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


                                    FORM 10-Q



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


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

                                       OR

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

     For the transition period from ______________to_____________
     Commission file number  0-10743
                           ---------


                        MCNEIL REAL ESTATE FUND XII, LTD.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)





         California                                  94-2717957
--------------------------------------------------------------------------------
 (State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                        Identification No.)



             13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240
--------------------------------------------------------------------------------
            (Address of principal executive offices)        (Zip code)


Registrant's telephone number, including area code  (972) 448-5800
                                                  ------------------------------


Indicate  by check  mark  whether  the  registrant,  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months and (2) has been  subject to such  filing
requirements for the past 90 days. Yes X No
                                      ---  ---




<PAGE>
                        MCNEIL REAL ESTATE FUND XII, LTD.

                          PART I. FINANCIAL INFORMATION

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

                                 BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

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

Real estate investments:
<S>                                                                    <C>                  <C>           
   Land.....................................................           $     6,079,334      $    6,280,580
   Buildings and improvements...............................                74,978,462          73,318,763
                                                                        --------------       -------------
                                                                            81,057,796          79,599,343
   Less:  Accumulated depreciation and amortization.........               (43,198,569)        (40,501,275)
                                                                        --------------       --------------
                                                                            37,859,227          39,098,068

Asset held for sale.........................................                 3,430,081           3,164,323

Cash and cash equivalents...................................                 1,424,211           5,791,363
Cash segregated for security deposits ......................                   310,062             316,665
Accounts receivable.........................................                   334,513             206,847
Prepaid expenses and other assets...........................                   170,441             149,212
Escrow deposits.............................................                 1,826,903           1,459,480
Deferred borrowing costs, net of accumulated amorti-
   zation of $593,294 and $476,661 at September 30,
   1996 and December 31, 1995, respectively.................                 1,845,941           1,926,908
                                                                        --------------       -------------
                                                                       $    47,201,379      $   52,112,866
                                                                        ==============       =============

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

Mortgage notes payable, net.................................           $    58,973,477      $   59,160,426
Accounts payable............................................                    85,615              86,164
Accrued expenses............................................                   122,598             146,379
Accrued interest............................................                   410,793             411,489
Accrued property taxes......................................                   997,262             935,318
Deferred gain - land condemnation...........................                   297,754                   -
Advance from Southmark......................................                    36,889              35,147
Advances from affiliates - General Partner..................                    28,843           1,474,968
Payable to affiliates - General Partner.....................                 4,680,858           7,196,483
Security deposits and deferred rental revenue...............                   591,422             515,676
                                                                        --------------       -------------
                                                                            66,225,511          69,962,050
                                                                        --------------       -------------
Partners' deficit:
   Limited partners - 240,000 limited partnership units
     authorized;  229,828 and 229,980 limited partnership 
     units issued and outstanding at September 30,
     1996 and December 31, 1995, respectively...............                (9,086,129)         (7,513,252)
   General Partner..........................................                (9,938,003)        (10,335,932)
                                                                        --------------       -------------
                                                                           (19,024,132)        (17,849,184)
                                                                        --------------       -------------
                                                                       $    47,201,379      $   52,112,866
                                                                        ==============       =============
</TABLE>




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

                 See accompanying notes to financial statements.
<PAGE>
                        MCNEIL REAL ESTATE FUND XII, LTD.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                           Three Months Ended                      Nine Months Ended
                                             September 30,                           September 30,
                                      ---------------------------------    ---------------------------------
                                          1996               1995               1996                1995
                                      --------------    ---------------    --------------     --------------
Revenue:
<S>                                   <C>                <C>               <C>                <C>           
   Rental revenue................     $    4,228,818     $    4,144,714    $   12,510,833     $   13,466,770
   Interest......................             33,541             47,465           178,629            104,625
   Gain on disposition of
     real estate.................                  -          1,164,231                 -          3,427,513
   Gain on legal settlement......                  -                  -                 -             65,856
                                       -------------      -------------     -------------      -------------
     Total revenue...............          4,262,359          5,356,410        12,689,462         17,064,764
                                       -------------      -------------     -------------      -------------

Expenses:
   Interest......................          1,305,014          1,247,512         3,897,787          4,696,851
   Interest - affiliates.........                651             41,426            52,972            124,139
   Depreciation and
     amortization................            906,536            920,480         2,697,294          3,059,738
   Property taxes................            321,067            350,240           883,799          1,024,026
   Personnel expenses............            503,874            551,899         1,428,688          1,666,178
   Utilities.....................            322,545            277,300         1,095,444          1,051,646
   Repair and maintenance........            546,145            651,063         1,615,186          1,818,350
   Property management
     fees - affiliates...........            208,158            205,204           620,793            674,514
   Other property operating
     expenses....................            272,718            313,216           793,989            918,037
   General and administrative....             32,656             16,845           130,610             86,270
   General and administrative -
     affiliates..................             75,856            103,474           270,091            347,284
                                       -------------      -------------     -------------      -------------
     Total expenses..............          4,495,220          4,678,659        13,486,653         15,467,033
                                       -------------      -------------     -------------      -------------

Net income (loss) before
   extraordinary item............           (232,861)           677,751          (797,191)         1,597,731
Extraordinary gain on
   extinguishment of debt........                  -                  -                 -          2,106,625
                                       -------------      -------------     -------------      -------------
Net income (loss)................     $     (232,861)    $      677,751    $     (797,191)    $    3,704,356
                                       =============      =============     =============      =============

Net income (loss) allocable
   to limited partners...........     $   (1,098,085)    $      643,864    $   (1,572,877)    $    3,519,138
Net income (loss) allocable
   to General Partner............            865,224             33,887           775,686            185,218
                                       -------------      -------------     -------------      -------------
Net income (loss)................     $     (232,861)    $      677,751    $     (797,191)    $    3,704,356
                                       =============      =============     =============      =============

Net income (loss) per limited 
 partnership unit:
Income (loss) before
   extraordinary item............     $        (4.78)    $         2.80    $        (6.84)    $         6.60
Extraordinary gain from
   extinguishment of debt........                  -                  -                 -               8.70
                                       -------------      -------------     -------------      -------------
Net income (loss) per limited
   partnership unit..............     $        (4.78)    $         2.80    $        (6.84)    $        15.30
                                       =============      =============     =============      =============
</TABLE>

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

                 See accompanying notes to financial statements.


<PAGE>


                        MCNEIL REAL ESTATE FUND XII, LTD.

                         STATEMENTS OF PARTNERS' DEFICIT
                                   (Unaudited)

              For the Nine Months Ended September 30, 1996 and 1995


<TABLE>
<CAPTION>
                                                                                                 Total
                                                   General                 Limited               Partners'
                                                   Partner                 Partners              Deficit
                                                ----------------        ----------------      ----------------

<S>                                             <C>                     <C>                   <C>             
Balance at December 31, 1994..............      $    (9,447,549)        $    (9,844,782)      $   (19,292,331)

Net income................................              185,218               3,519,138             3,704,356

Management Incentive Distribution.........             (769,728)                      -              (769,728)
                                                  -------------           -------------         -------------

Balance at September 30, 1995.............      $   (10,032,059)         $   (6,325,644)       $  (16,357,703)
                                                 ==============           =============         =============


Balance at December 31, 1995..............      $   (10,335,932)         $   (7,513,252)       $  (17,849,184)

Net loss..................................              775,686              (1,572,877)             (797,191)

Management Incentive Distribution.........             (377,757)                      -              (377,757)
                                                  -------------           -------------         -------------

Balance at September 30, 1996.............      $    (9,938,003)         $   (9,086,129)       $  (19,024,132)
                                                 ==============           =============         =============

</TABLE>














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

                 See accompanying notes to financial statements.

<PAGE>
                        MCNEIL REAL ESTATE FUND XII, LTD.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                Increase (Decrease) in Cash and Cash Equivalents



<TABLE>
<CAPTION>
                                                                            Nine Months Ended
                                                                              September 30,
                                                                -------------------------------------------
                                                                        1996                     1995
                                                                ------------------         ----------------
Cash flows from operating activities:
<S>                                                             <C>                        <C>            
   Cash received from tenants........................           $       12,391,277         $    13,514,491
   Cash received from legal settlement...............                            -                  65,856
   Cash paid to suppliers............................                   (4,658,985)             (5,677,208)
   Cash paid to affiliates...........................                   (2,873,715)               (885,995)
   Interest received.................................                      178,629                 104,625
   Interest paid.....................................                   (3,780,108)             (4,047,664)
   Interest paid to affiliates.......................                      (79,757)                      -
   Property taxes paid...............................                   (1,066,531)             (1,012,936)
                                                                 -----------------          --------------
Net cash provided by operating activities............                      110,810               2,061,169
                                                                 -----------------          --------------

Cash flows from investing activities:
   Additions to real estate investments..............                   (1,925,457)               (721,389)
   Net proceeds from disposition of real estate......                            -                  45,000
                                                                 -----------------          --------------
Net cash used in investing activities................                   (1,925,457)               (676,389)
                                                                 -----------------          --------------

Cash flows from financing activities:
   Proceeds from refinancing of mortgage
     notes payable...................................                            -                 334,062
   Principal payments on mortgage notes
     payable.........................................                     (186,949)             (2,311,177)
   Deferred borrowing costs paid.....................                      (35,665)               (131,246)
   Repayment of advances from affiliates -
     General Partner.................................                   (1,419,340)                      -
   Management Incentive Distribution.................                     (910,551)                      -
                                                                 -----------------          --------------
Net cash used in financing activities................                   (2,552,505)             (2,108,361)
                                                                 -----------------          --------------

Net decrease in cash and cash equivalents............                   (4,367,152)               (723,581)
Cash and cash equivalents at beginning of
   period............................................                    5,791,363               3,313,765
                                                                 -----------------          --------------

Cash and cash equivalents at end of period...........           $        1,424,211         $     2,590,184
                                                                 =================          ==============
</TABLE>


See discussion of noncash investing activities in Note 6.

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

                 See accompanying notes to financial statements.
<PAGE>
                        MCNEIL REAL ESTATE FUND XII, LTD.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

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

<TABLE>
<CAPTION>
                                                                            Nine Months Ended
                                                                                September 30,
                                                                  ----------------------------------------
                                                                        1996                    1995
                                                                  -----------------        ---------------
<S>                                                               <C>                      <C>            
Net income (loss)....................................             $       (797,191)        $     3,704,356
                                                                   ---------------          --------------

Adjustments to  reconcile  net income (loss) to net
   cash  provided by operating activities:
   Depreciation and amortization.....................                    2,697,294               3,059,738
   Amortization of deferred borrowing costs..........                      116,633                 136,303
   Amortization of discounts on mortgage
     notes payable...................................                            -                 210,785
   Net interest added on advances from
     affiliates - General Partner....................                          940                 124,139
   Net interest added on advances from
     Southmark.......................................                        1,742                   1,845
   Extraordinary gain on extinguishment
     of debt.........................................                            -              (2,106,625)
   Gain on disposition of real estate................                            -              (3,427,513)
   Changes in assets and liabilities:
     Cash segregated for security deposits...........                        6,603                  (5,805)
     Accounts receivable.............................                     (127,666)                134,879
     Prepaid expenses and other assets...............                      (21,230)               (149,191)
     Escrow deposits.................................                      131,577                (138,271)
     Accounts payable................................                         (549)                (35,092)
     Accrued expenses................................                      (23,781)                  7,834
     Accrued interest................................                      (28,421)                300,254
     Accrued property taxes..........................                       61,944                 129,384
     Payable to affiliates - General Partner.........                   (1,982,831)                135,803
     Security deposits and deferred rental ..........
       revenue.......................................                       75,746                 (21,654)
                                                                   ---------------          --------------

       Total adjustments.............................                      908,001              (1,643,187)
                                                                   ---------------          --------------

Net cash provided by operating activities............             $        110,810         $     2,061,169
                                                                   ===============          ==============
</TABLE>


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

                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND XII, LTD.

                          Notes to Financial Statements
                                   (Unaudited)

                               September 30, 1996

NOTE 1.
-------

McNeil Real Estate Fund XII, Ltd. (the  "Partnership") was organized February 2,
1981 as a limited  partnership  organized under the provisions of the California
Uniform  Limited  Partnership  Act. The general  partner of the  Partnership  is
McNeil Partners,  L.P. (the "General Partner"),  a Delaware limited partnership,
an affiliate of Robert A. McNeil.  The Partnership is governed by an amended and
restated limited  partnership  agreement,  dated September 6, 1991 (the "Amended
Partnership Agreement"). The principal place of business for the Partnership and
the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.

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

NOTE 2.
-------

The  financial  statements  should  be read in  conjunction  with the  financial
statements  contained in the  Partnership's  Annual  Report on Form 10-K for the
year  ended  December  31,  1995,  and the  notes  thereto,  as  filed  with the
Securities and Exchange  Commission,  which is available upon request by writing
to McNeil Real Estate Fund XII,  Ltd. c/o McNeil Real Estate  Management,  Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.

NOTE 3.
-------

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

NOTE 4.
-------

The  Partnership  pays property  management fees equal to 5% of the gross rental
receipts of the Partnership's properties to McNeil Real Estate Management,  Inc.
("McREMI"),  an  affiliate  of  the  General  Partner,  for  providing  property
management services for the Partnership's  residential and commercial properties
and  leasing  services  for its  residential  properties.  McREMI  may choose to
provide leasing services for the Partnership's  commercial properties,  in which
case  McREMI  will  receive  a  property  management  fee from  such  commercial
properties  equal to 3% of the property's gross rental receipts plus commissions
based on the  prevailing  market rate for such  services  where the  property is
located.

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

<PAGE>
Affiliates of the General Partner have advanced funds to the Partnership to meet
working capital requirements.  These advances accrue interest at a rate equal to
the prime lending rate plus 1%.

Under terms of the Amended  Partnership  Agreement,  the Partnership is paying a
Management  Incentive  Distribution  ("MID") to the General Partner. The maximum
MID is  calculated  as 1% of the tangible  asset value of the  Partnership.  The
maximum MID  percentage  decreases  subsequent to 1999.  Tangible asset value is
determined  by using the  greater  of (i) an amount  calculated  by  applying  a
capitalization  rate  of 9% to the  annualized  net  operating  income  of  each
property or (ii) a value of $10,000 per apartment unit for residential  property
and $50 per gross square foot for commercial  property to arrive at the property
tangible  asset value.  The property  tangible  asset value is then added to the
book value of all other assets excluding intangible items.

MID will be paid to the extent of the lesser of the  Partnership's  excess  cash
flow,  as  defined,  or net  operating  income,  as  defined  ("the  Entitlement
Amount"),  and may be paid (i) in cash, unless there is insufficient cash to pay
the  distribution  in which  event  any  unpaid  portion  not  taken in  limited
partnership  ("Units") will be deferred and is payable,  without interest,  from
the first  available  cash and/or (ii) in Units. A maximum of 50% of the MID may
be paid in Units.  The number of Units  issued in payment of the MID is based on
the greater of $50 per Unit or the net  tangible  asset value,  as defined,  per
Unit.

Any  amount  of the MID that is paid to the  General  Partner  in Units  will be
treated as if cash is distributed to the General Partner and is then contributed
to the Partnership by the General Partner. The MID represents a return of equity
to the General Partner for increasing cash flow, as defined,  and accordingly is
treated as a distribution.

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

                                                             Nine Months Ended
                                                                September 30,
                                                         -----------------------
                                                            1996        1995
                                                         ----------   ----------
Charged to other assets:
Property management fees - affiliates................    $  620,793   $  674,514
Interest - affiliates................................        52,972      124,139
Charged to general and administrative affiliates:
   Partnership administration........................       270,091      347,284
                                                          ---------    ---------
                                                         $  943,856   $1,145,937
                                                          =========    =========

Charged to General Partner's deficit:
   MID...............................................    $  377,757   $  769,728
                                                          =========    =========

NOTE 5.
-------

In 1996, the  Partnership  adopted the Financial  Accounting  Standards  Board's
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 the cessation of depreciation on assets held for sale.
<PAGE>
NOTE 6.
-------

On February  23,  1996,  the  Partnership  was  awarded  $499,000 as payment for
condemnation of 6.45 acres,  with a carrying value of $201,246,  at Palisades at
the Galleria by Cobb County,  Georgia.  The county required the  right-of-way to
this property for highway construction. The condemnation of this parcel will not
materially affect the operations of the property.  The $499,000 is being held in
escrow by the  mortgagee  pending  completion  of  construction  adjacent to the
property. Upon receipt of the $499,000, the Partnership will recognize a gain of
$297,754.

NOTE 7.
-------

On April 12,  1996,  a fire  destroyed  or  damaged  12 units at  Millwood  Park
Apartments.   Preliminary  estimates  indicate  the  fire  caused  approximately
$650,000  of damage to the  property.  The  Partnership  expects  its  insurance
carrier to reimburse the Partnership for all damages incurred as a result of the
fire less a standard deductible.

NOTE 8.
-------

On June  19,  1995  the  Partnership  sold  its  investment  in  Sundance  to an
unaffiliated  buyer for a cash sales  price of  $45,000  and  assumption  of the
first,  second and third liens by the  purchaser.  Cash proceeds and the gain on
disposition are detailed below.

                                                    Gain on Sale  Cash Proceeds
                                                    ------------  -------------
Sales price.......................................  $    45,000     $  45,000
Mortgages and accrued interest assumed by
   purchaser......................................    8,191,859
Basis of real estate sold.........................   (5,973,567)
                                                     ----------

Gain on disposition of real estate................  $  2,263,292
                                                      ==========

                                                                     --------
Net cash proceeds.................................                  $  45,000
                                                                     ========

Also related to the sale of Sundance, the Partnership recognized a $268,433 gain
on early  extinguishment  of debt related to the interest in net profits portion
of the debt.












<PAGE>
NOTE 9.
-------

On July 27,  1995,  the  Partnership  sold its  investment  in Lamar Plaza to an
unaffiliated  buyer  for  assumption  of  the  first  and  second  liens  by the
purchaser. The gain on disposition is detailed below:

                                                        Gain on Sale
                                                        ------------
Mortgage and accrued interest by purchaser.......       $  4,195,215
Basis of real estate sold........................         (3,030,994)
                                                         -----------

Gain on disposition of real estate...............       $  1,164,221
                                                         ===========

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

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

The  Partnership  was formed to  acquire,  operate and  ultimately  dispose of a
portfolio of income-producing properties. At September 30, 1996, the Partnership
owned six apartment properties and one shopping center. All of the Partnership's
properties are subject to mortgage notes.

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

Revenue:

Total  Partnership  revenues  decreased by $4,375,302 or 26% for the nine months
ended  September  30,  1996.  Rental  revenue  decreased by $955,937 or 7% while
interest income increased by $74,004.

Rental revenue for the nine months ended  September 30, 1996 was  $12,510,833 as
compared to $13,466,770  for the same period last year. The decrease of $955,937
is due to the loss in rental  revenue of  $1,322,305  generated  by Sundance and
Lamar  Plaza,  which  were  sold in June  and July of 1995.  This  decrease  was
partially  offset by the  increase  in rental  revenue at four of the  remaining
Partnership's properties.

In 1995,  the  Partnership  recognized a gain on  disposition  of real estate of
$3,427,513  as a result of the sale of Sundance and Lamar  Plaza,  as well as, a
gain  on  legal  settlement  of  $65,857  as a  result  of the  settlement  with
Southmark. No such gains were recognized in 1996.

Expenses:

Partnership expenses decreased by $1,980,380 or 13% for the first nine months of
1996 as  compared  to the same  period  last year  primarily  due to the sale of
Sundance  and Lamar Plaza in 1995.  The  effects  from these  transactions  were
declines  of $730,195  for  interest,  $354,739  for  depreciation,  $78,621 for
property taxes, $152,125 for personnel expenses, $68,501 for utilities, $149,184
for repair and maintenance,  $66,672 for property  management fees - affiliates,
and $96,274 other property operating expenses.
<PAGE>
In addition to the sale of Sundance and Lamar,  other factors affected the level
of expenses reported by the remaining properties.  Interest expense - affiliates
decreased  by  $71,167 or 57% and  $40,775 or 98% for the nine and three  months
ended  September  30, 1996,  respectively,  due to the  repayment of $235,145 in
advances in October 1995 and $1,419,339 in May 1996.

Property  tax  expense  decreased  by  $61,606 or 7% for the nine  months  ended
September  30, 1996,  while for the three month period ended  September 30, 1996
property  tax expense  increased  by $5,931 or 2% as compared to the same period
last year. The overall decrease is due to the successfully appeal of real estate
taxes at  Palisades  for the years 1990  through  1993,  resulting in refunds of
$88,775 realized in the first quarter of 1996.

Utility  expenses  increased  by $112,299 or 11% and $51,630 or 19% for the nine
and three months ended September 30, 1996, respectively.  The increase is due to
an increase in gas and oil usage as a result of the harsh weather  conditions in
1996.

General and administrative expenses increased $44,340 or 51% for the nine months
ended September 30, 1996 as compared to the same period last year. This increase
is due to legal and  professional  fees  relating  to the land  condemnation  at
Palisades and with the sale of Millwood Park.

General and  administrative - affiliate  expenses  decreased  $77,193 or 22% and
$27,618  or 27%  for the  nine  and  three  months  ended  September  30,  1996,
respectively,  as compared to the same period last year. This decrease is due to
a decrease in the percentage of the Partnership's portion of reimbursable costs.

All other remaining expense  categories  remained  comparable to the same period
last year.

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

During the first nine months of 1996, the Partnership  provided $110,810 in cash
from  operations as compared to  $2,061,169 in cash provided from  operations in
1995.  This  decrease can be  attributed  to the reduction in cash received from
tenants  as a result of the sales of  Sundance  and Lamar  Plaza in 1995 and the
payment of $1.6  million in  deferred  payments  to  affiliates  of the  General
Partner.

The Partnership expended $1,925,457 and $721,389 for capital improvements to its
properties for the nine months ended September 30, 1996 and 1995,  respectively.
The Partnership  also received cash proceeds of $45,000 for the sale of Sundance
in 1995.

During the first nine months of 1996, the  Partnership  expended  $2,552,505 for
financing  activities as compared to $2,108,361 for the same period in 1995. The
principle  payments  on the  mortgage  notes  payable  declined  in 1996  due to
$1,750,000  discounted  payoff  of the  interest  in net  profits  on  Buccaneer
Village, in 1995. During 1996, the Partnership repaid $1,419,339 in advances and
made MID  payments of $910,551.  During  1995,  the  Partnership  received  cash
proceeds of $334,062 for the refinancing of Plaza Westlake.






<PAGE>
Short-term liquidity:

At  September  30,  1996,  the  Partnership  held cash and cash  equivalents  of
$1,424,211.  The General  Partner  considers  this level of cash  reserves to be
adequate to meet the Partnership's  operating needs in 1996. The General Partner
believes that anticipated  operating results for 1996 will be sufficient to fund
the  Partnership's  budgeted $2 million in capital  improvements for 1996 and to
repay the current  portion of the  Partnership's  mortgage  notes. On October 3,
1996, the Partnership sold Millwood Park Apartments receiving approximately $1.3
million in net proceeds.  These funds will be used to pay  additional MID due to
the General Partner.

Long-term liquidity:

The  Partnership's  working  capital needs have been  supported by advances from
affiliates during the past several years. Some of that support was provided on a
short-term  basis  to  meet  monthly  operating  requirements,   with  repayment
occurring as funds became  available;  other advances were longer term in nature
due to lack of funds  for  repayment.  Additionally,  the  General  Partner  has
allowed the  Partnership to defer payment of MID and  reimbursements  until such
time as the  Partnership  's cash  reserves  allow  payments.  During 1996,  the
Partnership has begun to make repayments to the General Partner for advances and
has paid the accrued reimbursements.  The Partnership will continue to make such
payments  as is allowed  by cash  reserves  and cash  flows of the  Partnership.
However,  the  Partnership  will not be able to repay the  General  Partner  all
payables  outstanding  in the  foreseeable  future.  The  General  Partner  will
continue to defer the unpaid sums until the  Partnership's  cash reserves  allow
such payments.

For the long-term,  property operations will remain the primary source of funds.
In this regard,  the General Partner expects that the capital  improvements made
by the  Partnership  during the past will yield improved cash flow from property
operations in the future. If the Partnership's cash position  deteriorates,  the
General Partner may elect to defer certain of the capital  improvements,  except
where  such  improvements  are  expected  to  increase  the  competitiveness  or
marketability of the Partnership's properties.

As an additional  source of liquidity,  the General  Partner may attempt to sell
Partnership  properties judged to be mature considering the circumstances of the
market where the properties are located,  as well as the Partnership's  need for
liquidity.  However, there can be no guarantee that the Partnership will be able
to sell any of its  properties  for an amount  sufficient  to retire the related
mortgage note and still provide cash proceeds to the  Partnership,  or that such
cash  proceeds  could be  timed to  coincide  with  the  liquidity  needs of the
Partnership.  In this regard, the Partnership placed Millwood Park on the market
and on January 22, 1996, the Partnership  executed a purchase  agreement with an
unaffiliated  third party to purchase  Millwood Park  Apartments.  On October 3,
1996, the Partnership sold Millwood Park for net proceeds of approximately  $1.3
million.










<PAGE>
Income allocation and distributions:

Terms  of  the  Amended   Partnership   Agreement  specify  that  income  before
depreciation  is allocated  to the General  Partner to the extent of MID paid in
cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and
the  General  Partner,  respectively.  Therefore,  for  the  nine  months  ended
September 30, 1996 and 1995, $775,686 and $185,218, respectively, were allocated
to the General Partner.  The limited partners received allocations of net income
(loss) of  $(1,572,877)  and $3,519,138 for the nine months ended  September 30,
1996 and 1995, respectively.

With the exception of the MID,  distributions  to partners  have been  suspended
since 1986 as part of the General Partner's policy of maintaining  adequate cash
reserves.  Distributions  to the limited  partners 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 limited  partners.  A distribution  of
$377,757  for the MID has been accrued by the  Partnership  for the period ended
September 30, 1996 for the General Partner.

                           PART II. OTHER INFORMATION

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

(a)      Exhibits.

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

         3.3                        Amended and Restated Partnership  Agreement,
                                    dated  September  6, 1991  (Incorporated  by
                                    reference  to the  Quarterly  Report on Form
                                    10-Q for the  quarter  ended  September  30,
                                    1991).

         11.                        Statement regarding  computation of net loss
                                    per limited  partnership  unit: net loss per
                                    limited  partnership  unit  is  computed  by
                                    dividing  net loss  allocated to the limited
                                    partners    by   the   number   of   limited
                                    partnership  units  outstanding.   Per  unit
                                    information   has  been  computed  based  on
                                    229,828  and  229,980  limited   partnership
                                    units outstanding in 1996 and 1995.

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

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


<PAGE>


                        McNEIL REAL ESTATE FUND XII, LTD.

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized:


                               McNEIL REAL ESTATE FUND XII, Ltd.

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

                                     By: McNeil Investors, Inc., General Partner



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



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



November 14, 1996                    By:  /s/  Brandon K. Flaming
-----------------                       ----------------------------------------
Date                                    Brandon K. Flaming
                                        Chief Accounting Officer of McNeil 
                                          Real Estate Management, Inc.