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


                                    FORM 10-Q



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


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

                                       OR

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

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



                        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 600, LB70, Dallas, Texas, 75240
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip code)



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



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



<PAGE>
                          PART I. FINANCIAL INFORMATION

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

                        MCNEIL REAL ESTATE FUND XII, LTD.

                                 BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                       June 30,        December 31,
                                                                                         1998              1997
                                                                                     ------------      ------------
ASSETS
------
Real estate investments:
<S>                                                                                  <C>               <C>         
   Land ........................................................................     $  4,534,618      $  4,534,618
   Buildings and improvements ..................................................       58,996,741        58,352,857
                                                                                     ------------      ------------
                                                                                       63,531,359        62,887,475
   Less:  Accumulated depreciation and amortization ............................      (38,275,755)      (36,754,194)
                                                                                     ------------      ------------
                                                                                       25,255,604        26,133,281

Asset held for sale ............................................................                -         9,303,533

Cash and cash equivalents ......................................................        7,332,786         1,423,658
Cash segregated for security deposits ..........................................          467,585           456,356
Accounts receivable ............................................................          234,678           165,311
Prepaid expenses and other assets ..............................................          109,014           139,468
Escrow deposits ................................................................        1,497,372         1,350,788
Deferred borrowing costs, net of accumulated amorti-
   zation of $513,953 and $767,891 at June 30, 1998
   and December 31, 1997, respectively .........................................        1,470,367         1,544,702
                                                                                     ------------      ------------
                                                                                     $ 36,367,406      $ 40,517,097
                                                                                     ============      ============

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

Mortgage notes payable .........................................................     $ 41,382,609      $ 54,200,372
Accounts payable ...............................................................                -             9,996
Accrued expenses ...............................................................          112,339           277,958
Accrued interest ...............................................................          286,242           378,010
Accrued property taxes .........................................................          802,302           932,545
Deferred gain - land condemnation ..............................................          297,754           297,754
Advance from Southmark .........................................................           41,016            39,839
Advances from affiliates - General Partner .....................................           33,450            32,136
Payable to affiliates - General Partner ........................................        5,011,928         4,573,052
Security deposits and deferred rental revenue ..................................          351,369           519,042
                                                                                     ------------      ------------
                                                                                       48,319,009        61,260,704
                                                                                     ------------      ------------
Partners' deficit:
   Limited partners - 240,000 limited partnership units authorized;
     229,666 and 229,690 limited partnership units issued and 
     outstanding at June 30, 1998 and December 31, 1997, respectively ..........       (1,829,268)      (10,579,935)
   General Partner .............................................................      (10,122,335)      (10,163,672)
                                                                                     ------------      ------------
                                                                                      (11,951,603)      (20,743,607)
                                                                                     ------------      ------------
                                                                                     $ 36,367,406      $ 40,517,097
                                                                                     ============      ============
</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                      Six Months Ended
                                                    June 30,                                June 30,
                                          ------------------------------         ------------------------------
                                             1998               1997                1998               1997
                                          -----------        -----------         -----------        -----------
Revenue:
<S>                                       <C>                <C>                 <C>                <C>        
   Rental revenue ................        $ 3,176,358        $ 3,836,204         $ 7,345,415        $ 7,643,461
   Interest ......................             76,128             26,818              93,187             49,808
   Gain on sale of real estate....          9,568,850                  -           9,568,850                  -
                                          -----------        -----------         -----------        -----------
     Total revenue ...............         12,821,336          3,863,022          17,007,452          7,693,269
                                          -----------        -----------         -----------        -----------

Expenses:
   Interest ......................            943,764          1,207,287           2,137,736          2,415,317
   Interest - affiliates .........                660                668               1,314              1,305
   Depreciation and
     amortization ................            761,520            987,959           1,521,561          1,934,918
   Property taxes ................            237,569            303,171             538,349            606,342
   Personnel expenses ............            363,591            396,809             826,741            861,193
   Utilities .....................            239,032            266,900             608,358            687,650
   Repair and maintenance ........            482,055            573,231             921,427          1,032,247
   Property management
     fees - affiliates ...........            156,383            190,977             357,402            383,532
   Other property operating
     expenses ....................            166,720            199,456             371,950            416,996
   General and administrative ....            119,803             50,073             367,978            100,760
   General and administrative -
     affiliates ..................             78,213             56,798             143,407            111,603
                                          -----------        -----------         -----------        -----------
     Total expenses ..............          3,549,310          4,233,329           7,796,223          8,551,863
                                          -----------        -----------         -----------        -----------

Net income (loss) ................        $ 9,272,026        $  (370,307)        $ 9,211,229        $  (858,594)
                                          ===========        ===========         ===========        ===========

Net income (loss) allocable
   to limited partners ...........        $ 8,808,425        $  (351,792)        $ 8,750,667        $  (815,664)
Net income (loss) allocable
   to General Partner ............            463,601            (18,515)            460,562            (42,930)
                                          -----------        -----------         -----------        -----------
Net income (loss) ................        $ 9,272,026        $  (370,307)        $ 9,211,229        $  (858,594)
                                          ===========        ===========         ===========        ===========

Net income (loss) per limited
   partnership unit ..............        $     38.35        $     (1.53)        $     38.10        $     (3.55)
                                          ===========        ===========         ===========        ===========
</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 Six Months Ended June 30, 1998 and 1997

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

<S>                                              <C>                      <C>                   <C>           
Balance at December 31, 1996..............       $   (9,232,451)          $  (9,148,979)        $ (18,381,430)

Net loss..................................              (42,930)               (815,664)             (858,594)

Management Incentive Distribution.........             (429,770)                      -              (429,770)
                                                 --------------           -------------         -------------

Balance at June 30, 1997..................       $   (9,705,151)          $  (9,964,643)        $ (19,669,794)
                                                 ==============           =============         =============


Balance at December 31, 1997..............       $  (10,163,672)          $ (10,579,935)        $ (20,743,607)

Net income................................              460,562               8,750,667             9,211,229

Management Incentive Distribution.........             (419,225)                      -              (419,225)
                                                 --------------           -------------         -------------

Balance at June 30, 1998..................       $  (10,122,335)          $  (1,829,268)        $ (11,951,603)
                                                 ==============           =============         =============
</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>
                                                          Six Months Ended
                                                               June 30,
                                                  ----------------------------------
                                                      1998                  1997
                                                  -------------        -------------
Cash flows from operating activities:
<S>                                               <C>                  <C>         
   Cash received from tenants ............        $  7,102,407         $  7,710,513
   Cash paid to suppliers ................          (3,219,696)          (3,037,651)
   Cash paid to affiliates ...............            (481,158)            (828,566)
   Interest received .....................              93,187               49,808
   Interest paid .........................          (2,153,992)          (2,347,518)
   Property taxes paid ...................            (842,356)            (801,166)
                                                  ------------         ------------
Net cash provided by operating activities              498,392              745,420
                                                  ------------         ------------

Cash flows from investing activities:
   Additions to real estate investments ..            (643,884)            (621,599)
   Additions to assets held for sale .....              (9,438)                   -
   Proceeds from sale of real estate .....          18,881,821                    -
                                                  ------------         ------------
Net cash provided by (used in)
   investing activities ..................          18,228,499             (621,599)
                                                  ------------         ------------

Cash used in financing activities:
   Principal payments on mortgage notes
     payable .............................            (294,702)            (322,304)
   Retirement of mortgage note payable ...         (12,523,061)                   -
                                                  ------------         ------------
Net cash used in financing activities ....         (12,817,763)            (322,304)
                                                  ------------         ------------

Net increase (decrease) in cash and cash
   equivalents ...........................           5,909,128             (198,483)

Cash and cash equivalents at beginning of
   period ................................           1,423,658            1,768,249
                                                  ------------         ------------

Cash and cash equivalents at end of period        $  7,332,786         $  1,569,766
                                                  ============         ============

</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)

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

<TABLE>
<CAPTION>
                                                                Six Months Ended
                                                                    June 30,
                                                         --------------------------------
                                                            1998                1997
                                                         -----------         ------------
<S>                                                      <C>                 <C>         
Net income (loss) ...............................        $ 9,211,229         $  (858,594)
                                                         -----------         -----------

Adjustments to reconcile net income (loss) to net
   cash  provided by operating  activities:
   Depreciation and amortization ................          1,521,561           1,934,918
   Amortization of deferred borrowing costs .....             74,335              69,922
   Net interest added on advances from
     affiliates - General Partner ...............              1,314               1,305
   Net interest added on advances from
     Southmark ..................................              1,177               1,169
   Gain on sale of real estate ..................         (9,568,850)                  -
Changes in assets and liabilities:
     Cash segregated for security deposits ......            (11,229)             (5,213)
     Accounts receivable ........................            (69,367)             31,980
     Prepaid expenses and other assets ..........             30,454               6,389
     Escrow deposits ............................           (146,584)           (109,242)
     Accounts payable ...........................             (9,996)             (6,466)
     Accrued expenses ...........................           (165,619)            (54,776)
     Accrued interest ...........................            (91,768)             (3,292)
     Accrued property taxes .....................           (130,243)             19,300
     Payable to affiliates - General Partner ....             19,651            (333,431)
     Security deposits and deferred rental
       revenue ..................................           (167,673)             51,451
                                                         -----------         -----------

       Total adjustments ........................         (8,712,837)          1,604,014
                                                         -----------         -----------

Net cash provided by operating activities .......        $   498,392         $   745,420
                                                         ===========         ===========

</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)

                                  June 30, 1998

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 600, LB70, Dallas, Texas, 75240.

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

NOTE 2.
-------

The  financial  statements  should  be read in  conjunction  with the  financial
statements  contained in the  Partnership's  Annual  Report on Form 10-K for the
year  ended  December  31,  1997,  and the  notes  thereto,  as  filed  with the
Securities and Exchange  Commission,  which is available upon request by writing
to McNeil Real Estate Fund XII, Ltd., c/o McNeil Real Estate  Management,  Inc.,
Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.

NOTE 3.
-------

The  Partnership  pays property  management fees equal to 5% of the gross rental
receipts 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.

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%.



<PAGE>
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:

                                                             Six Months Ended
                                                                June 30,
                                                        ------------------------
                                                          1998            1997
                                                        --------        --------

Property management fees - affiliates ...........       $357,402        $383,532
Interest - affiliates ...........................          1,314           1,305
Charged to general and administrative affiliates:
   Partnership administration ...................        143,407         111,603
                                                        --------        --------
                                                        $502,123        $496,440
                                                        ========        ========

Charged to General Partner's deficit:
   MID ..........................................       $419,225        $429,770
                                                        ========        ========


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

The  Partnership  has become  aware of the  presence  of certain  solvent  based
contamination  in ground water under a portion of the Lodge at Aspen Grove.  The
source of the contamination is related to a documented  release of solvents from
underground  storage  tanks located at a Colorado  Department of  Transportation
("CDOT")  facility  nearby.  The Partnership has been informed that CDOT, as the
responsible party, has agreed to remediate the property to comply with state and
federal  standards.  CDOT has submitted a corrective action plan to the Colorado
Department of Public Health and  Environment and  implementation  of the plan is
ongoing.  The  Partnership  is unable to  estimate  impairment,  if any,  to the
property at this time.  However,  due to the  existence and  involvement  of the
responsible  party,  the  Partnership  does not  believe  that this  event has a
material impact on the accompanying financial statements.

NOTE 5.
-------

On  April  7,  1998,  the  Partnership   sold  to  W9/PHC  Real  Estate  Limited
Partnership, an unaffiliated buyer, Channingway Apartments, a 770 unit apartment
complex, located in Columbus, Ohio, for a cash sales price of $19,150,000.  Cash
proceeds from this transaction, as well as the gain on sale are detailed below.

<TABLE>
<CAPTION>
                                                                      Gain on Sale          Cash Proceeds
                                                                     -------------          -------------
       <S>                                                           <C>                    <C>         
       Cash sales price.....................................         $  19,150,000          $ 19,150,000

       Selling costs........................................              (268,179)             (268,179)
       Basis of real estate sold............................            (9,312,971)
                                                                     -------------

       Gain on sale of real estate..........................         $   9,568,850
                                                                     =============           -----------

       Proceeds from sale of real estate....................                                  18,881,821
       Retirement of mortgage note payable..................                                 (12,523,061)
                                                                                             -----------

       Net cash proceeds....................................                                 $ 6,358,760
                                                                                             ============
</TABLE>

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

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

The Partnership is engaged in diversified real estate activities,  including the
ownership,  operation and management of residential  and commercial  real estate
and other real estate related assets.  At June 30, 1998, the  Partnership  owned
four apartment  properties  and one shopping  center.  All of the  Partnership's
properties are subject to mortgage notes.
<PAGE>
The  Partnership   recorded  a  $9,568,850  gain  on  the  sale  of  Channingway
Apartments.  Net proceeds from the sale, after repayment of the related mortgage
note,  amounted to $6,358,760.  The net proceeds from the sale were added to the
Partnership's balance of cash reserves.

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

Revenue:

Partnership  revenues increased  $8,958,314 and $9,314,183 for the three and six
months  ended June 30, 1998 as compared to the same period last year.  Excluding
the  effects  of  the  sale  of  Channingway  Apartments,  Partnership  revenues
increased  $628,482 or 9% for the six months ended June 30,  1998.  Greater cash
reserves  led to an increase  of $43,379 in  interest  income for the six months
ended June 30, 1998.

Rental revenues increased at all of the Partnership's five remaining properties.
The  properties  reporting  the  largest  increases  in  rental  revenue,  on  a
percentage basis,  were Plaza Westlake and Brendon Way Apartments.  The increase
in rent on Plaza Westlake is due to an increase in contingent  rents billed,  as
compared to the prior year.  The increase at Brendon Way Apartments is primarily
due to greater  occupancy  during 1998. The Lodge at Aspen Grove  increased base
rental  rates  over 7%,  but the  increase  was  partially  offset by  decreased
occupancy rates. The remainder of the  Partnership's  properties  reported small
increases in rental revenue.

Expenses:

Partnership  expenses decreased $684,019 and $755,640 or 9% for the three months
and six months  ended June 30,  1998 as  compared  to the same period last year.
Excluding  the  effects  of the  sale  of  Channingway  Apartments,  Partnership
expenses increased $333,138 or 4% for the six months ended June 30, 1998.

The  Partnership  incurred  slight  decreases  in utilities  and other  property
operating  expenses.  These  expenses  were offset by  increases  in general and
administrative and general and administrative - affiliates.

General and administrative  expenses increased $267,218 for the six months ended
June 30, 1998 as compared to the same period last year.  The increase was mainly
due to costs  incurred  to explore  alternatives  to  maximize  the value of the
Partnership  (see Liquidity and Capital  Resources).  The increase was partially
offset by decreases attributable to investor services.  During 1997, charges for
investor services were provided by a third party vendor and beginning with 1998,
these services are provided by affiliates of the General Partner.

General  and  administrative-affiliate  expenses  increased  $31,804 for the six
months ended June 30, 1998 as compared to the same period of 1997.  The increase
is due to the change in investor relation charges as discussed above.

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







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

During the first six months of 1998, the Partnership  provided  $498,392 in cash
from  operations as compared to $745,420 in cash from  operations  in 1997.  The
$247,028  decrease can be  attributed  to the increase in cash paid to suppliers
and decrease in cash received from tenants in the first half of 1998 as compared
to the same period in 1997.

The Partnership  expended $643,884 and $621,599 for capital  improvements to its
properties  for the six months ended June 30, 1998 and 1997,  respectively.  The
Partnership also received proceeds of $18,881,821 for the sale of Channingway in
April 1998.

Total  principal  payments on mortgage  notes  payable were $294,702 for the six
months  ended June 30, 1998 as compared to $322,304 for the same period in 1997.
The Partnership  used also $12,523,061 of the proceeds from the Channingway sale
to retire the mortgage note payable on the property.

Short-term liquidity:

At June 30, 1998, the Partnership  held cash and cash equivalents of $7,332,786.
The General Partner believes that anticipated operating results for 1998 will be
sufficient  to  fund  the   Partnership's   budgeted  $1.2  million  in  capital
improvements  for 1998 and to repay the  current  portion  of the  Partnership's
mortgage  notes.  The mortgage  note payable on Plaza Westlake, in the amount of
$3,730,000, matures in January 2000 and has a constant of approximately  12%. In
light of the high  constant,  the  Partnership is considering an early payoff of
this mortgage loan during 1998.

Long-term liquidity:

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   previously   announced,    the   Partnership   has   retained   PaineWebber
("PaineWebber"),  Incorporated  as its  exclusive  financial  advisor to explore
alternatives  to  maximize  the  value  of the  Partnership  including,  without
limitation,  a  transaction  in  which  limited  partnership  interests  in  the
Partnership are converted into cash. The Partnership,  through PaineWebber,  has
provided  financial and other information to interested parties and is currently
conducting  discussions  with one such party in an attempt to reach a definitive
agreement  with respect to a sale  transaction.  It is possible that the General
Partner  and its  affiliates  will  receive  non-cash  consideration  for  their
ownership  interests in connection  with any such  transaction.  There can be no
assurance that any such agreement will be reached nor the terms thereof.





<PAGE>
Income (loss) allocation and distributions:

Terms of the Amended  Partnership  Agreement  specify that income  (loss) 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 six months ended June 30,
1998 and 1997,  $460,562  and  $(42,930),  respectively,  was  allocated  to the
General  Partner.  The limited partners  received  allocations of $8,750,667 and
$(815,664) for the six months ended June 30, 1998 and 1997, 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.  The General  Partner  will  continue  to monitor  the cash  reserves,
working capital needs and possible early payoff of mortgage  loan, as previously
discussed,  to  determine  when cash flows  will  support  distributions  to the
limited partners.

Forward-Looking Information:

Within this document,  certain  statements are made as to the expected occupancy
trends,  financial  condition,  results  of  operations,  and cash  flows of the
Partnership  for  periods  after  June 30,  1998.  All of these  statements  are
forward-looking  statements  made pursuant to the safe harbor  provisions of the
Private  Securities  Litigation  Reform Act of 1995.  These  statements  are not
historical  and  involve  risks  and  uncertainties.  The  Partnership's  actual
occupancy trends, financial condition, results of operations, and cash flows for
future  periods may differ  materially  due to several  factors.  These  factors
include,  but are not limited to, the  Partnership's  ability to control  costs,
make necessary  capital  improvements,  negotiate  sales or  refinancings of its
properties, and respond to changing economic and competitive factors.

Other Information:

Management  has begun to review its  information  technology  infrastructure  to
identify any systems that could be affected by the year 2000  problem.  The year
2000 problem is the result of computer  programs  being written using two digits
rather  than  four to  define  the  applicable  year.  Any  programs  that  have
time-sensitive  software may recognize a date using "00" as the year 1900 rather
than  the  year  2000.   This  could   result  in  major   systems   failure  or
miscalculations.  The information  systems used by the Partnership for financial
reporting and  significant  accounting  functions  were made year 2000 compliant
during  recent  systems  conversions.  The  Partnership  is in  the  process  of
evaluating the computer systems at the various properties.  The Partnership also
intends to communicate  with  suppliers,  financial  institutions  and others to
coordinate  year 2000 issues.  Management  believes that the  remediation of any
outstanding  year 2000  conversion  issues  will not have a material  or adverse
effect on the Partnership's operations.





<PAGE>
                           PART II. OTHER INFORMATION

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

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

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

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

Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint.  The case has  been  stayed  pending  settlement  discussions.  While
actively working toward a final resolution, there can be no assurances regarding
settlement.

<PAGE>

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
                                    229,666  and  229,690  limited   partnership
                                    units outstanding in 1998 and 1997.

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

(b)      Reports on  Form  8-K. A  Form  8-K   dated  April 7, 1998 was filed on
         April 14,  1998,  regarding  the sale of Channingway Apartments.


<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



August 14, 1998                     By: /s/  Ron K. Taylor
---------------                        -----------------------------------------
Date                                    Ron K. Taylor
                                        President and Director of McNeil 
                                         Investors, Inc.
                                        (Principal Financial Officer)




August 14, 1998                     By: /s/  Brandon K. Flaming
---------------                        -----------------------------------------
Date                                    Brandon K. Flaming
                                        Vice President of McNeil Investors, Inc.
                                        (Principal Accounting Officer)