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

                                    FORM 10-K405

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

      For the fiscal year ended                 December 31, 1995
                                     -----------------------------------------

                                       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      (214)  448-5800
                                                  ----------------------------

Securities registered pursuant to Section 12(b) of the Act: None
----------------------------------------------------------

Securities registered pursuant to Section 12(g) of the Act: 
                                        Current Income Limited Partnership Units
                                        Growth/Shelter Limited Partnership Units

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
                         ---  ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

All of the  Registrant's  33,208,117  limited  partnership  units  are  held  by
non-affiliates.  The aggregate market value of units held by  non-affiliates  is
not determinable since there is no public trading market for limited partnership
units and transfers of units are subject to certain restrictions.

Documents Incorporated by Reference:        See Item 14, Page 39

                                TOTAL OF 41 PAGES


<PAGE>



                                     PART I

ITEM 1.      BUSINESS
------       --------

ORGANIZATION
------------

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 General Partner was elected at a meeting of limited partners on
March 26, 1992, at which time an amended and restated partnership agreement (the
"Amended  Partnership  Agreement")  was adopted.  Prior to March 26,  1992,  the
general  partner of the Partnership was Southmark  Investment  Group,  Inc. (the
"Original General Partner"), a wholly-owned  subsidiary of Southmark Corporation
("Southmark").  The  principal  place of business  for the  Partnership  and the
General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.

On February  26,  1985,  the  Partnership  registered  with the  Securities  and
Exchange  Commission ("SEC") under the Securities Act of 1933 (File No. 2-94740)
and commenced a public  offering for sale of $55,000,000 of limited  partnership
units.  There were two  classes  of limited  partnership  units,  designated  as
Current Income Units and Growth/Shelter  Units offered (referred to collectively
as "Units"). The Units represent equity interests in the Partnership and entitle
the holders thereof to participate in certain  allocations and  distributions of
the Partnership.  The sale of Units closed on December 31, 1985, with 33,333,867
Units (19,922,588 Current Income Units and 13,411,279 Growth/Shelter Units) sold
at  one  dollar  each,  or  gross  proceeds  of  $33,333,867.   The  Partnership
subsequently filed a Form 8-A Registration Statement with the SEC and registered
its Units under the Securities Exchange Act of 1934 (File No. 0-14268). In 1991,
13,750  Units were  rescinded,  and in 1993,  1994 and 1995  20,000,  32,000 and
60,000  Units,   respectively,   were  relinquished   leaving  33,208,117  Units
(19,825,588   Current   Income  Units  and  13,382,529   Growth/Shelter   Units)
outstanding at December 31, 1995.

SOUTHMARK BANKRUPTCY AND CHANGE IN GENERAL PARTNER
--------------------------------------------------

On July 14, 1989,  Southmark filed a voluntary petition for reorganization under
Chapter 11 of the U.S.  Bankruptcy Code.  Neither the  Partnership,  the General
Partner  nor  the  Original   General  Partner  were  included  in  the  filing.
Southmark's  reorganization  plan became  effective  August 10, 1990.  Under the
plan, most of Southmark's assets,  which included  Southmark's  interests in the
Original  General  Partner,  are being  sold or  liquidated  for the  benefit of
creditors.

In  accordance  with  Southmark's  reorganization  plan,  Southmark,  McNeil and
various of their affiliates  entered into an asset purchase agreement on October
12, 1990,  providing for, among other things,  the transfer of control to McNeil
or his affiliates of 34 limited partnerships  (including the Partnership) in the
Southmark portfolio.

On February 14,  1991,  pursuant to the asset  purchase  agreement as amended on
that date,  McNeil Real Estate  Management,  Inc.  ("McREMI"),  an  affiliate of
McNeil acquired the assets  relating to the property  management and partnership
administrative business of Southmark and its affiliates and commenced management
of the  Partnership's  properties  pursuant  to an  assignment  of the  existing
property management agreements from the Southmark affiliates.

On March 26, 1992, the limited partners  approved a restructuring  proposal that
provided for (i) the  replacement  of the Original  General  Partners with a new
general  partner,  the  General  Partner;  (ii)  the  adoption  of  the  Amended
Partnership  Agreement which substantially alters the provisions of the original
partnership   agreement   relating   to,  among  other   things,   compensation,
reimbursement  of expenses and voting  rights;  (iii) the approval of an amended
management  agreement with McREMI, the Partnership's  property manager; and (iv)
the approval to change the  Partnership's  name to McNeil Real Estate Fund XXII,
L.P. Under the Amended Partnership Agreement,  the Partnership began accruing an
asset management fee,  retroactive to February 14, 1991, which is payable to the
new General  Partner.  For a discussion of the  methodology  for calculating the
asset   management   fee,  see  Item  13  Certain   Relationships   and  Related
Transactions.  The  proposals  approved  at the  March  26,  1992  meeting  were
implemented as of that date.

Concurrent with the approval of the restructuring,  the General Partner acquired
from Southmark and its affiliates,  for aggregate  consideration of $18,861, (i)
the right to receive  payment on the  advances  owing  from the  Partnership  to
Southmark  and its  affiliates  in the amount of  $16,397,  and (ii) the general
partner interest of the Original General Partner. None of the Units are owned by
the General Partner or its affiliates.

Settlement Of Claims:

The  Partnership  filed claims with the United States  Bankruptcy  Court for the
Northern  District of Texas,  Dallas Division (the  "Bankruptcy  Court") against
Southmark for damages relating to improper  overcharges,  breach of contract and
breach of fiduciary duty. The Partnership settled these claims in 1991, and such
settlement was approved by the Bankruptcy Court.

An Order Granting  Motion to Distribute  Funds to Class 8 Claimants  dated April
14, 1995 was issued by the Bankruptcy  Court.  In accordance  with the Order, in
May 1995 the Partnership received in full satisfaction of its claims, $29,292 in
cash, and common and preferred stock in the reorganized  Southmark which amounts
represent the  Partnership's  pro-rata share of Southmark  assets  available for
Class 8 Claimants. The Partnership sold the Southmark common and preferred stock
in May 1995 for $9,457 which,  combined  with the cash proceeds from  Southmark,
resulted in a gain on legal settlement of $38,749.

CURRENT OPERATIONS
------------------

General:

The Partnership is engaged in real estate  activities,  including the ownership,
operation and management of residential and retail real estate.  At December 31,
1995, the Partnership owned one income-producing property as described in Item 2
- Properties.

The  Partnership  does not directly  employ any personnel.  The General  Partner
conducts the business of the  Partnership  directly and through its  affiliates.
The Partnership  reimburses  affiliates of the General Partner for such services
rendered in accordance with the Amended Partnership Agreement. See Item 8 - Note
2 - "Transactions With Affiliates".

The business of the Partnership to date has involved only one industry  segment.
See Item 8 - Financial Statements and Supplementary Data. The Partnership has no
foreign operations. The business of the Partnership is not seasonal.

Business Plan:

The  Partnership's  anticipated  plan of  operations  for 1996 is to preserve or
increase the net operating income of its property  whenever  possible,  while at
the same time making  whatever  capital  expenditures  are reasonable  under the
circumstances  in order to preserve  and enhance the value of the  Partnership's
property. The General Partner is evaluating market and other economic conditions
to  determine  the  optimum  time to commence a sale of the  Partnership's  last
property in accordance with the terms of the Amended Partnership  Agreement.  In
conjunction  therewith,  the General Partner will continue to explore  potential
avenues to enhance the value of the Units in the Partnership, which may include,
among other things, asset sales or refinancings of the Partnership's  properties
which  may  result  in  distributions  to the  limited  partners.  See  Item 7 -
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.

Competitive Conditions:

Since the  principal  business of the  Partnership  is to own and  operate  real
estate,  the Partnership is subject to all of the risks incident to ownership of
real estate and interests  therein,  many of which relate to the  illiquidity of
this type of  investment.  These  risks  include  changes  in  general  or local
economic conditions,  changes in supply or demand for competing properties in an
area,  changes in interest rates and  availability  of permanent  mortgage funds
which  may  render  the  sale  or  refinancing   of  a  property   difficult  or
unattractive, changes in real estate and zoning laws, increases in real property
tax rates and Federal or local  economic or rent  controls.  The  illiquidity of
real estate  investments  generally  impairs the ability of the  Partnership  to
respond  promptly  to  changed  circumstances.  The  Partnership  competes  with
numerous established companies, private investors (including foreign investors),
real estate investment trusts,  limited partnerships and other entities (many of
which have greater  resources than the Partnership) in connection with the sale,
financing  and  leasing  of  properties.  The  impact  of  these  risks  on  the
Partnership,   including   losses  from  operations  and   foreclosures  in  the
Partnership's  property,  is described in Item 7 -  Management's  Discussion and
Analysis  of  Financial  Condition  and  Results of  Operations.  For a detailed
discussion of the competitive conditions for the Partnership's property see Item
2 - Properties.

Other information:

The environmental  laws of the Federal government and of certain state and local
governments  impose  liability  on current  property  owners for the clean-up of
hazardous and toxic substances discharged on the property. This liability may be
imposed  without  regard  to the  timing,  cause or person  responsible  for the
release of such substances onto the property.  The Partnership  could be subject
to such liability in the event that it owns a property having such environmental
problems.  The Partnership has no knowledge of any pending claims or proceedings
regarding such environmental problems.

ITEM 2.      PROPERTIES
------       ----------

The following  table sets forth the investment  portfolio of the  Partnership at
December  31,  1995.  The  buildings  and the land on which they are located are
owned in fee,  subject  in each case to a first  lien deed of trust as set forth
more fully in Item 8 - Note 5 - "Mortgage Note Payable".  See also Item 8 - Note
4 - "Real Estate  Investment"  and Schedule  III - "Real Estate  Investment  and
Accumulated  Depreciation and Amortization".  In the opinion of management,  the
property is adequately covered by insurance.
<TABLE>
                                            Net Basis of                          1995            Date
Property              Description             Property           Debt         Property Tax      Acquired
--------              -----------           -----------       ----------       -----------      --------
<S>                   <C>                   <C>              <C>               <C>              <C>
Harbour Club III (1)  Apartments
   Belleville, MI     331 units            $ 5,504,538       $ 6,026,515       $   158,523        5/86
</TABLE>

(1)    Harbour Club III Apartments is owned by Harbour Club  Associates  Limited
       Partnership,  which is  wholly-owned  by the  Partnership and its General
       Partner.

The following table sets forth the property's occupancy rate and rent per square
foot for the last five years:

<TABLE>
                                        1995            1994           1993           1992            1991
                                       -------         -------        -------        -------         -------
<S>                                    <C>             <C>            <C>            <C>             <C>
Harbour Club III
----------------
   Occupancy Rate............             96%             91%            90%            95%             93%
   Rent Per Square Foot......           $7.21           $6.75          $6.74          $6.42           $6.33

</TABLE>

Occupancy rate  represents all units leased divided by the total number of units
of the  property  as of  December  31 of the given  year.  Rent per square  foot
represents all revenue, except interest,  derived from the property's operations
divided by the leasable square footage of the property.

Competitive conditions
----------------------

Harbour Club III
----------------

Harbour Club III, located in Belleville,  Michigan,  was built in 1972 as a part
of a four-phase  apartment  complex.  The property offers a complete  package of
amenities  including a golf course,  clubhouse,  exercise  room,  tanning  beds,
tennis courts,  saunas,  boat docks and launch, and playgrounds.  The apartments
located  in this phase of the  complex  offer lake and golf  course  views.  The
Belleville  market has  significantly  rebounded  to an  occupancy  rate of 96%.
Harbour Club III is operating at an occupancy  rate of 96% and has not increased
rents for five years due to  restrictions  imposed by the  Department of Housing
and Urban Development  ("HUD"),  the property's  mortgage holder, as well as the
lack of capital  improvements.  The  property is  currently  petitioning  HUD to
increase  rental  rates.  The  property's  closest  competitor  has rental rates
approximately  $100 per month above Harbour Club III's rates.  Security concerns
are prompting demands from tenants for improved  lighting,  limited access gates
and  fencing,  as offered by  competitors.  The  property  has a large amount of
deferred  maintenance  and the  property is unable to generate  cash to meet its
capital improvement needs.  Management is currently seeking alternatives to fund
the needed capital  improvements.  The ability of the property to compete in the
market will be directly  determined  by the amount of capital  dollars  spent to
upgrade the property to community standards.

ITEM 3.  LEGAL PROCEEDINGS
------   -----------------

The Partnership is not party to, nor is the  Partnership's  property the subject
of,  any  material  pending  legal  proceedings,  other  than  ordinary  routine
litigation incidental to the Partnership, except for the following:

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, 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.

     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  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;
     however,  the final outcome of this litigation cannot be determined at this
     time.

2)   Martha Hess, et al. v. Southmark Equity Partners II, Ltd.  (presently known
     ---------------------------------------------------------------------------
     as McNeil Real Estate Fund XXV, L.P.),  Southmark Income  Investors,  Ltd.,
     ---------------------------------------------------------------------------
     Southmark Equity Partners,  Ltd.,  Southmark Realty Partners III, Ltd., and
     ---------------------------------------------------------------------------
     Southmark Realty Partners II, Ltd., et al. ("Hess");  Kotowski v. Southmark
     ---------------------------------------------------------------------------
     Equity Partners, Ltd. and Donald Arceri v. Southmark Income Investors, Ltd.
     ---------------------------------------------------------------------------
     These cases were previously pending in the Illinois Appellate Court for the
     First  District  ("Appellate  Court"),  as  consolidated  Case No.  90-107.
     Consolidated  with  these  cases  are  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 those
     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  Southmark  (now
     McNeil)  partnerships,  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. Although leave to appeal to the Illinois Supreme Court was
     sought,  the Illinois Supreme Court refused to hear the appeal.  The effect
     of the denial is that the Appellate  Court's opinion remains  standing.  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  defendent-group,  and others
     are  proceeding  under the caption  George and Joy  Krugler v. I.R.E.  Real
                                         ---------------------------------------
     Estate Income Fund,  Jerry and Barbara Neuman v. Southmark  Equity Partners
     ---------------------------------------------------------------------------
     II, Richard and Theresa  Bartoszewski v. Southmark Realty Partners III, and
     ---------------------------------------------------------------------------
     Edward and Rose Weskerna v. Southmark Realty Partners II.
     --------------------------------------------------------

     In September 1995, the court granted  Plaintiffs' Motion to File an Amended
     Complaint  to  Consolidate  and for Class  Certification.  Defendants  have
     answered  the  Complaint  and have plead that the  Plaintiffs  did not give
     timely  notice of their right to rescind  within six months of knowing that
     right. The ultimate outcome of this litigation cannot be determined at this
     time.  While the  Partnership  has  objected  to the Motion,  the  ultimate
     resolution of this litigation,  which is expected to occur within one year,
     could result in a loss to the  Partnership of up to $355,000 in addition to
     related  legal  fees.  No  accrual  has  been  recorded   related  to  this
     litigation.

3)   Nicpon v.  Southmark  Realty  Partners II  (presently  known as McNeil Real
     ---------------------------------------------------------------------------
     Estate Fund XXII, L.P.) 89 CH 4118, seek rescission of certain  partnership
     ----------------------
     interests  and damages for breach of  fiduciary  duty in  violation  of the
     Illinois  Consumer  Fraud  Act.  These  actions  were tried to the court on
     August 28,  1992 and the Court  dismissed  all but  $21,269 of the  claims.
     Those claims represent  rescission claims,  agreed to by the defendant that
     have now been paid by the defendant. The plaintiffs filed notices of appeal
     from these dismissals. The plaintiffs presented, on February 3, 1995, their
     motion to file an amended  consolidated  class  action  complaint  and,  on
     February 15, 1995,  their  motion to certify a class.  The  defendant-group
     intends  to object to both of these  motions.  The Court has yet to rule on
     either the motion for leave to file the  amendment  or the motion for class
     certification. The ultimate outcome of this proceeding cannot be determined
     at this time.

4)   Dick and Aloma  Anderson v.  McNeil  Real  Estate Fund XXII,  L.P. , McNeil
     ---------------------------------------------------------------------------
     Partners,  L.P.,  Wayne T. Shipp, the Wayne Shipp Agency,  Inc.,  Southmark
     ---------------------------------------------------------------------------
     Investment Group, Inc. and Southmark Realty Partners, Ltd. This lawsuit was
     ---------------------------------------------------------
     filed in November  1993 in  Washington  State in the Clark County  Superior
     Court. In 1985, the plaintiffs apparently spent $22,000 to purchase limited
     partnership  interests in Southmark Realty Partners Ltd. II , (not named by
     them as a defendant ) whose name is now McNeil Real Estate Fund XXII,  L.P.
     (the  "Partnership").   Plaintiffs  allege  that  in  connection  with  the
     transactions by which McNeil  Partners,  L.P. became general partner of the
     Partnership, and by which certain changes were made in the Partnership, the
     McNeil entities engaged in the offer and/or sale of unregistered securities
     in violation of Washington law. The plaintiffs have alleged that certain of
     the other  defendants  --  specifically  Mr. Shipp and the Shipp  Insurance
     Agency  --  engaged  in  fraud  in  connection  with  the  sale of  limited
     partnership interests in the Partnership to plaintiffs. The plaintiffs have
     not made fraud allegations against any of the McNeil or Southmark entities.
     The majority of  plaintiffs'  claims against the  Partnership  are based on
     allegations  that  the  securities  are  not  registered  in the  State  of
     Washington.  Counsel's  research  indicates  that  there  are two  possible
     exemptions to the  registration  of securities  which apply to this matter.
     These statutory  exceptions are under review by the  plaintiffs'  attorney.
     Counsel for the  Partnership  was contacted  recently and asked whether the
     Partnership  would be interested  in  repurchasing  Plaintiffs'  units at a
     discount. Plaintiffs will be advised of their option to abandon their units
     back to the Partnership for no consideration.  The ultimate outcome of this
     proceeding cannot be determined at this time.

For a discussion of the Southmark  bankruptcy,  see Item 1 - Business.  See also
Item 8 - Note 9 - "Gain on Legal Settlement".

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------       ---------------------------------------------------

None.
                                     PART II

ITEM 5.      MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND
------       ------------------------------------------------------------
             RELATED SECURITY HOLDER MATTERS
             -------------------------------

(A)      There is no established  public trading market for limited  partnership
         units, nor is one expected to develop.



<PAGE>


(B)      Title of Class                            Number of Record Unit Holders
         --------------                            -----------------------------

         Limited partnership units                 2,648 as of February 16, 1996

(C)      No distributions were made to the partners in 1995 or 1994 and none are
         anticipated in 1996.  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 partners.  See Item 7
         -  Management's  Discussion  and  Analysis of Financial  Condition  and
         Results of Operations, and Item 8 - Note 1 "Organization and Summary of
         Significant Accounting Policies - Distributions."

ITEM 6. SELECTED FINANCIAL DATA
------  -----------------------

The  following  table sets forth a summary  of  certain  financial  data for the
Partnership.  This summary should be read in conjunction with the  Partnership's
financial  statements  and  notes  thereto  appearing  in  Item  8  -  Financial
Statements and Supplementary Data.

<TABLE>
                                                               Years Ended December 31,
Statements of                           ---------------------------------------------------------------------
Operations                                1995           1994            1993           1992           1991
------------------                      ---------      ---------      ----------      ---------     ---------
<S>                                    <C>            <C>             <C>            <C>           <C>          
Rental revenue................         $2,456,308     $2,950,795      $5,655,988     $6,168,199    $6,223,307
Write-down for permanent
  impairment of  real estate                    -              -         735,288      5,101,763             -
Loss on disposition of real
  estate......................            245,637              -       1,443,330              -             -
Loss before extraordinary
  items.......................           (308,378)      (565,993)     (3,829,270)    (7,801,365)    (2,272,922)
Extraordinary items...........                  -              -       3,583,014        119,606        335,999
Net loss......................           (308,378)      (565,993)       (246,256)    (7,681,759)    (1,936,923)


Net loss per thousand
  limited partnership
  Units:
Loss before extraordinary
  items:
  Current Income Units........         $    (1.40)    $    (2.56)     $   (17.32)    $   (35.24)    $   (10.27)
  Growth/Shelter Units........             (20.74)        (38.04)        (257.23)       (524.05)       (152.61)

Extraordinary items:
  Current Income Units........                  -              -           16.20            .54           1.52
  Growth/Shelter Units........                  -              -          240.69           8.03          22.56

Net loss:
  Current Income Units........              (1.40)          (2.56)         (1.12)        (34.70)         (8.75)
  Growth/Shelter Units........             (20.74)         (38.04)        (16.54)       (516.02)       (130.05)

</TABLE>

<TABLE>

                                                                 As of December 31,
                                       -----------------------------------------------------------------------
Balance Sheets                            1995           1994            1993           1992           1991
--------------                         ----------     ----------      ----------     ----------     ----------
<S>                                    <C>            <C>            <C>            <C>            <C>
Real estate, net...............       $ 5,504,538    $ 5,632,109     $10,543,632    $26,473,696    $32,731,915
Asset held for sale............                 -      4,393,157               -              -              -
Total assets...................         6,407,931     11,314,161      11,558,910     27,626,566     34,358,182
Mortgage notes payable, net....         6,026,515      9,534,751       9,622,454     25,289,348     25,233,561
Partners' equity (deficit).....        (1,419,024)    (1,110,646)       (544,653)      (298,397)     7,383,362
</TABLE>

Abbey Lane Apartments and Lexington Green Apartments were conveyed via a deed in
lieu of  foreclosure  on September 30, 1993.  Wyoming Mall was sold on March 31,
1995. See Item 7 - Management's  Discussion and Analysis of Financial  Condition
and Results of Operations.


<PAGE>


ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
------       -----------------------------------------------------------
             AND RESULTS OF OPERATIONS
             -------------------------

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

The  Partnership was provided  $448,347 of cash from  operations  during 1995 as
compared to $500,253 in 1994.  The  Partnership  experienced a reduction in cash
received  from  tenants  due to the  sale of  Wyoming  Mall in March  1995.  The
Partnership also experienced  declines in cash paid to suppliers,  interest paid
and property taxes paid as a result of the sale. With the proceeds from the sale
of Wyoming  Mall,  the  Partnership  was able make a $250,000  payment for asset
management  fees and repay all the  affiliate  advances  and  accrued  interest.
During 1995, the Partnership  also received  $38,749 for a legal settlement with
Southmark and $134,434 as a property tax refund as a result of a successful  tax
appeal.

Cash provided by operations  increased  $184,266 in 1994 as compared to 1993. In
June 1993, the Partnership ceased making the interest only debt service payments
on the mortgage notes related to Abbey Lane and Lexington Green  Apartments.  In
September 1993, the  Partnership  transferred the two properties to unaffiliated
partnerships  via a deed-in-lieu of foreclosure.  These  transactions,  although
reducing the cash received from tenants, relieved the Partnership of significant
cash  obligations,  including  cash  paid to  suppliers  and  interest,  thereby
increasing the cash flow from operations.

Cash paid to  affiliates  decreased  $171,292 in 1994 as compared to 1993 due to
the decrease in property  management  fees - affiliates  expense  because of the
loss of Lexington Green and Abbey Lane Apartments, as discussed above.

The   Partnership   expended   $270,552,   $146,836  and  $346,003  for  capital
improvements  to its properties in 1995, 1994 and 1993,  respectively.  The 1994
decrease  is  attributable  to the  loss  of  Abbey  Lane  and  Lexington  Green
Apartments.  The 1995  increase is  attributable  to Harbour Club III's  capital
improvements. The Partnership also received proceeds of $738,914 for the sale of
Wyoming Mall on March 31, 1995.

Net cash used in  financing  activities  was  $876,173  for 1995 as  compared to
$142,626 in 1994.  During 1993, the Partnership  received cash advances from the
General Partner or its affiliates of $250,207.  Wyoming Mall required additional
cash of  $100,000 in 1993 to meet  operating  requirements  and the  Partnership
received $150,207 of such advances to pay Partnership general and administrative
expenses,  including costs associated with the proxy. The amounts of $20,874 and
$53,909 of such  advances  were  repaid in 1994 and 1993,  respectively.  During
1995,  the  improved  cash  position   allowed  the  Partnership  to  repay  all
outstanding  advances from  affiliates  of the General  Partner in the amount of
$784,654.

The Partnership's  remaining  property,  through improved  operations as well as
curtailment of expenses,  has been able to provide  sufficient cash flow to meet
its own working  capital  requirements.  In  addition,  the sale of Wyoming Mall
enabled  the  Partnership  to meet  its  general  and  administrative  expenses;
therefore, no cash advances were required during 1995.

Short-term liquidity:

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  will be reserved  for any  particular  partnership.  As of December 31,
1995,  $2,662,819 remained available for borrowing under the facility;  however,
additional  funds could become  available as other  partnerships  repay existing
borrowings.  This commitment will terminate on March 26, 1997.

Additionally, the General Partner has, at its discretion,  advanced funds to the
Partnership in addition to the revolving  credit  facility.  As discussed below,
the  Partnership  received other advances that were used to fund working capital
requirements  which advances were repaid in full in 1995. The General Partner is
not obligated to advance funds to the Partnership and there is no assurance that
the Partnership will receive additional funds.

Prior  to the  restructuring  of the  Partnership,  affiliates  of the  Original
General  Partner  advanced  funds to enable the  Partnership to meet its working
capital requirements.  These advances were purchased by, and were repaid to, the
General Partner.

McNeil Real Estate Fund XXI,  L.P., an affiliate of the General  Partner and the
joint owner of Wyoming Mall,  advanced  $320,874 in 1992 to the  Partnership for
use in tenant  improvements  and  operations at Wyoming Mall.  During 1994,  the
Partnership  repaid  $20,874 of these  advances.  During 1995,  the  Partnership
repaid the $300,000  remaining  advance.  The advances  were  unsecured,  due on
demand and accrued interest at a rate of prime plus 3 1/2%.

The total advances from  affiliates at December 31, 1995 and 1994 consist of the
following:

<TABLE>
                                                                         1995              1994
                                                                       ---------         --------
         <S>                                                          <C>               <C>
         Advances from General Partner- revolving credit
           facility                                                   $        -        $ 167,102
         Advances from General Partner - other                                 -          301,155
         Advances purchased by General Partner                                 -           16,397
         Advances from McNeil Real Estate Fund XXI, L.P.                       -          300,000
         Accrued interest payable                                              -          130,475
                                                                       ---------         --------
                                                                      $        -        $ 915,129
                                                                       =========         ========
</TABLE>

The advances from the General Partner were unsecured,  due on demand and accrued
interest at the prime lending rate of Bank of America plus 1%. The prime lending
rate was 9% at April 4, 1995 (date of  repayment  of loans) and 8.5% at December
31, 1994.  With the proceeds from the sale of Wyoming Mall, the  Partnership was
able to repay all the advances outstanding.

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  property,  arranging  financing  from  affiliates  or the
ultimate sale of the property. A sale or refinance is a possibility only, and as
previously discussed, management is seeking additional financing.

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.

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

The  accompanying   financial   statements  have  been  prepared   assuming  the
Partnership will continue as a going concern. The Partnership incurred losses of
$308,378, $565,993, and $246,256 in 1995, 1994, and 1993, respectively.

At  December  31,  1995,  the  Partnership  held  cash and cash  equivalents  of
$629,747. The balance of cash and cash equivalents can be no more than a minimum
level of cash reserves for the remaining  property's  operations.  Operations of
the property in 1996 are expected to provide  sufficient  positive cash flow for
normal  operations and debt service  payments.  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.

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") whose general partner is an
affiliate of Southmark.  McREMI had been managing all four phases of the complex
until December 1992, when the property  management  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. As of year end, no steps
have been taken towards 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.

Harbour  Club III  Apartments  was 96%  occupied at the end of December  1995 as
compared  to 91% and 90% at the end of  December  1994 and  1993,  respectively.
Harbour Club III was able to provide  enough cash flow from  operations  to meet
ordinary operating expenses as well as the debt service for its related mortgage
during  1995;  however,  the  property is in need of major  capital  repairs and
improvements in order to compete in its local market. The Partnership is seeking
alternatives  to fund the  necessary  improvements,  but at this time no sources
have been found.

The  Partnership was formed to engage in the business of acquiring and operating
income-producing  real  properties and holding the  properties  for  investment.
Since  completion of its capital  formation and property  acquisition  phases in
1986,  when it completed the purchase of five  properties,  the  Partnership has
operated its properties for production of income.  The Partnership's  properties
were  adversely  affected by competitive  and over built  markets,  resulting in
continuing cash flow problems.  In 1988, Southmark Tower in Houston,  Texas, was
foreclosed on by the lender in full  settlement of the mortgage  indebtedness on
the property. On September 30, 1993, two of the Partnership's properties,  Abbey
Lane and Lexington  Green,  were conveyed via a deed in lieu of  foreclosure  in
full settlement of the mortgage indebtedness on the properties. As a result, the
1993  Statement of Operations  include a $1,443,330  loss on disposition of real
estate and an extraordinary  gain on  extinguishment  of debt of $3,583,014.  On
March 31, 1995 the  Partnership  sold Wyoming  Mall.  The  Partnership  received
$738,914 in net cash proceeds  from the sale and recorded a loss on  disposition
of real estate of $245,637.  The Partnership paid a disposition fee of 3% of the
gross sales price to the General  Partner in the amount of $138,750.  See Item 8
Note 6 -  "Property  Dispositions".  The  Partnership  continues  to operate its
remaining property, Harbour Club III.

When McNeil took over  management of Wyoming Mall in 1991, the property had been
experiencing large vacancy losses and negative cash flow. An intensive marketing
and leasing  effort over the next several  years was  embarked  upon to sign new
tenants for  long-term  leases in order to stabilize  occupancy and the economic
performance of the property. This effort resulted in improved occupancy over the
ensuing periods and by the second quarter of 1993, occupancy had stabilized to a
level of 92%. Until a stable occupancy could be reached, management was not in a
position to determine if any permanent impairment had occurred because the size,
location and demographics of the mall were unique to the Albuquerque, N.M. area.
Accordingly,  a "wait  and see"  posture  was  taken  until  such  stabilization
occurred.  At about that time, during the third quarter of 1993, the Partnership
received an  unsolicited  offer to buy the  property.  Management  began serious
negotiations with the prospective purchaser,  and although the decision was made
not to  sell  at  that  time,  this  offer  from  an  unaffiliated  third  party
established a market value that was close to the value  calculated by the future
cash flows of the  stabilized  leases.  Accordingly,  a write-down for permanent
impairment of $735,288 was recorded  during the third quarter of 1993, to adjust
the carrying value to its estimated realizable value.

During  1994,  management  determined  that Wyoming Mall had reached its optimum
value and therefore began actively marketing the property for sale. 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  paid a disposition  fee of 3% of the gross sales
price to the General Partner in the amount of $138,750. The Partnership recorded
$265,274 of revenue and $270,725 of expenses during 1995 for Wyoming Mall.

The Partnership has had little ready cash reserves since its inception,  and has
been  largely  dependent on  affiliates  to support its  operations.  Payable to
affiliates for property management fees,  Partnership general and administrative
expenses and asset management fees totaled $1,527,935 at December 31, 1995.

Until the  Partnership  is able to generate cash from  operations or sales,  the
Partnership  will be dependent on its present  cash  reserves,  operation of the
property,  or  financial  support  from  affiliates.  Distributions  will remain
suspended until cash reserves are judged adequate.

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

1995 compared to 1994

Revenue:

Total  Partnership  revenues  in 1995  decreased  $312,327 or 11% as compared to
1994. This decrease is primarily due to the sale of Wyoming Mall in March 1995.

Rental revenue decreased $494,487 or 17% for the year ended December 31, 1995 as
compared to the same period in 1994, primarily due to the sale of Wyoming Mall.

Interest  income  increased  $8,977  or 54% in 1995 as  compared  to  1994.  The
increase is primarily due to higher average cash balances that resulted from the
sale proceeds of Wyoming Mall.

The  Partnership  recorded a $38,749 gain on legal  settlement  in 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.

The Partnership  also recorded  $134,434 in other income during 1995 as a result
of 1993-1994 property tax refund on Harbour Club III. This was the result of the
successful tax appeal to reduce the property's taxable base value.

Expenses:

Total expenses decreased $569,942 or 16% for the year ended December 31, 1995 as
compared to the same period of 1994.

During 1995,  Wyoming Mall was sold and the effects from the sale were  declines
of $293,450 in interest,  $225,217 in depreciation and amortization,  $42,455 in
property taxes,  $25,418 in personnel  expenses,  $35,249 in property management
fees -  affiliates,  $29,219 in repairs  and  maintenance  and  $79,833 in other
property operating expenses.

In addition to the sale of Wyoming  Mall,  other  factors  affected the level of
expenses reported by the remaining property.

Interest - affiliates  decreased $53,034 or 74% in 1995 as compared to 1994. The
sale of Wyoming Mall enabled the Partnership to repay all outstanding  affiliate
advances, thereby reducing affiliate interest expense.

Depreciation  and   amortization   increased  by  $25,632  due  to  the  capital
improvements made at Harbour Club III.

Property  tax expense  decreased  $53,554 in 1995 as compared to 1994 due to the
reduction in property tax expense at Harbour Club III  Apartments  that occurred
from a successful tax appeal.

Property management  fees-affiliates  increased by $7,272 in 1995 as compared to
1994 due to the increase in rental revenue generated at Harbour Club III.


1994 compared to 1993

Revenue:

Rental  revenue for 1994 was  $2,950,795 as compared to $5,655,988 for 1993. The
decrease  was  primarily  due to the loss of  Abbey  Lane  and  Lexington  Green
Apartments via a deed in lieu of foreclosure in full  settlement of the mortgage
indebtedness  on the  properties in September  1993.  The  Partnership  recorded
$2,754,042  of  rental  revenue  relating  to  Abbey  Lane and  Lexington  Green
Apartments  in 1993.  This decrease in rental  revenue was  partially  offset by
decreased  vacancies  at the  Partnership's  remaining  two  properties,  due to
marketing efforts to lease available space.

Interest  income  increased  by $2,257 in 1994 as compared to 1993 due to higher
average cash balances and higher interest rates.  Cash and cash equivalents were
$589,211 at December 31, 1994 as compared to $378,420 at December 31, 1993.

Expenses:

Total  expenses  for 1994  decreased  by  $6,031,337  as compared  to 1993.  The
decrease  was  partially  due to the loss of  Abbey  Lane  and  Lexington  Green
Apartments  as discussed  above.  The 1993  expenses  include a  write-down  for
permanent  impairment of real estate of $735,288 to reduce the carrying value of
Wyoming Mall and a $1,443,330 loss on disposition of real estate. See discussion
of "Financial Condition" and Item 8 - Note 4 - "Real Estate Investment".

Interest  expense  decreased by $1,307,678  as compared to 1993.  Abbey Lane and
Lexington Green Apartments recorded $1,297,132 of interest expense in 1993.

Interest  expense -  affiliates  increased  $12,771 as  compared  to 1993 due to
higher average advance balances and increased interest rates.

Depreciation  and  amortization  decreased by $591,919 as compared to 1993.  The
decrease  was  primarily  due to the loss of  Abbey  Lane  and  Lexington  Green
Apartments in September  1993, as well as the reduction in basis of Wyoming Mall
resulting from the write-down for permanent impairment.

Property  taxes  decreased by $314,338 as compared to 1993. The decrease was due
to the loss of Abbey Lane and Lexington Green  Apartments as well as a lower tax
expense for Harbour Club III Apartments due to a successful tax appeal.

Personnel  costs  decreased  by $444,403  as  compared  to 1993.  Abbey Lane and
Lexington Green Apartments  recorded  $474,743 of personnel expense in 1993. The
decrease  attributable to the loss of these two properties was partially  offset
by increases at Wyoming Mall and Harbour Club III due to staff additions to meet
service requirements as well as higher employee insurance rates.

Repairs and maintenance  expense  decreased by $434,215 as compared to 1993. The
Partnership  recorded $388,903 of repair and maintenance  expense for Abbey Lane
and Lexington Green  Apartments in 1993. A decrease in floor covering  recurring
replacements  at  Harbour  Club  III  was  responsible  for the  balance  of the
decrease.

Property  management fees - affiliates  decreased  $157,138 as compared to 1993.
The  Partnership  recorded  $137,935  of  management  fees  for  Abbey  Lane and
Lexington Green Apartments in 1993. Additionally,  the mortgage note encumbering
Harbour Club III Apartments is insured by the Federal Housing Administration and
is,  therefore,  regulated by HUD under Sections  223(f) and 224 of the National
Housing  Act.  The  Regulatory  Agreement  had  limited  the amount of  property
management fees that can be charged to 4.25%;  and the Partnership  received the
approval  of HUD to change the  property  management  fees of  Harbour  Club III
Apartments  from  4.25%  to 5%  retroactive  to May 30,  1991.  The  Partnership
recorded $23,032 of such retroactive fees related to 1991 - 1992 during 1993.

Other  property  operating  expenses  decreased by $405,758 as compared to 1993.
Abbey Lane and Lexington Green  Apartments  recorded  $456,900 of other property
operating  expenses in 1993.  The increase at the  Partnership's  two  remaining
properties was attributable to increased bad debts and legal fees.  During 1994,
a tenant  occupying  10,123 square feet at Wyoming Mall moved out owing past due
rent of approximately  $20,000.  Additionally,  lower tenant profiles at Harbour
Club III led to higher bad debt in 1994. Both  properties  incurred higher legal
expenses to process the evictions related to the above bad debt.

General and  administrative  -  affiliates  decreased by $206,571 as compared to
1993.  The  decrease  was  partially  due to a  decrease  of  $125,175  in asset
management  fees in 1994 due to a decrease  in the  tangible  asset value of the
Partnership,  on which the fee is based.  The remainder was due to a decrease in
cost  reimbursements  to affiliates.  This was attributable to a decrease in the
number  of  properties,  due to the  loss of  Abbey  Lane  and  Lexington  Green
Apartments, to which the overhead costs were allocated by McREMI.




<PAGE>


ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------       -------------------------------------------

<TABLE>

                                                                                                       Page
                                                                                                      Number
                                                                                                      ------
INDEX TO FINANCIAL STATEMENTS
<S>                                                                                                   <C>
Financial Statements:

   Report of Independent Public Accountants.......................................                       15

   Balance Sheets at December 31, 1995 and 1994...................................                       16

   Statements of Operations for each of the three years in the period
   ended December 31, 1995........................................................                       17

   Statements of Partners' Deficit for each of the three years in
   the period ended December 31, 1995.............................................                       18

   Statements of Cash Flows for each of the three years in the period
   ended December 31, 1995........................................................                       19

   Notes to Financial Statements..................................................                       21

   Financial Statement Schedules -

      Schedule III - Real Estate Investment and Accumulated
         Depreciation and Amortization............................................                       32

</TABLE>

























All other  schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.


<PAGE>





                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of McNeil Real Estate Fund XXII, L.P.:

We have audited the accompanying balance sheets of McNeil Real Estate Fund XXII,
L.P. (a California  limited  partnership)  as of December 31, 1995 and 1994, and
the related statements of operations,  partners' deficit and cash flows for each
of the three  years in the period  ended  December  31,  1995.  These  financial
statements  and the  schedule  referred to below are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of McNeil Real Estate Fund XXII,
L.P. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  As  discussed in Note 7 to the
financial  statements,  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 year end,  no steps have
been taken towards the foreclosure of Phase I.  Management's  plans in regard to
these matters are also described in Note 8. 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.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  The  schedule  listed  in the index to
financial  statements is presented for purposes of complying with the Securities
and  Exchange  Commission's  rules  and  is not  part  of  the  basic  financial
statements.  This schedule has been subjected to the auditing procedures applied
in our audits of the basic  financial  statements  and, in our  opinion,  fairly
states in all material  respects  the  financial  data  required to be set forth
therein in relation to the basic financial statements taken as a whole.


/s/  Arthur Andersen LLP


Dallas, Texas
   March 6, 1996


<PAGE>


                       McNEIL REAL ESTATE FUND XXII, L.P.

                                 BALANCE SHEETS


<TABLE>
                                                                                      December 31,
                                                                            ------------------------------
                                                                               1995                1994
                                                                            ----------          ----------
ASSETS
------
<S>                                                                        <C>                 <C>
Real estate investments:
   Land.....................................................               $   380,414         $   380,414
   Buildings and improvements...............................                 9,842,846           9,579,406
                                                                            ----------          ----------
                                                                            10,223,260           9,959,820
   Less:  Accumulated depreciation and
     amortization...........................................                (4,718,722)         (4,327,711)
                                                                            ----------          ----------
                                                                             5,504,538           5,632,109

Asset held for sale                                                                  -           4,393,157

Cash and cash equivalents...................................                   629,747             589,211
Cash segregated for security deposits.......................                    76,490              87,838
Accounts receivable.........................................                     4,683             141,268
Escrow deposits.............................................                   180,537             357,858
Prepaid expenses and other assets, net......................                    11,936             112,720
                                                                            ----------          ----------
                                                                           $ 6,407,931         $11,314,161
                                                                            ==========          ==========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------

Mortgage notes payable, net.................................               $ 6,026,515         $ 9,534,751
Accounts payable and accrued expenses.......................                   133,150             147,771
Accrued property taxes......................................                    65,931             234,143
Payable to affiliates - General Partner.....................                 1,527,935           1,501,947
Advances from affiliates....................................                         -             915,129
Security deposits and deferred rental income................                    73,424              91,066
                                                                            ----------          ----------
                                                                             7,826,955          12,424,807
                                                                            ----------          ----------

Partners' deficit:
   Limited partners - 55,000,000 Units authorized; 33,208,117
     and   33,268,117   Units   issued  and   outstanding  at
     December 31, 1995 and 1994, respectively,(19,825,588 and
     19,875,588   Current   Income   Units   outstanding   at
     December 31, 1995 and 1994, respectively, and 13,382,529
     and 13,392,529 Growth/Shelter Units at December 31, 1995
     and 1994 respectively).................................                (1,168,315)           (863,021)
   General Partner..........................................                  (250,709)           (247,625)
                                                                            ----------          ----------
                                                                            (1,419,024)         (1,110,646)
                                                                            ----------          ----------
                                                                           $ 6,407,931         $11,314,161
                                                                            ==========          ==========

</TABLE>

                See accompanying notes to financial statements.


<PAGE>


                       McNEIL REAL ESTATE FUND XXII, L.P.
                            STATEMENTS OF OPERATIONS
<TABLE>

                                                               For the Years Ended December 31,
                                                        -----------------------------------------------
                                                          1995               1994               1993
                                                        ---------          ---------          ---------
<S>                                                    <C>                <C>                <C>
Revenue:
   Rental revenue..........................            $2,456,308         $2,950,795         $5,655,988
   Interest................................                25,649             16,672             14,415
   Gain on settlement of legal
     expenses..............................                38,749                  -                  -
   Other income............................               134,434                  -             65,124
                                                        ---------          ---------          ---------
     Total revenue.........................             2,655,140          2,967,467          5,735,527
                                                        ---------          ---------          ---------

Expenses:
   Interest................................               683,664            981,281          2,288,959
   Interest - affiliates...................                18,568             71,602             58,831
   Depreciation and amortization...........               465,617            665,202          1,257,121
   Property taxes..........................               169,039            265,048            579,386
   Personnel expenses......................               317,753            350,089            794,492
   Repairs and maintenance.................               313,668            310,645            744,860
   Property management fees -
     affiliates............................               126,807            154,784            311,922
   Other property operating expenses.......               279,043            365,478            771,236
   General and administrative..............                64,085             73,968             77,438
   General and administrative -
     affiliates............................               279,637            295,363            501,934
   Write-down for permanent
     impairment of real estate.............                     -                  -            735,288
   Loss on disposition of real estate......               245,637                  -          1,443,330
                                                        ---------          ---------          ---------
     Total expenses........................             2,963,518          3,533,460          9,564,797
                                                        ---------          ---------          ---------

Loss before extraordinary items............              (308,378)          (565,993)        (3,829,270)
Extraordinary items........................                     -                  -          3,583,014
                                                       ----------          ---------          ---------
Net loss...................................           $  (308,378)        $ (565,993)        $ (246,256)
                                                       ==========          =========          =========

Net loss allocable to limited
   partners - Current Income Unit..........           $   (27,754)        $  (50,939)        $  (22,163)
Net loss allocable to limited
   partners - Growth/Shelter Unit..........              (277,540)          (509,394)          (221,630)
Net loss allocable to General
   Partner.................................                (3,084)            (5,660)            (2,463)
                                                       ----------          ---------          ---------
Net loss...................................           $  (308,378)        $ (565,993)        $ (246,256)
                                                       ==========          =========          =========

Net loss per thousand limited partnership
  units:
Current Income Units:
   Loss before extraordinary items.........           $     (1.40)        $    (2.56)        $   (17.32)
   Extraordinary items.....................                     -                  -              16.20
                                                       ----------          ---------          ---------
   Net loss................................           $     (1.40)        $    (2.56)        $    (1.12)
                                                       ==========          =========          =========

Growth/Shelter Units:
   Loss before extraordinary items.........           $    (20.74)        $   (38.04)        $  (257.23)
   Extraordinary items.....................                     -                  -             240.69
                                                       ----------          ---------          ---------
   Net loss................................           $    (20.74)        $   (38.04)        $   (16.54)
                                                       ==========          =========          =========

</TABLE>

                See accompanying notes to financial statements.


<PAGE>


                       McNEIL REAL ESTATE FUND XXII, L.P.

                         STATEMENTS OF PARTNERS' DEFICIT

              For the Years Ended December 31, 1995, 1994 and 1993




<TABLE>
                                                                                                     Total
                                                       General                 Limited               Partners'
                                                       Partner                 Partners              Deficit
                                                       --------               ---------             ---------
<S>                                                   <C>                    <C>                   <C>
Balance at December 31, 1992..............            $(239,502)            $   (58,895)           $ (298,397)

Net loss
   General Partner........................               (2,463)                      -                (2,463)
   Current Income Units...................                    -                 (22,163)              (22,163)
   Growth/Shelter Units...................                    -                (221,630)             (221,630)
                                                       --------               ---------             ---------
Total net loss............................               (2,463)               (243,793)             (246,256)
                                                       --------               ---------             ---------

Balance at December 31, 1993..............             (241,965)               (302,688)             (544,653)

Net loss
   General Partner........................               (5,660)                      -                (5,660)
   Current Income Units...................                    -                 (50,939)              (50,939)
   Growth/Shelter Units...................                    -                (509,394)             (509,394)
                                                       --------               ---------             ---------
Total net loss............................               (5,660)               (560,333)             (565,993)
                                                       --------               ---------             ---------

Balance at December 31, 1994..............             (247,625)               (863,021)           (1,110,646)

Net loss
   General Partner........................               (3,084)                      -                (3,084)
   Current Income Units...................                    -                 (27,754)              (27,754)
   Growth/Shelter Units...................                    -                (277,540)             (277,540)
                                                       --------               ---------             ---------
Total net loss............................               (3,084)               (305,294)             (308,378)
                                                       --------               ---------             ---------

Balance at December 31, 1995..............            $(250,709)            $(1,168,315)          $(1,419,024)
                                                       ========              ==========            ==========
</TABLE>



















                See accompanying notes to financial statements.


<PAGE>


                       McNEIL REAL ESTATE FUND XXII, L.P.

                            STATEMENTS OF CASH FLOWS

                      Increase in Cash and Cash Equivalents


<TABLE>
                                                               For the Years Ended December 31,
                                                        -----------------------------------------------
                                                          1995               1994               1993
                                                        ---------         ----------         ----------
<S>                                                    <C>               <C>                <C>
Cash flows from operating activities:
   Cash received from tenants..............            $2,527,267        $ 2,945,966        $ 5,561,856
   Cash received from legal settlement.....                38,749                  -                  -
   Cash paid to suppliers..................              (945,403)        (1,021,436)        (2,604,510)
   Cash paid to affiliates.................              (380,456)          (153,489)          (324,781)
   Interest received.......................                25,649             16,672             14,415
   Interest paid...........................              (676,971)          (936,355)        (1,990,475)
   Interest paid to affiliates.............              (149,043)                 -                  -
   Property taxes paid.....................              (125,879)          (351,105)          (405,642)
   Property taxes refunded.................               134,434                  -             65,124
                                                        ---------          ---------         ----------
Net cash provided by operating
   activities..............................               448,347            500,253            315,987
                                                        ---------          ---------         ----------

Cash flows from investing activities:
   Additions to real estate
     investments...........................              (270,552)          (146,836)          (346,003)
Proceeds from sale of real estate..........               738,914                  -                  -
                                                       ----------          ---------         ----------
Net cash provided by (used in)
   financing activities                                   468,362           (146,836)          (346,003)
                                                       ----------          ---------         ----------

Cash flows from financing activities:
   Principal payments on mortgage
     notes payable.........................               (91,519)          (121,752)          (111,838)
   Advances from affiliates................                     -                  -            250,207
   Repayment of advances from
     affiliates - General Partner..........              (784,654)           (20,874)           (53,909)
                                                       ----------          ---------         ----------
Net cash provided by (used in)
     financing activities..................              (876,173)          (142,626)            84,460
                                                       ----------          ---------         ----------

Net increase in cash and cash
     equivalents...........................                40,536            210,791             54,444

Cash and cash equivalents at
     beginning of year.....................               589,211            378,420            323,976
                                                       ----------         ----------         ----------

Cash and cash equivalents at end
     of year...............................           $   629,747        $   589,211        $  378,420
                                                       ==========         ==========         =========
</TABLE>


See discussion of noncash investing and financing activities in Note 6.






                See accompanying notes to financial statements.


<PAGE>


                       McNEIL REAL ESTATE FUND XXII, L.P.

                            STATEMENTS OF CASH FLOWS


               Reconciliation of Net Loss to Net Cash Provided by
                              Operating Activities


<TABLE>
                                                                For the Years Ended December 31,
                                                         ---------------------------------------------
                                                           1995               1994              1993
                                                         --------           --------          --------
<S>                                                      <C>               <C>               <C>
Net loss...................................             $(308,378)         $(565,993)        $(246,256)
                                                         --------           --------          --------

Adjustments to reconcile net loss to net 
   cash provided by operating activities:
   Depreciation and amortization...........               465,617            665,202          1,257,121
   Amortization of discounts on
     mortgage notes payable................                35,620             34,049            129,403
   Amortization of deferred borrowing
     costs.................................                 2,936             11,744             11,744
   Interest added to advances from
     affiliates - General Partner..........                     -             71,602             51,740
   Write-down for permanent
     impairment of real estate.............                     -                  -            735,288
   Loss on disposition of real estate......               245,637                  -          1,443,330
   Extraordinary items.....................                     -                  -         (3,583,014)
   Changes in assets and liabilities:
     Cash segregated for security
       deposits............................                11,348            (14,465)           114,021
     Accounts receivable...................                54,836             32,100            (44,728)
     Escrow deposits.......................               177,321           (101,497)            59,218
     Prepaid expenses and other assets.....                 7,902              9,292             27,205
     Accounts payable and accrued
       expenses............................              (145,096)            28,306           (124,609)
     Accrued property taxes ...............              (130,323)            17,911            127,948
     Payable to affiliates - General
       Partner.............................                25,988            296,658            489,075
     Security deposits and deferred
       rental income.......................                 4,939             15,344           (131,499)
                                                         --------          ---------          ---------

         Total adjustments.................               756,725          1,066,246            562,243
                                                         --------          ---------          ---------

Net cash provided by
   operating activities....................             $ 448,347         $  500,253         $  315,987
                                                         ========          =========          =========
</TABLE>





                See accompanying notes to financial statements.


<PAGE>


                       McNEIL REAL ESTATE FUND XXII, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 1995

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------   -----------------------------------------------------------

Organization
------------

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 General Partner was elected at a meeting of limited partners on
March 26, 1992, at which time an amended and restated partnership agreement (the
"Amended  Partnership  Agreement")  was adopted.  Prior to March 26,  1992,  the
general  partner of the Partnership was Southmark  Investment  Group,  Inc. (the
"Original General Partner"), a wholly-owned  subsidiary of Southmark Corporation
("Southmark").  The  principal  place of business  for the  Partnership  and the
General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.

The Partnership is engaged in real estate  activities,  including the ownership,
operation and  management of  residential  and retail real estate and other real
estate  related  assets.  At  December  31,  1995,  the  Partnership  owned  one
income-producing property as described in Note 4 - Real Estate Investment.

Basis of Presentation
---------------------

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles ("GAAP").  The preparation of financial
statements in conformity  with GAAP  requires  management to make  estimates and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

The  Partnership's  financial  statements  include the  accounts of Harbour Club
Associates  Limited  Partnership   ("Harbour  Club"),  a  single  asset  limited
partnership   formed  to  accommodate   the  refinancing  of  Harbour  Club  III
Apartments.  The Partnership is the general partner of Harbour Club, and holds a
99.99% interest in Harbour Club. The Partnership  exercises effective control of
Harbour Club. The minority  interest is not presented as it is both negative and
immaterial.

                                             % of Ownership Interest
Tier Partnership                        Partnership        General Partner
----------------                        -----------        ---------------

General Partnerships:
Harbour Club Associates                     99%                  1%

Real Estate Investments
-----------------------

Real  estate  investments  are  generally  stated  at the  lower  of cost or net
realizable value.  Real estate  investments are monitored on an ongoing basis to
determine if the property has sustained a permanent impairment in value. At such
time,  a  write-down  is recorded to reduce the basis of the property to its net
realizable  value. A permanent  impairment is determined to have occurred when a
decline in property  value is considered to be other than  temporary  based upon
management's  expectations  with respect to projected  cash flows and prevailing
economic conditions.

Improvements and betterments are capitalized and expensed  through  depreciation
charges. Repairs and maintenance are charged to operations as incurred.

In March 1995,  the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived  Assets to be Disposed Of." This statement
requires that long-lived assets and certain identifiable  intangibles to be held
and used by an entity be reviewed for impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  This  statement is effective for financial  statements  for fiscal
years  beginning  after December 15, 1995. The  Partnership  has not adopted the
principles  of this  statement  within the  accompanying  financial  statements;
however,  it is not anticipated that adoption will have a material effect on the
carrying value of the Partnership's long-lived assets.

Depreciation and Amortization
-----------------------------

Buildings and improvements are depreciated using the  straight-line  method over
the  estimated  useful lives of the assets,  ranging from 5 to 25 years.  Tenant
improvements were capitalized and amortized over the terms of the related tenant
lease using the straight-line method.

Cash and Cash Equivalents
-------------------------

Cash  and  cash  equivalents  include  cash on hand  and  cash on  deposit  with
financial  institutions  with  original  maturities  of  three  months  or less.
Carrying amounts for cash and cash equivalents approximate fair value.

Escrow Deposits
---------------

The  Partnership is required to maintain  escrow accounts in accordance with the
terms of various  mortgage  indebtedness  agreements.  These escrow accounts are
controlled by the mortgagee and are used for payment of property  taxes,  hazard
insurance,  capital improvements and/or property replacements.  Carrying amounts
for escrow deposits approximate fair value.

Deferred Borrowing Costs
------------------------

Loan fees and other related costs incurred to obtain long-term financing on real
property are capitalized and are included in prepaid  expenses and other assets.
Amortization is recorded using a method that approximates the effective interest
method over the terms of the related  mortgage  notes payable.  Amortization  of
deferred  borrowing  costs is included in interest  expense on the Statements of
Operations.

Discounts on Mortgage Notes Payable
-----------------------------------

Discounts on mortgage notes payable are being amortized over the remaining terms
of the related  notes  using the  effective  interest  method.  Amortization  of
discounts  on mortgage  notes  payable is  included  in interest  expense on the
Statements of Operations.

Rental Revenue
--------------

The  Partnership  leases its  residential  property under  short-term  operating
leases. Lease terms generally are less than one year in duration.  Rental income
is recognized as earned.

The Partnership leased its commercial  property under  non-cancelable  operating
leases. Certain leases provided concessions and/or periods of escalating or free
rent. Rental income was recognized on a straight-line basis over the term of the
related lease.  The excess of the rental income  recognized over the contractual
rental payments was recorded as accrued rent receivable and included in accounts
receivable on the Balance Sheets in 1994.

Income Taxes
------------

No provision for Federal  income taxes is necessary in the financial  statements
of the  Partnership  because,  as a  partnership,  it is not  subject to Federal
income tax and the tax effect of its activities accrues to the partners.


<PAGE>


Allocation of Net Income and Net Loss
-------------------------------------

The Amended Partnership Agreement generally provides that net income (other than
net income  arising from sales or  refinancing)  shall be allocated  one percent
(1%) to the  General  Partner  and  ninety-nine  percent  (99%)  to the  limited
partners equally as a group, and net loss shall be allocated one percent (1%) to
the General  Partner,  nine percent (9%) to the limited  partners owning Current
Income  Units  and  ninety  percent  (90%)  to  the  limited   partners   owning
Growth/Shelter Units.

For financial statement  purposes,  net income arising from sales or refinancing
shall be  allocated  one  percent  (1%) to the General  Partner and  ninety-nine
percent (99%) to the limited  partners equally as a group, and net loss shall be
allocated  one percent  (1%) to the General  Partner,  nine  percent (9%) to the
limited  partners  owning  Current  Income Units and ninety percent (90%) to the
limited partners owning Growth/Shelter Units.

For tax reporting  purposes,  net income arising from sales or refinancing shall
be  allocated  as  follows:  (a)  first,  amounts  of such net  income  shall be
allocated among the General  Partner and limited  partners in proportion to, and
to the extent of, the  portion of such  partner's  share of the net  decrease in
Partnership Minimum Gain determined under Treasury  Regulations,  (b) second, to
the General Partner and limited partners in proportion to, and to the extent of,
the amount by which their  respective  capital account  balances are negative by
more than their respective  remaining shares of the  Partnership's  Minimum Gain
attributable  to property still owned by the  Partnership  and (c) third,  1% of
such net income shall be  allocated  to the General  Partner and 99% of such net
income shall be allocated to the limited partners.

Federal  income tax law provides  that the  allocation of loss to a partner will
not be  recognized  unless the  allocation  is in  accordance  with a  partner's
interest in the partnership or the allocation has substantial  economic  effect.
Internal  Revenue  Code Section  704(b) and  accompanying  Treasury  Regulations
establish  criteria for allocation of  Partnership  deductions  attributable  to
debt. The  Partnership's  tax allocations for 1995, 1994 and 1993 have been made
in accordance with these provisions.

Distributions
-------------

At the discretion of the General  Partner,  distributable  cash (other than cash
from sales or refinancing)  shall be distributed  100% to the limited  partners,
with such distributions first paying the Current Income Priority Return and then
the  Growth/Shelter  Priority  Return.  Also at the  discretion  of the  General
Partner, the limited partners will receive 100% of distributable cash from sales
or refinancing, with such distributions first paying the Current Income Priority
Return,  then the  Growth/Shelter  Priority  Return,  then repayment of Original
Invested  Capital,  and of the  remainder,  16.66% to  limited  partners  owning
Current Income Units and 83.34% to limited partners owning Growth/Shelter Units.
The  limited  partners'  Current  Income  and  Growth/Shelter  Priority  Returns
represent a 10% cumulative return on their Adjusted Invested Capital balance, as
defined.  No  distributions  of Current Income  Priority  Returns have been made
since 1988, and no  distributions of  Growth/Shelter  Priority Returns have been
made since the Partnership began.

In connection  with a Terminating  Disposition,  as defined,  cash from sales or
refinancing and any remaining reserves shall be allocated among, and distributed
to, the General Partner and limited partners in proportion to, and to the extent
of,  their  positive  capital  account  balances  after the net  income has been
allocated pursuant to the above.

Net Loss Per Thousand Limited Partnership Units
-----------------------------------------------

Net loss per  thousand  limited  partnership  units  ("Units")  is  computed  by
dividing  net loss  allocated to the limited  partners by the  weighted  average
number of limited  partnership  Units  outstanding  expressed in thousands.  Per
thousand unit information has been computed based on 19,826,  19,876, and 19,903
weighted  average  Current  Income  Units  outstanding  in 1995,  1994 and 1993,
respectively,  and 13,383,  13,393 and 13,398  weighted  average  Growth/Shelter
Units outstanding in 1995, 1994, and 1993, respectively.



<PAGE>

NOTE 2 - TRANSACTIONS WITH AFFILIATES
------   ----------------------------

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

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

Under the terms of the Amended Partnership Agreement,  the Partnership is paying
an asset  management fee,  retroactive to February 14, 1991, which is payable to
the new 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 percent 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.

Compensation  and  reimbursements  paid to or  accrued  for the  benefit  of the
General Partner or its affiliates are as follows:
<TABLE>
                                                                 For the Years Ended December 31,
                                                          ---------------------------------------------
                                                           1995               1994               1993
                                                          -------            -------            -------
<S>                                                      <C>                <C>                <C>
Property management fees - affiliates......              $126,807           $154,784           $311,922
Interest on expense - affiliates...........                18,568             71,602             58,831
Charged to general and
   administrative - affiliates:
   Partnership administration..............               114,003            114,924            196,320
   Asset Management Fee....................               165,634            180,439            305,614
Charged to loss on disposition of real 
   estate sale:
   Disposition fee - Wyoming Mall..........               138,750                  -                  -
                                                          -------            -------            -------
                                                         $563,762           $521,749           $872,687
                                                          =======            =======            =======
</TABLE>

Payable to affiliates - General  Partner at December 31, 1995 and 1994 consisted
primarily  of  unpaid  property   management  fees,   Partnership   general  and
administrative  expenses, and asset management fees and are due and payable from
current operations.

Prior  to the  restructuring  of the  Partnership,  affiliates  of the  Original
General  Partner  advanced  funds to enable the  Partnership to meet its working
capital requirements.  These advances were purchased by, and were repaid to, the
General Partner.

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.  The  Partnership  received
advances  under the  revolving  credit  facility to meet  operating  expenses at
Lexington  Green  Apartments and Wyoming Mall which were repaid in full in 1995.
There is no assurance that the  Partnership  will receive any  additional  funds
under the  facility  because  no amounts  will be  reserved  for any  particular
partnership.  As  of  December  31,  1995,  $2,662,819  remained  available  for
borrowing under the facility;  however,  additional funds could become available
as other partnerships repay existing borrowings.  This commitment will terminate
on March 26, 1997.

Additionally, the General Partner has, at its discretion,  advanced funds to the
Partnership in addition to the revolving  credit  facility.  As discussed below,
the  Partnership  received  such other  advances  that were used to fund working
capital  requirements.  The General Partner is not obligated to advance funds to
the  Partnership  and there is no assurance  that the  Partnership  will receive
additional funds.

McNeil Real Estate Fund XXI,  L.P., an affiliate of the General  Partner and the
joint owner of Wyoming Mall,  advanced  $320,874 in 1992 to the  Partnership for
use in tenant  improvements  and  operations at Wyoming Mall.  During 1994,  the
Partnership  repaid  $20,874 of these  advances.  During 1995,  the  Partnership
repaid the $300,000  remaining  advance.  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.

The total advances from  affiliates at December 31, 1995 and 1994 consist of the
following:
<TABLE>
                                                                        1995             1994
                                                                     -----------      -----------
         <S>                                                       <C>               <C>
         Advances from General Partner- revolving credit
           facility                                                $           -     $    167,102
         Advances from General Partner - other                                 -          301,155
         Advances purchased by General Partner                                 -           16,397
         Advances from McNeil Real Estate Fund XXI, L.P.                       -          300,000
         Accrued interest payable                                              -          130,475
                                                                     -----------      -----------
                                                                   $           -     $    915,129
                                                                    ============      ===========
</TABLE>


The advances from the General Partner were unsecured,  due on demand and accrued
interest at the prime lending rate of Bank of America plus 1%. The prime lending
rate was 9% at April 4, 1995 (date of repayment) and 8.5% at December 31, 1994.

NOTE 3 - TAXABLE LOSS
------   ------------

McNeil  Real  Estate  Fund XXII,  L.P.  is a  partnership  and is not subject to
Federal and state income taxes.  Accordingly,  no recognition  has been given to
income taxes in the accompanying  financial  statements of the Partnership since
the income or loss of the  Partnership  is to be  included in the tax returns of
the  individual  partners.  The tax  returns of the  Partnership  are subject to
examination by Federal and state taxing authorities. If such examinations result
in  adjustments  to  distributive  shares of  taxable  income  or loss,  the tax
liability of the partners could be adjusted accordingly.

The  Partnership's  net assets and liabilities for tax purposes exceeded the net
assets and liabilities for financial  reporting  purposes by $6,235,169 in 1995,
$6,774,370 in 1994 and $6,811,846 in 1993.

NOTE 4 - REAL ESTATE INVESTMENT
------   ----------------------

The  basis  and  accumulated  depreciation  of  the  Partnership's  real  estate
investment at December 31, 1995 and 1994, is set forth in the following tables:

<TABLE>
                                                   Buildings and       Accumulated           Net Book
                                    Land           Improvements        Depreciation            Value
                                   -------         -----------         -----------          ----------
<S>                                <C>            <C>                 <C>                  <C>
Harbour Club III
 Belleville, MI

    1995                          $380,414        $ 9,842,846         $(4,718,722)         $5,504,538
                                   =======         ==========          ==========           =========


    1994                          $380,414        $ 9,579,406        $ (4,327,711)         $5,632,109
                                   =======         ==========         ===========           =========
</TABLE>

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  $265,274 of revenue  (excluding loss on
sale of real estate) and $270,725 of expenses during 1995 for Wyoming Mall.
<PAGE>

NOTE 5 - MORTGAGE NOTE PAYABLE
------   ---------------------

The following sets forth  mortgage notes payable of the  Partnership at December
31, 1995 and 1994. All mortgage notes are secured by the underlying  real estate
investment.
<TABLE>
                         Mortgage         Annual          Monthly                           December 31,
                         Lien             Interest        Payments/                -----------------------------
Property                 Position  (a)    Rates %         Maturity                   1995                1994
--------                 -------------    -------      -------------------         ----------         ----------
<S>                      <C>              <C>          <C>                        <C>                <C>
Harbour Club III         First                7.000    $   49,395    04/24        $ 7,302,661        $ 7,381,214
                         Discount(b)                                               (1,276,146)        (1,311,766)
                                                                                   ----------         ----------
                                                                                    6,026,515          6,069,448
                                                                                   ----------         ----------

Wyoming Mall (50%)       First(c)            10.875        35,688    07/99                  -          3,465,303
                                                                                   ----------         ----------
                                                                                  $ 6,026,515        $ 9,534,751
                                                                                   ==========         ==========
</TABLE>

(a)     The debt is non-recourse to the Partnership.

(b)     Discount for Harbour Club III is based on an effective interest rate  of
        9.09%.


(c)     On  March  31,  1995,  Wyoming  Mall  was  sold.  See Note 6 -  Property
        Dispositions.

Scheduled  principal   maturities  of  the  mortgage  note  under  the  existing
agreement, excluding the discount of $1,276,146, are as follows:

                  1996....................................        $   84,232
                  1997....................................            90,321
                  1998....................................            96,851
                  1999....................................           103,852
                  2000....................................           111,360
                  Thereafter..............................         6,816,045
                                                                   ---------
                  Total                                           $7,302,661
                                                                   =========

Based on borrowing rates  currently  available to the Partnership for a mortgage
loan with similar terms and average  maturities,  the fair value of the mortgage
note payable was approximately $6,507,000 as of December 31, 1995.



<PAGE>


NOTE 6 - PROPERTY DISPOSITIONS
------   ---------------------

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. Cash proceeds and the loss on the  disposition is detailed
below:

<TABLE>

                                                                       Loss on Sale            Cash Proceeds
                                                                        ----------               ---------
<S>                                                                     <C>                     <C>
Sales Price..........................................                  $ 4,625,000              $4,625,000

Selling costs........................................                     (234,838)               (234,838)
Mortgage note prepayment penalty.....................                     (138,441)               (138,441)
Carrying value.......................................                   (4,325,663)
Accounts receivable..................................                      (81,749)
Deferred borrowing costs.............................                      (49,910)
Prepaid expenses.....................................                      (40,036)
                                                                        ----------

Loss on disposition of real estate...................                  $  (245,637)
                                                                        ==========


Retirement of mortgage note..........................                                           (3,452,337)
Payment of 1994 taxes at closing.....................                                              (23,735)
Real estate tax proration............................                                              (14,154)
Credit for security deposit liability................                                              (22,581)
                                                                                                ----------

Net cash proceeds....................................                                          $   738,914
                                                                                                ==========
</TABLE>

The selling costs above include a disposition fee at 3% of the gross sales price
paid the to General Partner in the amount of $138,750.

In July 1993,  the  Partnership  discontinued  payments on the mortgage notes of
Lexington Green Apartments and Abbey Lane Apartments,  both located in Columbus,
Ohio.  In an  agreement  with  the  lender,  the  properties  were  conveyed  to
unaffiliated  entities via a deed in lieu of foreclosure  in full  settlement of
the mortgage indebtedness

On September 30, 1993, the Partnership transferred Lexington Green Apartments to
Lex Green Realty,  Inc., an  unaffiliated  entity.  The property was transferred
subject to the wraparound mortgage in the principal amount of $9,975,000.

Additionally,  on September 30, 1993,  the  Partnership  transferred  Abbey Lane
Apartments to Abbey Lane Apartments,  Inc., an unaffiliated entity. The property
was  transferred  subject  to the  first  mortgage  in the  principal  amount of
$6,025,000.

In  consideration  for  these  transactions,   the  Partnership  paid  $291,353,
representing cash on hand and security deposits, less certain credits.

Based  on  appraisals  obtained  by  the  transferee,  the  fair  values  of the
properties were established to be less than their book value; and accordingly, a
loss on disposition of real estate  totaling  $1,443,330,  and an  extraordinary
gain on extinguishment  of debt totaling  $3,583,014 were recorded in connection
with these transactions. The amounts are determined as follows:



<PAGE>

<TABLE>
                                                                     Lexington Green            Abbey Lane
                                                                     ---------------            ----------
<S>                                                                    <C>                     <C>

Estimated fair value of real estate..................                  $ 7,750,000             $ 4,650,000
Carrying value.......................................                   (9,145,589)             (4,697,741)
                                                                        ----------              ----------
Loss on disposition of real estate...................                  $(1,395,589)            $   (47,741)
                                                                        ==========              ==========

Amount of mortgage and accrued interest
   settled...........................................                  $ 9,997,307             $ 5,985,707
Estimated fair value of real estate..................                   (7,750,000)             (4,650,000)
                                                                        ----------              ----------
Gain on extinguishment of debt.......................                  $ 2,247,307             $ 1,335,707
                                                                        ==========              ==========
</TABLE>


NOTE 7 - FINANCIAL CONDITION AND GOING CONCERN CONSIDERATIONS
------   ----------------------------------------------------

The  accompanying   financial   statements  have  been  prepared   assuming  the
Partnership will continue as a going concern. The Partnership incurred losses of
$308,378, $565,993, and $246,256 in 1995, 1994, and 1993, respectively.

The Partnership's  remaining  property,  through improved  operations as well as
curtailment of expenses,  has been able to provide  sufficient cash flow to meet
its own working  capital  requirements.  In  addition,  the sale of Wyoming Mall
enabled  the  Partnership  to meet  its  general  and  administrative  expenses;
therefore, no cash advances were required during 1995.

At  December  31,  1995,  the  Partnership  held  cash and cash  equivalents  of
$629,747. The balance of cash and cash equivalents can be no more than a minimum
level of cash reserves for the remaining  property's  operations.  Operations of
the property in 1996 are expected to provide  sufficient  positive cash flow for
normal  operations and debt service  payments.  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.

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") whose general partner is an
affiliate of Southmark.  McREMI had been managing all four phases of the complex
until December 1992, when the property  management  agreement between McREMI and
UREF 12 was canceled.  Additionally,  in January 1993,  Phase 1 defaulted on the
mortgage loan to the United States  Department of Housing and Urban  Development
("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. As of year end,  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.

NOTE 8 - LEGAL PROCEEDINGS
------   -----------------

The Partnership is not party to, nor are any of the  Partnership's  property the
subject of, any material pending legal proceedings,  other than ordinary routine
litigation incidental to the Partnership, except for the following:

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, 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.

     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  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;
     however,  the final outcome of this litigation cannot be determined at this
     time.

2)   Martha Hess, et al. v. Southmark Equity Partners II, Ltd.  (presently known
     ---------------------------------------------------------------------------
     as McNeil Real Estate Fund XXV, L.P.),  Southmark Income  Investors,  Ltd.,
     ---------------------------------------------------------------------------
     Southmark Equity Partners,  Ltd.,  Southmark Realty Partners III, Ltd., and
     ---------------------------------------------------------------------------
     Southmark Realty Partners II, Ltd., et al. ("Hess");  Kotowski v. Southmark
     ---------------------------------------------------------------------------
     Equity Partners, Ltd. and Donald Arceri v. Southmark Income Investors, Ltd.
     ---------------------------------------------------------------------------
     These cases were previously pending in the Illinois Appellate Court for the
     First  District  ("Appellate  Court"),  as  consolidated  Case No.  90-107.
     Consolidated  with  these  cases  are  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 those
     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  Southmark  (now
     McNeil)  partnerships,  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. Although leave to appeal to the Illinois Supreme Court was
     sought,  the Illinois Supreme Court refused to hear the appeal.  The effect
     of the denial is that the Appellate  Court's opinion remains  standing.  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  defendent-group,  and others
     are  proceeding  under the caption  George and Joy  Krugler v. I.R.E.  Real
                                         ---------------------------------------
     Estate Income Fund,  Jerry and Barbara Neuman v. Southmark  Equity Partners
     ---------------------------------------------------------------------------
     II, Richard and Theresa  Bartoszewski v. Southmark Realty Partners III, and
     ---------------------------------------------------------------------------
     Edward and Rose Weskerna v. Southmark Realty Partners II.
     --------------------------------------------------------

     In September 1995, the court granted  Plaintiffs' Motion to File an Amended
     Complaint  to  Consolidate  and for Class  Certification.  Defendants  have
     answered  the  Complaint  and have plead that the  Plaintiffs  did not give
     timely  notice of their right to rescind  within six months of knowing that
     right. The ultimate outcome of this litigation cannot be determined at this
     time.  While the  Partnership  has  objected  to the Motion,  the  ultimate
     resolution of this litigation,  which is expected to occur within one year,
     could result in a loss to the  Partnership of up to $355,000 in addition to
     related  legal  fees.  No  accrual  has  been  recorded   related  to  this
     litigation.

3)   Nicpon v.  Southmark  Realty  Partners II  (presently  known as McNeil Real
     ---------------------------------------------------------------------------
     Estate Fund XXII, L.P.) 89 CH 4118, seek rescission of certain  partnership
     ----------------------
     interests  and damages for breach of  fiduciary  duty in  violation  of the
     Illinois  Consumer  Fraud  Act.  These  actions  were tried to the court on
     August 28,  1992 and the Court  dismissed  all but  $21,269 of the  claims.
     Those claims represent  rescission claims,  agreed to by the defendant that
     have now been paid by the defendant. The plaintiffs filed notices of appeal
     from these dismissals. The plaintiffs presented, on February 3, 1995, their
     motion to file an amended  consolidated  class  action  complaint  and,  on
     February 15, 1995,  their  motion to certify a class.  The  defendant-group
     intends  to object to both of these  motions.  The Court has yet to rule on
     either the motion for leave to file the  amendment  or the motion for class
     certification. The ultimate outcome of this proceeding cannot be determined
     at this time.

4)   Dick and Aloma  Anderson v.  McNeil  Real  Estate Fund XXII,  L.P. , McNeil
     ---------------------------------------------------------------------------
     Partners,  L.P.,  Wayne T. Shipp, the Wayne Shipp Agency,  Inc.,  Southmark
     ---------------------------------------------------------------------------
     Investment Group, Inc. and Southmark Realty Partners, Ltd. This lawsuit was
     ---------------------------------------------------------
     filed in November  1993 in  Washington  State in the Clark County  Superior
     Court. In 1985, the plaintiffs apparently spent $22,000 to purchase limited
     partnership  interests in Southmark Realty Partners Ltd. II , (not named by
     them as a defendant ) whose name is now McNeil Real Estate Fund XXII,  L.P.
     (the  "Partnership").   Plaintiffs  allege  that  in  connection  with  the
     transactions by which McNeil  Partners,  L.P. became general partner of the
     Partnership, and by which certain changes were made in the Partnership, the
     McNeil entities engaged in the offer and/or sale of unregistered securities
     in violation of Washington law. The plaintiffs have alleged that certain of
     the other  defendants  --  specifically  Mr. Shipp and the Shipp  Insurance
     Agency  --  engaged  in  fraud  in  connection  with  the  sale of  limited
     partnership interests in the Partnership to plaintiffs. The plaintiffs have
     not made fraud allegations against any of the McNeil or Southmark entities.
     The majority of  plaintiffs'  claims against the  Partnership  are based on
     allegations  that  the  securities  are  not  registered  in the  State  of
     Washington.  Counsel's  research  indicates  that  there  are two  possible
     exemptions to the  registration  of securities  which apply to this matter.
     These statutory  exceptions are under review by the  plaintiffs'  attorney.
     Counsel for the  Partnership  was contacted  recently and asked whether the
     Partnership  would be interested  in  repurchasing  Plaintiffs'  units at a
     discount. Plaintiffs will be advised of their option to abandon their units
     back to the Partnership for no considerations. The ultimate outcome of this
     proceeding cannot be determined at this time.

NOTE 9 - GAIN ON LEGAL SETTLEMENT
------   ------------------------

The  Partnership  filed claims with the United States  Bankruptcy  Court for the
Northern  District of Texas,  Dallas Division (the  "Bankruptcy  Court") against
Southmark   Corporation   ("Southmark")   for   damages   relating  to  improper
overcharges,  breach of contract and breach of fiduciary  duty. The  Partnership
settled these claims in 1991, and such settlement was approved by the Bankruptcy
Court.

An Order Granting  Motion to Distribute  Funds to Class 8 Claimants  dated April
14, 1995 was issued by the Bankruptcy  Court.  In accordance  with the Order, in
May 1995 the Partnership received in full satisfaction of its claims, $29,292 in
cash, and common and preferred stock in the reorganized  Southmark  subsequently
sold for $9,457,  which amounts  represent the  Partnership's  pro-rata share of
Southmark assets available for Class 8 Claimants.
<PAGE>

NOTE 10 - PRO FORMA INFORMATION (UNAUDITED)
-------   --------------------------------

The following pro forma  information  for the years ended  December 31, 1995 and
1994  reflects the results of operations  of the  Partnership  as if the sale of
Wyoming Mall had occurred as of January 1, 1994.  The pro forma  information  is
not  necessarily  indicative of the results of operations  which  actually would
have occurred or those which might be expected to occur in the future.
<TABLE>
                                                                         1995             1994
                                                                       ---------        ---------
<S>                                                                   <C>              <C>
         Total revenue                                                $2,389,866       $2,086,148
         Net loss                                                        (57,289)        (445,746)

         Net loss per thousand limited partnership units:
           Current Income Units                                            (.26)            (2.02)
           Growth/Shelter Units                                           (3.85)           (29.95)

</TABLE>
<PAGE>


                       McNEIL REAL ESTATE FUND XXII, LTD.
                                  SCHEDULE III
      REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION AND AMORTIZATION
                                December 31, 1995
<TABLE>
                                                    Initial Cost (b)             Cumulative            Costs
                                             ------------------------------      Write-down         Capitalized
                             Related (b)                      Buildings and     and Permanent        Subsequent
Description                  Encumbrances      Land           Improvements        Impairment       To Acquisition
-----------                  ------------    ------------------------------     -------------      -------------
<S>                           <C>           <C>               <C>               <C>                <C>
Apartments:

Harbour Club
   Belleville, MI (c)         $6,026,515    $ 561,491         $13,475,784       $(4,526,936)       $    712,921
                               =========     ========          ==========        ==========         ===========
</TABLE>












































                     See accompanying notes to Schedule III.


<PAGE>


                       McNEIL REAL ESTATE FUND XXII, LTD.
                                  SCHEDULE III
      REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION AND AMORTIZATION
                                December 31, 1995

<TABLE>
                                                Gross Amount at
                                        Which Carried at Close of Period
                                --------------------------------------------------      Accumulated
                                                  Buildings and                         Depreciation
Description                         Land          Improvements        Total (a)       and Amortization
-----------                     ------------      -------------    ---------------     --------------
<S>                            <C>               <C>              <C>                 <C>
Apartments:

Harbour Club III
   Belleville, MI (c)         $      380,414     $    9,842,846   $     10,223,260    $   (4,718,722)
                               =============      =============    ===============     =============

</TABLE>

(a)  For Federal Income tax purposes,  the properties are depreciated over lives
     ranging from 15-25 years using ACRS or MACRS methods. The aggregate cost of
     real estate investments for Federal income tax purposes was $16,232,088 and
     accumulated depreciation was $9,193,055 at December 31, 1995.

(b)  The  encumbrances  reflect  the  present  value  of  future  loan  payments
     discounted,  if  appropriate,  at a rate  estimated  to be  the  prevailing
     interest rate at the date of acquisition or refinancing.

(c) The carrying values of Harbour Club III apartments was reduced by $4,526,936
    in 1992.

































                     See accompanying notes to Schedule III.


<PAGE>


                       McNEIL REAL ESTATE FUND XXII, LTD.
                                  SCHEDULE III
      REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION AND AMORTIZATION
                                December 31, 1995


<TABLE>

                                 Date of                    Date                 Depreciable
Description                   Construction                Acquired              lives (years)
-----------                   ------------                --------              ------------
<S>                           <C>                         <C>                   <C>
APARTMENTS:

Harbour Club III
   Belleville, MI (c)           1972                        05/86                   5-25

</TABLE>




<PAGE>



                       McNEIL REAL ESTATE FUND XXII, L.P.

                              Notes to Schedule III

      Real Estate Investments and Accumulated Depreciation and Amortization


A  summary  of  activity  for the  Partnership's  real  estate  investments  and
accumulated depreciation and amortization is as follows:

<TABLE>
                                                               For the Years Ended December 31,
                                                        -----------------------------------------------
                                                          1995               1994               1993
                                                        ---------         ----------         ----------
<S>                                                    <C>               <C>                <C>
Real estate investments:
-----------------------

Balance at beginning of year...............            $9,959,820        $16,906,946        $37,627,163

Improvements...............................               263,440            146,836            346,003

Reclassification to asset held for sale....                     -         (7,093,962)                 -

Write-down for permanent
   impairment of real estate...............                     -                  -           (735,288)

Dispositions...............................                     -                  -        (20,330,932)
                                                        ---------         ----------         ----------

Balance at end of year.....................           $10,223,260        $ 9,959,820        $16,906,946
                                                       ==========         ==========         ==========



Accumulated depreciation and amortization:
-----------------------------------------

Balance at beginning of year...............           $ 4,327,711        $ 6,363,314        $11,153,467

Depreciation and amortization..............               391,011            665,202          1,257,121

Reclassification to asset held for sale....                     -         (2,700,805)                 -

Dispositions...............................                     -                  -         (6,047,274)
                                                       ----------         ----------         ----------

Balance at end of year.....................           $ 4,718,722        $ 4,327,711        $ 6,363,314
                                                       ==========         ==========         ==========


Asset held for sale:
-------------------

Balance at beginning of year...............           $ 4,393,157        $         -        $         -

Improvements...............................                 7,112                  -                  -

Depreciation and amortization..............               (74,606)                 -                  -

Reclassification from real estate
   investment..............................                     -          4,393,157                  -

Dispositions...............................            (4,325,663)                 -                  -
                                                       ----------         ----------         ----------

Balance at end of year.....................           $         -        $ 4,393,157        $         -
                                                       ==========         ==========         ==========
</TABLE>


<PAGE>



ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
------        ---------------------------------------------------------------
              FINANCIAL DISCLOSURES
              ---------------------




None.


                                    PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------       --------------------------------------------------

Neither the  Partnership  nor the General Partner has any directors or executive
officers.  The names and ages of, as well as the positions held by, the officers
and  directors of McNeil  Investors,  Inc.,  the general  partner of the General
Partner, are as follows:
<TABLE>

                                       Other Principal Occupations and Other
Name and Position             Age      Directorships During the Past 5 Years
-----------------             ---      -------------------------------------
<S>                           <C>      <C>
Robert A. McNeil,              75       Mr.  McNeil  is also  Chairman  of the Board and  Director  of McNeil  Real
Chairman of the                         Estate  Management,  Inc.  ("McREMI")  which is an affiliate of the General
Board and Director                      Partner.  He has held the foregoing  positions  since the formation of such
                                        an entity in 1990.  Mr.  McNeil  received  his B.A.  degree  from  Stanford
                                        University  in 1942 and his  L.L.B.  degree  from  Stanford  Law  School in
                                        1948. He is a member of the State Bar of  California  and has been involved
                                        in  real  estate  financing  since  the  late  1940's  and in  real  estate
                                        acquisitions,  syndications  and  dispositions  since 1960. From 1986 until
                                        active  operations of McREMI and McNeil  Partners,  L.P.  began in February
                                        1991,  Mr.  McNeil was a private  investor.  Mr.  McNeil is a member of the
                                        International  Board of Directors  of the Salk  Institute,  which  promotes
                                        research in improvements in health care.

Carole J. McNeil               52       Mrs.  McNeil is  Co-Chairman,  with  husband  Robert A.  McNeil,  of McNeil
Co-Chairman of the                      Investors,  Inc.  Mrs.  McNeil has twenty years of real estate  experience,
Board                                   most  recently  as a  private  investor  from  1986 to 1993.  In 1982,  she
                                        founded Ivory & Associates, a commercial real estate  brokerage firm in San
                                        Francisco,  CA. Prior to that, she was a commercial  real estate  associate
                                        with the  Madison Company and, earlier,  a commercial  sales  associate and
                                        analyst with   Marcus  and   Millichap   in  San Francisco.  In 1978,  Mrs.
                                        McNeil established Escrow  Training  Centers, California's first accredited
                                        commercial training   program  for  title company escrow  officers and real
                                        estate  agents needing  college credits to qualify for brokerage  licenses.
                                        She  began  in  real  estate  as  Manager and  Marketing  Director of Title
                                        Insurance  and  Trust in  Marin  County,  CA. Mrs.  McNeil  serves  on  the
                                        International  Board of Directors of the Salk Institute.

</TABLE>

<PAGE>

<TABLE>

                                       Other Principal Occupations and Other
Name and Position             Age      Directorships During the Past 5 Years
-----------------             ---      -------------------------------------
<S>                           <C>       <C>
Donald K. Reed,                50       Mr. Reed is  President,  Chief  Executive  Officer  and  Director of McREMI
Director, President,                    which is an affiliate of the General  Partner.  Prior to joining  McREMI in
and Chief Executive                     March 1993, Mr. Reed was President,  Chief  Operating  Officer and Director
Officer                                 of Duddlesten Management Corporation and Duddlesten Realty Advisors,  Inc.,
                                        with   responsibility   for   a   management portfolio  of office,  retail,
                                        multi-family and mixed-use land projects  representing  $2 billion in asset
                                        value. He was  also  Chief  Operating  Officer, Director  and member of the
                                        Executive Committee of all Duddlesten  affiliates. Mr.  Reed  started  with
                                        the Duddlesten companies  in 1976 and  served as Senior Vice President  and
                                        Chief Financial Officer and as Executive Vice President and Chief Operating
                                        Officer of  Duddlesten  Management  Corporation  before  his  promotion  to
                                        President in 1982.  He was   President   and  Chief   Operating  Officer of
                                        Duddlesten  Realty  Advisors, Inc.,  which has been engaged  in real estate
                                        acquisitions,   marketing   and dispositions, since its formation  in 1989.

Ron K. Taylor                  38       Mr.  Taylor  is a Senior  Vice  President  of  McREMI  and has been in this
Vice President                          capacity since McREMI commenced  active  operations in 1991. He also serves
                                        as Acting  Chief  Financial  Officer  of McREMI  since the  resignation  of
                                        Robert C. Irvine on January 31, 1996.  Mr. Taylor is primarily  responsible
                                        for   Asset   Management   functions   at   McREMI,    including   property
                                        dispositions,   commercial  leasing,  real  estate  finance  and  portfolio
                                        management.  Prior to joining  McREMI,  Mr.  Taylor  served as an Executive
                                        Vice  President  for a national  syndication/property  management  company.
                                        Mr. Taylor has been involved in the real estate industry since 1983.
</TABLE>

Each director  shall serve until his successor  shall have been duly elected and
qualified.

ITEM 11.     EXECUTIVE COMPENSATION
-------      ----------------------

No direct  compensation  was paid or payable by the  Partnership to directors or
officers  (since it does not have any  directors or officers) for the year ended
December  31,  1995,  nor was any  direct  compensation  paid or  payable by the
Partnership  to  directors  or officers  of the  general  partner of the General
Partner for the year ended  December 31, 1995. The  Partnership  has no plans to
pay any such remuneration to any directors or officers of the General Partner in
the future.

See Item 13 - Certain  Relationships  and  Related  Transactions  for amounts of
compensation and  reimbursements  paid by the Partnership to the General Partner
and its affiliates.

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------      --------------------------------------------------------------

(A)   Security ownership of certain beneficial owners.

      No  individual or group as defined by Section  13(d)(3) of the  Securities
      Exchange Act of 1934,  known to the Partnership is the beneficial owner of
      more than 5 percent of the Partnership's Units.

(B)   Security ownership of management.

      Neither the General  Partner nor any of its  officers or  directors of its
      general partner own any limited partnership units.

(C)   Change in control.

      None.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------      ----------------------------------------------

The amendments to the Partnership compensation structure included in the Amended
Partnership  Agreement  provide for an asset management fee to replace all other
forms of General Partner  compensation  other than property  management fees and
reimbursements  of certain  costs.  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 percent 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.  For the  year  ended  December  31,  1995,  the
Partnership  paid or accrued  $165,634  of such  asset  management  fees.  Total
accrued  but unpaid  asset  management  fees of  $988,791  were  outstanding  at
December 31, 1995.

The Partnership pays property  management fees equal to 5% of the gross receipts
of the residential  property and paid 6% for the commercial  property to McREMI,
an affiliate of the General Partner, for providing property management services.
Additionally,  the  Partnership  reimburses  McREMI  for  its  costs,  including
overhead of administering the Partnership's affairs. For the year ended December
31, 1995, the Partnership paid or accrued  $240,810 of such property  management
fees and reimbursements.

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  for the  year  ended  December  31,  1995 in  connection  with the sale of
properties.


<PAGE>


ITEM 14.     EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
-------      -----------------------------------------------------------------

See accompanying Index to Financial Statements at Item 8.

      (A)     Exhibits
              --------

              The following  exhibits are  incorporated  by reference and are an
              integral part of this Form 10-K.

              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).

              10.2                  Portfolio Services Agreement, dated February
                                    14, 1991,  between Southmark Realty Partners
                                    II, Ltd. and McNeil Real Estate  Management,
                                    Inc. (1)

              10.3                  Promissory  Note, dated June 14, 1989, among
                                    Southmark Realty Partners,  Ltd.,  Southmark
                                    Realty  Partners II, Ltd. and Woodmen of the
                                    World Life  Insurance  Society  relating  to
                                    Wyoming Mall. (1)

              10.6                  Modification of Note and Mortgage, dated May
                                    1, 1984,  between  Knoblinks  Associates III
                                    and Samuel R.  Pierce,  Jr., as Secretary of
                                    Housing  and Urban  Development  relating to
                                    Harbour Club III. (1)

              10.7                  Property  Management  Agreement  dated March
                                    26,  1992,  between  McNeil Real Estate Fund
                                    XXII,    L.P.   and   McNeil   Real   Estate
                                    Management, Inc. (2)

              10.8                  Amendment of Property  Management  Agreement
                                    dated March 5, 1993. (2)

              10.9                  Revolving  Credit  Agreement dated August 6,
                                    1991,  between  McNeil  Partners,  L.P.  and
                                    various selected partnerships, including the
                                    Registrant.  (Incorporated  by  reference to
                                    the Annual Report of McNeil Real Estate Fund
                                    XI, Ltd.,  on Form 10-K for the period ended
                                    December  31,  1991 as filed  on  March  29,
                                    1992.)

              10.10                 Property  Management  Agreement  dated March
                                    26, 1992,  between  Harbour Club  Associates
                                    and  McNeil  Real  Estate   Management  Inc.
                                    (Incorporated  by  reference  to the  Annual
                                    Report  of the  Registrant  on Form 10-K for
                                    the period ended December 31, 1993, as filed
                                    on March 31, 1994.)

              11.                   Statement regarding  computation of Net Loss
                                    per Limited  Partnership Unit (see Note 1 to
                                    Financial Statements).



<PAGE>


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

              22.                   Following is a list of  subsidiaries  of the
                                    Partnership:

                                                                Names Under
                                            Jurisdiction        Which It Is
              Name of Subsidiary            Incorporation      Doing Business
              ------------------            -------------      --------------

              Harbour Club Associates
              Limited Partnership             Michigan              None


       The  Partnership has omitted  instruments  with respect to long-term debt
       where the total amount of the securities  authorized  thereunder does not
       exceed 10% of the total assets of the Partnership. The Partnership agrees
       to furnish a copy of each such instrument to the Commission upon request.

                           (1)   Incorporated  by  reference  to  the  Quarterly
                                 Report of the Registrant,  on Form 10-Q for the
                                 period  ended March 31,  1991,  as filed on May
                                 14, 1991.

                           (2)   Incorporated  by reference to the Annual Report
                                 of the  Registrant  on Form 10-K for the period
                                 ended  December 31, 1992, as filed on March 30,
                                 1993.


      (B)     Reports  on Form  8-K.  There  were no  reports  on Form 8-K filed
              during the quarter ended December 31, 1995.


<PAGE>



                       McNEIL REAL ESTATE FUND XXII, L.P.
                              A Limited Partnership

                                 SIGNATURE PAGE


Pursuant to the  requirements of Section 13 or 15(d) 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.

<TABLE>
                                                   McNEIL REAL ESTATE FUND XXII, L.P.
<S>                                                <C>

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

                                                        By: McNeil Investors, Inc., General Partner



March 29, 1996                                    By:  /s/  Robert A. McNeil
-----------------------------------                    ----------------------------------------
Date                                                    Robert A. McNeil
                                                        Chairman of the Board and Director
                                                        Principal Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.



March 29, 1996                                    By:  /s/  Donald K. Reed   
------------------------------------                  ----------------------------------------
Date                                                    Donald K. Reed
                                                        President and Director of McNeil Investors, Inc.



March 29, 1996                                    By:  /s/  Ron K. Taylor
------------------------------------                  ---------------------------------------
Date                                                    Ron K. Taylor
                                                        Acting Chief Financial Officer
                                                           of McNeil Investors, Inc.



March 29, 1996                                    By:  /s/  Carol A. Fahs
------------------------------------                  ---------------------------------------
Date                                                    Carol A. Fahs
                                                        Chief Accounting Officer of McNeil Real Estate
                                                           Management, Inc.

</TABLE>