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


                                    FORM 10-Q



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


     For the quarterly period ended               September 30, 1998
                                     -------------------------------------------


                                       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 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 XXII, L.P.

                                 BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                           September 30,        December 31,
                                                                               1998                1997
                                                                           ------------         ------------
ASSETS
------

Real estate investments:
<S>                                                                        <C>                  <C>         
   Land ...........................................................        $    380,414         $    380,414
   Buildings and improvements .....................................          10,840,238           10,595,887
                                                                           ------------         ------------
                                                                             11,220,652           10,976,301
   Less:  Accumulated depreciation ................................          (6,006,872)          (5,586,872)
                                                                           ------------         ------------
                                                                              5,213,780            5,389,429

Cash and cash equivalents .........................................           1,009,747              794,630
Cash segregated for security deposits .............................              68,550               67,510
Accounts receivable ...............................................               2,774               11,508
Escrow deposits ...................................................             163,267               68,310
Prepaid expenses and other assets .................................               9,000                9,953
                                                                           ------------         ------------
                                                                           $  6,467,118         $  6,341,340
                                                                           ============         ============

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

Mortgage note payable, net ........................................        $  5,885,151         $  5,928,021
Accounts payable and accrued expenses .............................             116,752              114,584
Accrued property taxes ............................................             127,503               68,129
Payable to affiliates - General Partner ...........................           2,088,802            1,933,837
Security deposits and deferred rental revenue .....................             114,409               69,670
                                                                           ------------         ------------
                                                                              8,332,617            8,114,241
                                                                           ------------         ------------

Partners' deficit:
   Limited  partners - 55,000,000  Units  authorized;
     32,736,117 and 32,815,117 Units issued and out-
     standing at September 30, 1998 and December 31, 1997,
     respectively (19,493,088 and 19,567,088 Current Income
     Units outstanding at September 30, 1998 and December
     31, 1997, respectively,  and 13,243,029 and
     13,248,029 Growth/Shelter  Units  outstanding
     at September  30, 1998 and  December 31, 1997,
     respectively) ................................................          (1,611,868)          (1,520,196)
   General Partner ................................................            (253,631)            (252,705)
                                                                           ------------         ------------
                                                                             (1,865,499)          (1,772,901)
                                                                           ------------         ------------
                                                                           $  6,467,118         $  6,341,340
                                                                           ============         ============
</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,
                                               -------------------------------        -------------------------------
                                                   1998               1997               1998                1997
                                               -----------         -----------        -----------         -----------
Revenue:
<S>                                            <C>                 <C>                <C>                 <C>        
   Rental revenue .....................        $   652,397         $   606,423        $ 1,871,961         $ 1,751,122
   Interest ...........................             11,070              10,666             33,345              28,326
                                               -----------         -----------        -----------         -----------
     Total revenue ....................            663,467             617,089          1,905,306           1,779,448
                                               -----------         -----------        -----------         -----------

Expenses:
   Interest ...........................            133,335             134,992            401,273             409,143
   Depreciation .......................            142,501             103,288            420,000             320,336
   Property taxes .....................             42,501              50,250            127,503             150,750
   Personnel costs ....................             77,226              78,763            231,346             221,290
   Utilities ..........................             21,097              14,427             87,908              94,247
   Repair and maintenance .............             92,278              94,982            229,521             233,910
   Property management
     fees - affiliates ................             31,773              29,932             92,559              86,910
   Other property operating
     expenses .........................             22,360              26,592             63,565              79,323
   General and administrative .........             39,612              14,675            162,023              53,827
   General and administrative -
     affiliates .......................             63,762              53,899            182,206             155,959
                                               -----------         -----------        -----------         -----------
     Total expenses ...................            666,445             601,800          1,997,904           1,805,695
                                               -----------         -----------        -----------         -----------

Net income (loss) .....................        $    (2,978)        $    15,289        $   (92,598)        $   (26,247)
                                               ===========         ===========        ===========         ===========

Net income (loss) allocable
   to limited partners - Current
   Income Unit ........................        $      (268)        $     1,376        $    (8,334)        $    (2,362)
Net income (loss) allocable
   to limited partners - Growth
   Shelter Unit .......................             (2,680)             13,760            (83,338)            (23,623)
Net income (loss) allocable
   to General Partner .................                (30)                153               (926)               (262)
                                               -----------         -----------        -----------         -----------
Net income (loss) .....................        $    (2,978)        $    15,289        $   (92,598)        $   (26,247)
                                               ===========         ===========        ===========         ===========

Net income (loss) per thousand
 limited partnership units:
Current Income Units ..................        $      (.01)        $       .07        $      (.43)        $      (.12)
                                               ===========         ===========        ===========         ===========

Growth/Shelter Units ..................        $      (.20)        $      1.04        $     (6.29)        $     (1.78)
                                               ===========         ===========        ===========         ===========
</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, 1998 and 1997


<TABLE>
<CAPTION>
                                                                                      Total
                                              General             Limited            Partners'
                                              Partner            Partners             Deficit
                                            ------------        ------------        ------------
<S>                                         <C>                 <C>                 <C>         
Balance at December 31, 1996 .......        $  (252,917)        $(1,541,156)        $(1,794,073)

Net loss
   General Partner .................               (262)                 --                (262)
   Current Income Units ............                 --              (2,362)             (2,362)
   Growth/Shelter Units ............                 --             (23,623)            (23,623)
                                            -----------         -----------         -----------
Total net loss .....................               (262)            (25,985)            (26,247)
                                            -----------         -----------         -----------

Balance at September 30, 1997 ......        $  (253,179)        $(1,567,141)        $(1,820,320)
                                            ===========         ===========         ===========


Balance at December 31, 1997........        $  (252,705)        $(1,520,196)        $(1,772,901)

Net loss
   General Partner .................               (926)                 --                (926)
   Current Income Units ............                 --              (8,334)             (8,334)
   Growth/Shelter Units ............                 --             (83,338)            (83,338)
                                            -----------         -----------         -----------
Total net loss .....................               (926)            (91,672)            (92,598)
                                            -----------         -----------         -----------

Balance at September 30, 1998 ......        $  (253,631)        $(1,611,868)        $(1,865,499)
                                            ===========         ===========         ===========

</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,
                                                          --------------------------------
                                                             1998                 1997
                                                          ------------        ------------

Cash flows from operating activities:
<S>                                                       <C>                 <C>        
   Cash received from tenants ....................        $ 1,934,431         $ 1,750,749
   Cash paid to suppliers ........................           (780,859)           (602,851)
   Cash paid to affiliates .......................           (119,800)           (134,838)
   Interest received .............................             33,345              28,326
   Interest paid .................................           (372,562)           (380,404)
   Property taxes paid and escrowed ..............           (163,086)            (88,969)
                                                          -----------         -----------
Net cash provided by operating activities ........            531,469             572,013
                                                          -----------         -----------

Cash used in investing activities:
   Additions to real estate investments ..........           (244,351)           (186,602)
                                                          -----------         -----------

Cash used in financing activities:
   Principal payments on mortgage note
     payable .....................................            (72,001)            (67,146)
                                                          -----------         -----------

Net increase in cash and cash equivalents ........            215,117             318,265

Cash and cash equivalents at beginning of
   period ........................................            794,630             602,462
                                                          -----------         -----------

Cash and cash equivalents at end of period........        $ 1,009,747         $   920,727
                                                          ===========         ===========
</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,
                                                             ----------------------------
                                                               1998               1997
                                                             ----------        ----------
<S>                                                          <C>               <C>       
Net loss ............................................        $ (92,598)        $ (26,247)
                                                             ---------         ---------

Adjustments to reconcile net loss to net cash
   provided by operating activities:
   Depreciation .....................................          420,000           320,336
   Amortization of discounts on mortgage
     note payable ...................................           29,131            29,131
   Changes in assets and liabilities:
     Cash segregated for security deposits ..........           (1,040)           (1,000)
     Accounts receivable ............................            8,734            (2,473)
     Escrow deposits ................................          (94,957)           56,721
     Prepaid expenses and other assets ..............              953             1,492
     Accounts payable and accrued expenses ..........            2,168            (4,294)
     Accrued property taxes .........................           59,374            84,323
     Payable to affiliates - General Partner ........          154,965           108,031
     Security deposits and deferred rental
       revenue ......................................           44,739             5,993
                                                             ---------         ---------
       Total adjustments ............................          624,067           598,260
                                                             ---------         ---------

Net cash provided by operating activities ...........        $ 531,469         $ 572,013
                                                             =========         =========
</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, 1998

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 600, LB70, Dallas, Texas, 75240.

In the opinion of management,  the financial  statements reflect all adjustments
necessary for a fair  presentation of the Partnership's  financial  position and
results  of  operations.  All  adjustments  were of a normal  recurring  nature.
However,  the results of operations for the nine months ended September 30, 1998
are not necessarily indicative of the results to be expected for the year ending
December 31, 1998.

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,  1997,  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 600, LB70, Dallas, Texas 75240.

NOTE 3.
-------

The  Partnership  pays property  management fees equal to 5% of the gross rental
receipts for its  residential  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 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
$1,425,098 were outstanding at September 30, 1998.


<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,
                                                       ------------------------
                                                          1998           1997
                                                       --------        --------

Property management fees ......................        $ 92,559        $ 86,910
Charged to general and administrative -
   affiliates:
   Partnership administration .................          50,568          46,449
   Asset management fee .......................         131,638         109,510
                                                       --------        --------
                                                       $274,765        $242,869
                                                       ========        ========

NOTE 4.
-------

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

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

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


<PAGE>
Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint. The case was stayed pending settlement discussions.  A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties.  Preliminary
Court  approval  was  received  on  October 6,  1998.  A hearing on final  Court
approval is scheduled for December 17, 1998.

Plaintiff's  counsel  intend  to seek an  order  awarding  attorney's  fees  and
reimbursements  of their  out-of-pocket  expenses.  The  amount of such award is
undeterminable  until  final  approval  is  received  from the  court.  Fees and
expenses shall be allocated amongst the Partnerships on a pro rata basis,  based
upon  tangible  asset value of each such  partnership,  less total  liabilities,
calculated in accordance with the Amended Partnership Agreements for the quarter
most recently ended.

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

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

The occupancy  rate at Harbour Club III Apartments was 95% at September 30, 1998
and 96% at September 30, 1997.  Harbour Club III  Apartments was able to provide
enough cash flow from operations to meet ordinary  operating expenses as well as
the debt  service  for its  related  mortgage  note for the first nine months of
1998. The property is in need of major capital  improvements in order to compete
in its local market,  and the  Partnership  has begun a program to complete such
capital  improvements to be funded from existing cash reserves.  However,  there
can be no  assurances  that such  reserves  will be  sufficient  to complete all
needed improvements.

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

Revenue:

Total Partnership  revenues  increased by $46,378 and $125,858 for the three and
nine months  ended  September  30, 1998,  respectively,  as compared to the same
periods of 1997.  Rental  revenue was $652,397 and  $1,871,961 for the three and
nine months ended September 30, 1998,  respectively,  and remained comparable to
$606,423 and  $1,751,122 for the same periods in 1997.  Interest  income for the
first nine months of 1998 increased by $5,019 as compared to the prior period.

Expenses:

Total  expenses  increased  by $64,645 for the three months and $192,209 for the
nine months ended September 30, 1998, as compared to the same periods in 1997.





<PAGE>
Depreciation expense increased $39,213 and $99,664 for the three and nine months
ended September 30, 1998, respectively, as compared to the same period for 1997.
The increase can be  attributed  to  depreciation  of the more than $244,000 and
$511,000 of capital improvements added during 1998 and 1997, respectively, being
amortized over useful lives ranging from five to ten years.

Property tax expense is based on estimates during the year. When the actual bill
is  received,  the expense is adjusted  accordingly.  During the last quarter of
1997, an  approximate  $42,000  adjustment to decrease the first three  quarters
estimate was made.  After taking this  adjustment  into account,  the expense is
comparable for the periods ended September 30, 1998, and September 30, 1997.

Other property  operating expenses decreased by $4,232 and $15,758 for the three
and nine months ended September 30, 1998, respectively,  as compared to the same
periods of last year. The decrease is mainly  attributed to bad debt collections
of approximately $18,000 during the first nine months of 1998.

General and  administrative  expenses  increased by $24,937 and $108,196 for the
three and nine months ended September 30, 1998, respectively, as compared to the
same periods of 1997. The increase was primarily due to increased costs incurred
to explore  alternatives to maximize the value of the Partnership (see Liquidity
and Capital Resources).

General and  administrative  - affiliates  increased  $9,863 and $26,247 for the
three and nine months ended September 30, 1998, respectively, as compared to the
same  periods  of 1997 due to an  increase  in the asset  management  fee.  This
increase  was  primarily  due to the  increase  of the net  operating  income on
Harbour Club III, on which the fee is based.

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

The Partnership was provided $531,469 of cash by operating activities during the
first nine months of 1998 as  compared to $572,013  for the same period in 1997.
Cash  paid to  suppliers  increased  by  $178,008  mainly  due to  payments  for
increased General and Administrative  expenses as discussed above. This increase
was partially offset by rental income increases of more than $120,000 at Harbour
Club III Apartments.

Cash used for additions to real estate was $244,351 during the first nine months
of 1998 as compared to $186,602 during the same period of 1997. A greater amount
was spent in 1998 at Harbour Club III for landscape and signage improvements, as
well as electrical upgrades.  In addition,  hallway renovations were capitalized
during the first nine months of 1998.

Cash used for principal payments on mortgage note payable was $72,001 during the
first nine months of 1998 as compared to $67,146 for the same period of 1997.

Short-term liquidity:

At  September  30,  1998,  the  Partnership  held  $1,009,747  of cash  and cash
equivalents.  The General  Partner  considers  this level of cash reserves to be
adequate to meet the Partnership's operating needs. The General Partner believes
that  anticipated  operating  results  for 1998 will be  sufficient  to fund the
Partnership's  budgeted  capital  improvements for 1998 and to repay the current
portion of the  Partnership's  mortgage  note.  Effective  January 23, 1997, the
mortgage note payable was sold by HUD to an unaffiliated buyer.


<PAGE>
Long-term liquidity:

As previously announced, the Partnership has retained PaineWebber,  Incorporated
("PaineWebber")  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.  The  Partnership,   through  PaineWebber,  has  provided
financial  and  other  information  to  interested   parties  and  is  currently
conducting  discussions  with one such party in an attempt to reach a definitive
agreement  with respect to a sale  transaction.  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 that any such agreement will be reached nor the terms thereof.

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.

Forward-Looking Information:

Within this document,  certain  statements are made as to the expected occupancy
trends,  financial  condition,  results  of  operations,  and cash  flows of the
Partnership  for periods after  September 30, 1998. 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 the sale or refinancing of its
property, and respond to changing economic and competitive factors.

Other Information:

Management has reviewed its information  technology  infrastructure  to identify
any  systems  that could be  affected  by the year 2000  problem.  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.  The
information  systems  used  by  the  Partnership  for  financial  reporting  and
significant  accounting  functions were made year 2000  compliant  during recent
systems conversions.


<PAGE>
Management  is  in  the  process  of  evaluating  the  mechanical  and  embedded
technological systems at the various properties. Management intends to inventory
all such systems and query  suppliers,  vendors and  manufacturers  to determine
year 2000 compliance.  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.  Management is in the process of identifying
those risks as well as  developing  a  contingency  plan to  mitigate  potential
adverse effects from non-compliance.

                           PART II. OTHER INFORMATION

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

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

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

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






<PAGE>
Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint. The case was stayed pending settlement discussions.  A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties.  Preliminary
Court  approval  was  received  on  October 6,  1998.  A hearing on final  Court
approval is scheduled for December 17, 1998.

Plaintiff's  counsel  intend  to seek an  order  awarding  attorney's  fees  and
reimbursements  of their  out-of-pocket  expenses.  The  amount of such award is
undeterminable  until  final  approval  is  received  from the  court.  Fees and
expenses shall be allocated amongst the Partnerships on a pro rata basis,  based
upon  tangible  asset value of each such  partnership,  less total  liabilities,
calculated in accordance with the Amended Partnership Agreements for the quarter
most recently ended.

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 19,493 and 19,567  weighted
                                   average  Current  Income Units (in thousands)
                                   outstanding  in 1998 and 1997,  respectively,
                                   and  13,243  and  13,248   weighted   average
                                   Growth/Shelter     Units    (in    thousands)
                                   outstanding in 1998 and 1997, respectively.

         27.                       Financial Data Schedule for the quarter ended
                                   September 30, 1998.


(b)      Reports on Form 8-K.  There  were  no  reports on Form 8-K filed during
         the quarter ended September 30, 1998.



<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 16, 1998                 By: /s/  Ron K. Taylor
-----------------                    -------------------------------------------
Date                                  Ron K. Taylor
                                      President and Director of McNeil 
                                       Investors, Inc.
                                      (Principal Financial Officer)




November 16, 1998                 By: /s/  Carol A. Fahs
-----------------                    -------------------------------------------
Date                                  Carol A. Fahs
                                      Vice President of McNeil Investors, Inc.
                                      (Principal Accounting Officer)