  desire to rescind  within six (6) months of knowing  that right,  as
     required by law.

     Plaintiffs  filed a Motion  for  Summary  Judgment  against  the  remaining
     partnership defendants,  as well as the initial general partners. The Court
     ruled on  Plaintiffs'  Motion for  Summary  Judgment  on April 25, 1996 and
     entered partial summary judgment  against the  Partnership,  as well as the
     initial general partner. Summary judgment against McNeil Partners, L.P., as
     the successor general partner, was not sought.

     On October 22, 1996, the Court entered  judgment against the Partnership in
     the amount of  $347,712,  plus  interest.   Discussions  are  ongoing  with
     respect to the  settlement of the judgment.  However,  the  Defendants  are
     attempting to negotiate a settlement for a lesser  amount.  Since the final
     outcome  is  uncertain,  no  accrual  has been  recorded  relating  to this
     litigation.

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   Thousand    Limited
                                    Partnership  Units:  Net  income  (loss) per
                                    thousand   limited   partnership   units  is
                                    computed  by  dividing  net  income   (loss)
                                    allocated  to the  limited  partners  by the
                                    weighted    average    number   of   limited
                                    partnership units  outstanding  expressed in
                                    thousands.  Per  unit  information  has been
                                    computed based on 19,818 and 19,826 weighted
                                    average  Current Income Units (in thousands)
                                    outstanding in 1996 and 1995,  respectively,
                                    and  13,358  and  13,383  weighted   average
                                    Growth/Shelter    Units    (in    thousands)
                                    outstanding in 1996 and 1995, respectively.

         27.                        Financial   Data  Schedule   for the quarter
                                    ended September 30, 1996.


(b)      Reports  on  Form  8-K.  There were no reports on Form 8-K filed during
         the quarter ended September 30, 1996.


<PAGE>


                       MCNEIL REAL ESTATE FUND XXII, 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 XXII, L.P.

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

                                     By: McNeil Investors, Inc., General Partner




November 14, 1996                    By:  /s/  Donald K. Reed
-----------------                       ----------------------------------------
Date                                    Donald K. Reed
                                        President and Chief Executive Officer




November 14, 1996                    By:  /s/  Ron K. Taylor
-----------------                       ----------------------------------------
Date                                    Ron K. Taylor
                                        Acting Chief Financial Officer of
                                          McNeil Investors, Inc.




November 14, 1996                    By:  /s/  Carol A. Fahs
-----------------                       ----------------------------------------
Date                                    Carol A. Fahs
                                        Chief Accounting Officer of McNeil 
                                          Real Estate Management, Inc.