-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lx0bWVYu1ALsP4mH3BV8cVG81zzCivpq1RfKcn+H/3DH/5JoBSyvzaA0ka4bMGUj 98kid13NJEk/NYRdS9CCPg== 0000892626-98-000164.txt : 19980401 0000892626-98-000164.hdr.sgml : 19980401 ACCESSION NUMBER: 0000892626-98-000164 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARLYLE REAL ESTATE LTD PARTNERSHIP XIII CENTRAL INDEX KEY: 0000711604 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363207212 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-12791 FILM NUMBER: 98581226 BUSINESS ADDRESS: STREET 1: C/O JMB REALTY CORP STREET 2: 900 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3129151987 MAIL ADDRESS: STREET 1: C/O JMB REALTY CORP STREET 2: 900 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 FORMER COMPANY: FORMER CONFORMED NAME: CARLYLE REAL ESTATE LTD PARTNERSHIP XIV DATE OF NAME CHANGE: 19830504 10-K405 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934 For the fiscal year ended December 31, 1997 Commission File Number 0-12791 CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (Exact name of registrant as specified in its charter) Illinois 36-3207212 (State of organization) (I.R.S. Employer Identification No.) 900 N. Michigan Ave., Chicago, Illinois 60611 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code 312-915-1987 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered - ------------------- ------------------------------ None None Securities registered pursuant to Section 12(g) of the Act: LIMITED PARTNERSHIP INTERESTS (Title of Class) 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 (or for such shorter period that the registrant was required to file such reports), 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 ] State the aggregate market value of the voting stock held by non-affiliates of the registrant. Not applicable. Documents incorporated by reference: None TABLE OF CONTENTS Page ---- PART I Item 1. Business . . . . . . . . . . . . . . . . . . 1 Item 2. Properties . . . . . . . . . . . . . . . . . 8 Item 3. Legal Proceedings. . . . . . . . . . . . . . 10 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . 10 PART II Item 5. Market for the Partnership's Limited Partnership Interests and Related Security Holder Matters. . . . . . . . . . . 10 Item 6. Selected Financial Data. . . . . . . . . . . 12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . 15 Item 7A. Quantitative and Qualitative Disclosures about Market Risk. . . . . . . . . . . . . . 21 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . 22 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . 59 PART III Item 10. Directors and Executive Officers of the Partnership . . . . . . . . . . . . . 59 Item 11. Executive Compensation . . . . . . . . . . . 62 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . 64 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . 65 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. . . . . . . . . . . 65 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 70 i PART I ITEM 1. BUSINESS Unless otherwise indicated, all references to "Notes" are to Notes to Consolidated Financial Statements contained in this report. Capitalized terms used herein, but not defined, have the same meanings as used in the Notes. The registrant, Carlyle Real Estate Limited Partnership-XIII (the "Partnership"), is a limited partnership formed in late 1982 and currently governed by the Revised Uniform Limited Partnership Act of the State of Illinois to invest in improved income-producing commercial and residential real property. The Partnership sold 366,177.57 limited partnership interests (the "Interests") at $1,000 per Interest commencing on June 9, 1983, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933 (Registration No. 2-81125 and No. 2-87033). The offering closed on May 22, 1984. No holder of Interests (hereinafter, "Holder" or "Holder of Interests") has made any additional capital contribution after such date. The Holders of Interests share in their portion of the benefits of ownership of the Partnership's real property investments according to the number of Interests held. The Partnership is engaged solely in the business of the acquisition, operation and sale and disposition of equity real estate investments. Such equity investments are or have been held by fee title, leasehold estates and/or through joint venture partnership interests. The Partnership's real estate investments are located throughout the nation and it has no real estate investments located outside of the United States. A presentation of information about industry segments, geographic regions, raw materials or seasonality is not applicable and would not be material to an understanding of the Partnership's business taken as a whole. Pursuant to the Partnership Agreement, the Partnership is required to terminate no later than December 31, 2033. The Partnership is self-liquidating in nature. At sale of a particular property, the net proceeds, if any, are generally distributed or reinvested in existing properties rather than invested in acquiring additional properties. As discussed further in Item 7, with the sale of the Partnership's interest in the Carrollwood Station Apartments in the first quarter of 1998, the Partnership has interests in three remaining investment properties. Title to Long Beach Plaza is expected to be transferred to the lender in 1998. The Partnership's other investment properties consist of its indirect interests in the 237 Park Avenue and 1290 Avenue of the Americas properties. Reference is made to Item 7 for a further discussion of these properties. The Partnership has made the real property investments set forth in the following table:
SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1997, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b) - ---------------------- ---------- -------- ---------------------- --------------------- 1. Copley Place multi-use complex Boston, Massachusetts. . . 1,220,000 sq.ft. 9/1/83 1/23/97 fee ownership of improve- n.r.a. ments and leasehold interest in air rights (through joint venture partnership) (c)(e) 2. 1001 Fourth Avenue Plaza office building Seattle, Washington . . . . 678,000 sq.ft. 9/1/83 11/1/93 fee ownership of land and n.r.a. improvements 3. First Tennessee Plaza (Plaza Tower) office building Knoxville, Tennessee. . . . . 418,000 sq.ft. 10/26/83 9/19/97 fee ownership of land and n.r.a. improvements (e) 4. Gables Corporate Plaza office building Coral Gables, Florida. . . . . . 106,000 sq.ft. 11/15/83 1/5/94 fee ownership of land and n.r.a. improvements (through joint venture partnership) 5. University Park office building Sacramento, California . . . . 120,000 sq.ft. 1/16/84 1/10/94 fee ownership of land and n.r.a. improvements SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1997, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b) - ---------------------- ---------- -------- ---------------------- --------------------- 6. Sherry Lane Place office building Dallas, Texas. . . 286,000 sq.ft. 12/1/83 9/12/97 fee ownership of land and n.r.a. improvements (through joint venture partnerships)(c)(e) 7. Allied Automotive Center Southfield, Michigan . . . . . 192,000 sq.ft. 3/30/84 10/10/90 fee ownership of land and n.r.a. improvements (e) 8. Commercial Union Building Quincy, Massachusetts. . . 172,000 sq.ft. 3/12/84 8/15/91 fee ownership of land and n.r.a. improvements 9. 237 Park Avenue Building New York, New York . . . . . 1,140,000 sq.ft. 8/14/84 (h) fee ownership of land and n.r.a. improvements (through joint venture partnerships) (c) 10. 1290 Avenue of the Americas Building New York, New York . . . . . 2,000,000 sq.ft. 7/27/84 (h) fee ownership of land and n.r.a. improvements (through joint venture partnerships) (c) 11. 2 Broadway Building New York, New York . . . . . 1,600,000 sq.ft. 8/14/84 9/18/95 fee ownership of land and n.r.a. improvements (through joint venture partnerships) (c)(e) SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1997, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b) - ---------------------- ---------- -------- ---------------------- --------------------- 12. Long Beach Plaza shopping center Long Beach, California . . . . 559,000 sq.ft. 6/22/83 4% fee ownership of land and g.l.a. improvements and leasehold interest in the parking structure (d)(f) 13. Michael's (Marshall's) Aurora Plaza shopping center Aurora (Denver), Colorado . . . . . 123,000 sq.ft. 4/1/83 10/15/97 fee ownership of land and g.l.a. improvements (e) 14. Old Orchard shopping center Skokie (Chicago), Illinois . . . . . 843,000 sq.ft. 4/1/84 8/30/93 fee ownership of land and g.l.a. improvements (through a joint venture partnership) (c)(g) 15. Heritage Park-II Apartments Oklahoma City, Oklahoma . . . . . 244 units 7/1/83 3/26/92 fee ownership of land and improvements (through a joint venture partnership) 16. Quail Place Apartments Oklahoma City, Oklahoma . . . . . 180 units 7/1/83 3/26/92 fee ownership of land and improvements (through a joint venture partnership) 17. Lake Point Apartments Charlotte, North Carolina . . 208 units 9/15/83 12/29/89 fee ownership of land and improvements SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1997, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b) - ---------------------- ---------- -------- ---------------------- --------------------- 18. Eastridge Apartments Tucson, Arizona. . 456 units 8/23/83 6/30/94 fee ownership of land and improvements (through a joint venture partnership) 19. Rio Cancion Apartments Tucson, Arizona. . 380 units 8/18/83 3/31/93 fee ownership of land and improvements 20. Bridgeport Apartments Irving, Texas. . . 312 units 9/30/83 4/2/92 fee ownership of land and improvements 21. Carrollwood Station Apartments Tampa, Florida . . 336 units 12/16/83 1% fee ownership of land and (sold 3/2/98) improvements (through a joint venture partnership) (c)(f)(i) 22. Greenwood Creek II Apartments Benbrook (Fort Worth), Texas. . . . . . . 152 units 3/30/84 4/6/93 fee ownership of land and improvements 23. The Glades Apartments Jacksonville, Florida . . . . . 360 units 10/9/84 11/21/96 fee ownership of land and improvements (through a joint venture partnership) (e) - ----------------------- (a) The computation of this percentage for properties held at December 31, 1997 does not include amounts invested from sources other than the original net proceeds of the public offering as described above and in Item 7. (b) Reference is made to the Notes and Schedule III filed with this annual report for the current outstanding principal balances and a description of the long-term mortgage indebtedness secured by certain of the Partnership's real property investments. (c) Reference is made to the Notes for a description of the joint venture partnership or partnerships through which the Partnership has made this real property investment. (d) Reference is made to the Notes for a description of the leasehold interest in the land on which a portion of this real property investment is situated. (e) This property or the Partnership's interest in this property has been sold. Reference is made to the Notes for a description of the sale of such real property investment. (f) Reference is made to Item 8 - Schedule III to the Consolidated Financial Statements filed with this annual report for further information concerning real estate taxes and depreciation. (g) The venture sold its interest in the property. Reference is made to the Notes. (h) The original invested capital percentage for the 237 Park Avenue Building and the 1290 Avenue of the Americas Building was 4% and 8%, respectively. Reference is made to the Notes for a description of the reorganization and restructuring of the Partnership's indirect interests in these investment properties. (i) The Partnership sold its interest in the property in 1998. Reference is made to the Notes for a description of such transaction.
The Partnership's real property investments are subject to competi- tion from similar types of properties (including in certain areas, properties owned by affiliates of the General Partners or properties owned by certain of the joint venture partners) in the respective vicinities in which they are located. Such competition is generally for the retention of existing tenants. Reference is made to Item 7 below for a discussion of competitive conditions for certain of its significant investment properties. Approximate occupancy levels for the properties owned in 1997 are set forth in the table in Item 2 below to which reference is hereby made. The Partnership has maintained the suitability and competitiveness of its properties in its markets primarily on the basis of effective rents, tenant allowances and services provided to tenants. In the opinion of the Corporate General Partner of the Partnership, all of the investment properties held at December 31, 1997 are adequately insured. Although there is earthquake insurance coverage for a portion of the value of the Partnership's investment properties, the Corporate General Partner does not believe that such coverage for the entire replacement cost of the investment properties is available on economic terms. On January 23, 1997, the Partnership sold its entire partnership interest in Copley Place Associates. Reference is made to the Notes for further description of the transaction. On March 12, 1997, the Partnership sold the remaining land of the Allied Automotive Center. Reference is made to the Notes for further description of the transaction. On September 12, 1997, the Partnership sold the land and related improvements of the Sherry Lane Place office building. Reference is made to the Notes for a further description of such transaction. On September 19, 1997, the Partnership sold the land and related improvements of the First Tennessee Plaza ("Plaza Tower") office building. Reference is made to the Notes for a further description of such transaction. On October 15, 1997, the Partnership sold the land and related improvements of the Michael's (Marshall's) Aurora Plaza. Reference is made to the Notes for a further description of such transaction. On March 2, 1998, the Partnership sold its interest in the Carrollwood Station Apartments, as described more fully in the Notes. Reference is made to the Notes filed with this annual report for a schedule of minimum lease payments to be received in each of the next five years, and in the aggregate thereafter, under leases in effect at the Partnership's shopping center investment as of December 31, 1997. The Partnership has no employees other than personnel performing on- site duties at some of the Partnership's properties, none of whom are officers or directors of the Corporate General Partner of the Partnership. The terms of transactions between the Partnership, the General Partners and their affiliates are set forth in Item 11 below to which reference is hereby made for a description of such terms and transactions. ITEM 2. PROPERTIES The Partnership owns or owned directly or through joint venture partnerships the properties or interests in the properties referred to under Item 1 above to which reference is hereby made for a description of said properties. The following is a listing of principal businesses or occupations carried on in and approximate physical occupancy levels by quarter during fiscal years 1997 and 1996 for the Partnership's investment properties owned during 1997:
1996 1997 ------------------------- ------------------------- At At At At At At At At Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 ------------------ ---- ---- ---- ----- ---- ---- ----- ----- 1. Michael's (Marshall's) Aurora Plaza shopping center Aurora (Denver), Colorado . . . . . . . . Retail 95% 96% 96% 96% 96% 92% 96% N/A 2. Carrollwood Station Apartments Tampa, Florida . . . . . Residential 96% 98% 97% 96% 96% 97% 97% 98% 3. Long Beach Plaza shopping center Long Beach, California . . . . . . . Retail 55% 55% 55% 55% 48% 49% 34% 59% 4. Sherry Lane Place office building Dallas, Texas. . . . . . Legal and Financial Services 96% 97% 96% 96% 97% 96% N/A N/A 5. Copley Place multi-use complex Boston, Massachusetts. . Retail/Business Machines/Financial Services 89% 93% 90% 90% N/A N/A N/A N/A 1996 1997 ------------------------- ------------------------- At At At At At At At At Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 ------------------ ---- ---- ---- ----- ---- ---- ----- ----- 6. First Tennessee Plaza (Plaza Tower) office building Knoxville, Tennessee . . Financial Services 91% 93% 93% 93% 92% 94% N/A N/A 7. 237 Park Avenue Building New York, New York . . . Advertising/Insurance/ Paper/Real Estate 98% 98% 98% * * * * * 8. 1290 Avenue of the Americas Building New York, New York . . . Men's Clothing Financial Services 78% 71% 81% * * * * * - ----------------- Reference is made to Item 7, and to the Notes for further information regarding property occupancy, competitive conditions and tenant leases at the Partnership's investment properties. An "N/A" indicates that the property was sold and was not owned by the Partnership or its joint venture at the end of the period. An "*" indicates that the joint venture which owns the property was restructured. Reference is made to the Notes for further information regarding the reorganized and restructured ventures.
ITEM 3. LEGAL PROCEEDINGS In February 1996, an action entitled TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA V. CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIII, JMB REALTY CORPORATION, et. al. was initiated in California Superior Court of Orange County, California. In the proceeding, Teachers Insurance and Annuity Association of America ("Teachers"), as the holder of the mortgage notes secured by the Long Beach Plaza Shopping Center, sought the appointment of a receiver for the benefit of the lender to take exclusive possession, control and operation of the property. Due to declining retail sales at the shopping center and one of its anchor tenant's previously vacating its space, the Partnership has not made all of the scheduled debt service payments on the mortgage notes since June 1993. The Partnership also did not pay the outstanding principal and accrued interest on the first mortgage note at its maturity in August 1995 (combined principal and accrued interest balance at December 31, 1997 was approximately $52,009,000). The Partnership was unable to obtain a long-term modification of the mortgage notes from Teachers, and the Partnership decided not to commit any significant additional amounts to the property. In March 1996, the Court granted Teachers' application and entered an order for a receiver to take exclusive possession, control and operation of the property. Accordingly, the receiver has control of the property and its operations. An affiliate of the General Partners continues as the property manager, at the discretion of the receiver. Title to the property is expected to be transferred to Teachers or its designee in 1998. The Partnership is not subject to any other material legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during 1996 and 1997. PART II ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS As of December 31, 1997, there were 38,317 record holders of the 365,971.66918 Interests outstanding in the Partnership. There is no public market for Interests and it is not anticipated that a public market for Interests will develop. Upon request, the Corporate General Partner may provide information relating to a prospective transfer of Interests to an investor desiring to transfer his Interests. The price to be paid for the Interests, as well as any other economic aspects of the transaction, will be subject to negotiation by the investor. There are certain conditions and restrictions on the transfer of Interests, including, among other things, the requirement that the substitution of a transferee of Interests as a Limited Partner of the Partnership be subject to the written consent of the Corporate General Partner, which may be granted or withheld in its sole and absolute discretion. The rights of a transferee of Interests who does not become a substituted Limited Partner will be limited to the rights to receive his share of profits or losses and cash distributions from the Partnership, and such transferee will not be entitled to vote such Interests or have other rights of a Limited Partner. No transfer will be effective until the first day of the next succeeding calendar quarter after the requisite transfer form satisfactory to the Corporate General Partner has been received by the Corporate General Partner. The transferee consequently will not be entitled to receive any cash distributions or any allocable share of profits or losses for tax purposes until such next succeeding calendar quarter. Profits or losses from operations of the Partnership for a calendar year in which a transfer occurs will be allocated between the transferor and the transferee based upon the number of quarterly periods in which each was recognized as the Holder of the Interests, without regard to the results of the Partnership's operations during particular quarterly periods and without regard to whether cash distributions were made to the transferor or transferee. Profits or losses arising from the sale or other disposition of Partnership properties will be allocated to the recognized Holder of the Interests as of the last day of the quarter in which the Partnership recognized such profits or losses. Cash distributions to a Holder of Interests arising from the sale or other disposition of Partnership properties will be distributed to the recognized Holder of the Interests as of the last day of the quarterly period with respect to which such distribution is made. Reference is made to Item 6 below for a discussion of cash distribu- tions made to the Holders of Interests. Reference is made to Item 7 for a discussion of unsolicited tender offers received from unaffiliated third parties. ITEM 6. SELECTED FINANCIAL DATA CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993 (NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
1997 1996 1995 1994 1993 ------------- ------------- ----------- ------------ ------------ Total income. . . . . . . $ 16,941,329 69,093,943 66,763,349 65,969,277 85,193,793 ============ ============ ============ ============ ============ Earnings (loss) before gains on sale or disposi- tion of investment properties . . . . . . . $ (5,592,268) 42,099,222 (25,732,699) (26,022,593) (51,028,194) Gains (losses) on sale or disposition of investment properties, net of venture partners' share of ($329,169) in 1996 and $2,887,659 in 1994. . . . . . . . . 96,019,552 5,484,249 -- 18,364,792 11,083,791 Partnership's share of gains (losses) on sale of property or interest in property of unconsolidated ventures . . . . . . . . -- -- (14,789,529) 1,702,082 7,898,727 ------------ ------------ ------------ ------------ ------------ Earnings (loss) before extraordinary items. . . 90,427,284 47,583,471 (40,522,228) (5,955,719) (32,045,676) Extraordinary items . . . 55,468,888 -- 15,632,407 996,126 (141,776) ------------ ------------ ------------ ------------ ------------ Net earnings (loss) . . . . . . . . . $145,896,172 47,583,471 (24,889,821) (4,959,593) (32,187,452) ============ ============ ============ ============ ============ 1997 1996 1995 1994 1993 ------------- ------------ ----------- ------------ ------------ Net earnings (loss) per Interest (b): Earnings (loss) before gains on sale or disposition of invest- ment properties. . . . $ (14.67) 110.42 (67.47) (68.22) (133.78) Gains (losses) on sale or disposition of investment properties, net of venture partners' share of ($329,169) in 1996 and $2,887,659 in 1994. . . . . . . . 259.75 14.83 -- 49.66 29.97 Partnership's share of gains (losses) on sale of property or interest in property of unconsolidated ventures . . . . . . . -- -- (39.99) 4.60 21.35 Extraordinary items . . 150.05 -- 42.27 2.69 (.38) ------------ ------------ ------------ ------------ ------------ Net earnings (loss) . . $ 395.13 125.25 (65.19) (11.27) (82.84) ============ ============ ============ ============ ============ Total assets. . . . . . . $ 27,600,886 280,595,580 307,460,106 333,577,902 374,787,300 Long-term debt. . . . . . $ 1,479,679 384,098,834 382,303,505 361,563,239 360,881,897 Cash distributions per Interest (b) . . . . $ 25.00 -- 30.00 -- -- ============ ============ ============ ============ ============ - ------------- (a) The above selected financial data should be read in conjunction with the consolidated financial statements and the related notes appearing elsewhere in this annual report. (b) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for financial reporting or Federal income tax purposes. Each Partner's taxable income or (loss) from the Partnership in each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the cash generated or distributed by the Partnership. Accordingly, cash distributions to the Holders of Interests since the inception of the Partnership have not resulted in taxable income to such Holders of Interests and have therefore represented a return of capital.
SIGNIFICANT PROPERTIES - SELECTED RENTAL AND OPERATING DATA As of December 31, 1997, only the Long Beach Shopping Center investment property would be considered by the Partnership to be significant. However, as more fully described in the Notes, the Long Beach property is in receivership. Therefore, selected rental and operating data has not been presented in this Annual Report. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES As a result of the public offering of Interests as described in Item 1, the Partnership had approximately $326,000,000 (after deducting selling expenses) and other offering costs with which to make investments in income-producing commercial and residential real property, to pay legal fees and other costs (including acquisition fees) related to such invest- ments and to satisfy working capital requirements. A portion of the proceeds was utilized to acquire the properties described in Item 1 above. In March 1997 some of the Holders of Interests received from a third party unaffiliated with the Partnership an unsolicited offer to purchase up to 17,000 Interests (approximately 4.6% of the outstanding Interests) at $10 per Interest. Such offer expired on April 10, 1997. As of the date of this report, the Partnership is aware that 1.44% of the Interests have been purchased by such unaffiliated third party either pursuant to such tender offer or through negotiated purchases. The board of directors of JMB Realty Corporation ("JMB"), the Corporate General Partner, has established a special committee (the "Special Committee") consisting of certain directors of JMB to deal with all matters relating to tender offers for Interests, including any and all responses to such tender offers. The Special Committee has retained independent counsel to advise it in connection with any tender offers for Interests and has retained Lehman Brothers Inc. as financial advisor to assist the Special Committee in evaluating and responding to such tender offers. With respect to the offer for Interests at $10 per Interest, the Special Committee, on behalf of the Partnership, recommended against acceptance of this offer on the basis that, among other things, the offer price was inadequate. It is possible that other offers for Interests may be made by unaffiliated third parties in the future, although there is no assurance that any third party will commence an offer for Interests, the terms of any such offer or whether any such offer, if made, will be consummated, amended or withdrawn. At December 31, 1997, the Partnership and its consolidated ventures had cash and cash equivalents of approximately $9,528,000 and short-term investments of approximately $374,000. These funds are available for working capital requirements and reserves (including payment of deferred amounts to affiliates of the Corporate General Partners), and potential future distributions to the General Partners and Holders. In February 1998, the Partnership made a sales distribution totaling $1,829,858 (approximately $5 per Interest) out of sale proceeds (primarily related to the sale of Michael's Aurora Plaza). The Partnership does not expect to spend other than nominal amounts in 1998 for tenant improvements as the Partnership's interest in the Carrollwood Apartments, the only remaining source of liquidity at December 31, 1997, was sold in 1998, and title to Long Beach Plaza is expected to be transferred to the lender in 1998. In addition, the Partnership does not consider its indirect interest in JMB/NYC to be a source of liquidity. In such regard, reference is made to the Partnership's property-specific discussions below. The Partnership's and its ventures' mortgage obligations are separate non-recourse loans secured individually by the investment properties and are not obligations of any other investment, and the Partnership and its ventures are not personally liable for the payment of the mortgage indebtedness. The Partnership had suspended operating cash distributions to the Holders of Interests and General Partners effective as of the first quarter of 1992. The affiliates of the Corporate General Partner deferred certain pre- 1993 property management and leasing fees payable to them under the terms of the management agreements in an aggregate amount of approximately $1,321,500 (approximately $4 per Interest) through December 31, 1997. The Partnership paid $10,000,000 of previously deferred fees during February 1995 and $1,500,000 in April 1997. The remaining deferred amounts did not bear interest and were paid in 1998. In March 1998, the Partnership sold its ownership interest in the joint venture that owns the Carrollwood Station Apartments to the unaffiliated venture partner for $4,642,140. As a result of the property specific concerns discussed below, the Partnership does not expect that its remaining investment properties, Long Beach Plaza, 237 Park Avenue and 1290 Avenue of the Americas, will provide it with any significant cash flow from either operation or sale or other disposition. Aggregate distribution of sale or refinancing proceeds received by Holders of Interests over the entire term of the Partnership will be substantially less than one-fourth of their original investment. However, in connection with sales or other dispositions (including a transfer to a lender) of the Partnership's remaining investment properties (or interests therein), Holders of Interests will recognize a substantial amount of taxable income for Federal income tax purposes, even though the Holders of Interests do not receive cash distributions as a result of such sales or dispositions. For certain Holders of Interests, such taxable income may be offset by their suspended passive activity losses (if any). Each Holder's tax consequences will depend on such Holder's own tax situation. Copley Place On January 23, 1997, through a series of transactions the Partnership sold its entire partnership interest in Copley Place Associates. The Partnership received approximately $929,000 of net proceeds after repayment of the purchase price note, at a discount, and repayment of its portion of the deficit loans. Reference is made to the Notes for a further description of such sale. Orchard Associates The Partnership's interest in Old Orchard Shopping Center (through Orchard Associates and Old Orchard Urban Venture ("OOUV") was sold in September 1993. Old Orchard Urban Venture could have received reimbursement, under certain conditions, of up to an additional $3,400,000 (of which Orchard Associates had a 79.1667 interest) of previously incurred development costs based upon certain future earnings of the property (as defined). In December 1996, the joint venture received a final settlement of $2,450,000 (of which the Partnership share was $969,796) of such development costs related to the sale of the Old Orchard Shopping Center. In 1996, OOUV distributed to Orchard Associates $1,389,210 in proceeds from the settlement of operating prorations. As a result, Orchard Associates distributed $694,605 to the Partnership representing its share of such operating prorations. JMB/NYC In October 1994, the Partnership and its affiliated partners (together with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered into an agreement (the "Agreement") with the affiliates (the "Olympia & York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the venture partners in the Joint Ventures which owned 237 Park Avenue, 1290 Avenue of the Americas and 2 Broadway Buildings, to resolve certain disputes among the Affiliated Partners and the Olympia & York affiliates. In general, the parties agreed to: (i) restructure the first mortgage loan; (ii) sell the 2 Broadway Building; (iii) reduce or eliminate approval rights of JMB/NYC with respect to virtually all property management, leasing, sale or refinancing; (iv) amend the Joint Ventures' agreements to eliminate any funding obligations by JMB/NYC and (v) establish a new preferential cash distribution level for the Olympia & York affiliates. In accordance with the Agreement and in anticipation of the sale of the 2 Broadway Building, the unpaid first mortgage indebtedness previously allocated to 2 Broadway was allocated in 1994 to 237 Park Avenue and 1290 Avenue of the Americas Buildings. As part of the Agreement, JMB/NYC and the Olympia & York affiliates agreed to file a pre-arranged bankruptcy plan for reorganization under Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and the debt encumbering the two properties remaining after the sale of 2 Broadway. In June 1995, the 2 Broadway Joint Ventures filed their pre- arranged bankruptcy plans for reorganization, and in August 1995, the bankruptcy court entered an order confirming their plans of reorganization. In September 1995, the sale of the 2 Broadway Building was completed. Such sale did not result in any distributable proceeds to JMB/NYC or the Olympia and York affiliates. Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue and 1290 Avenue of the Americas properties were made in April 1996, and in August 1996, an Amended Plan of Reorganization and Disclosure Statement (the "Plan") was filed with the Bankruptcy Court for these Joint Ventures. The Plan was accepted by the various classes of debt and equity holders and confirmed by the Court on September 20, 1996 and became effective October 10, 1996 ("Effective Date"). The Plan provides that JMB/NYC has an indirect limited partnership interest which, before taking into account significant preferences to other partners, equals approximately 4.9% of the reorganized and restructured ventures owning 237 Park and 1290 Avenue of the Americas (the "Properties"). Neither O&Y nor any of its affiliates has any direct or indirect continuing interest in the Properties. The new ownership structure gives control of the Properties to an unaffiliated real estate investment trust ("REIT") which is owned primarily by holders of the first mortgage debt which encumbered the Properties prior to the bankruptcy. JMB/NYC has, under certain limited circumstances, through January 1, 2001 rights of consent regarding sale of the Properties or the consummation of certain other transactions that significantly reduce indebtedness of the Properties. In general, at any time on or after January 2, 2001, an affiliate of the REIT has the right to purchase JMB/NYC's interest in the Properties for certain amounts relating to the operations of the Properties. There can be no assurance that such REIT affiliate will not exercise such right on or after January 2, 2001. If such REIT affiliate exercises such right to purchase, due to the level of indebtedness remaining on the Properties, the original purchase money notes payable by JMB/NYC, and the significant preference levels within the reorganized structure and liabilities of the Partnership, it is unlikely that such purchase would result in any significant distributions to the partners of the Partnership. Additionally, at any time, JMB/NYC has the right to require such REIT affiliate to purchase the interest of JMB/NYC in the Properties for the same price at which such REIT affiliate can require JMB/NYC to sell such interest as described above. The restructuring and reorganization discussed above eliminates any potential additional obligation of the Partnership in the future to provide additional funds under its previous joint venture agreements (other than that related to a certain indemnification agreement provided in connection with the restructuring). The Affiliated Partners entered into a joint and several obligation to indemnify, through a date no later than January 2, 2001, the REIT to the extent of $25 million to ensure their compliance with the terms and conditions relating to JMB/NYC's indirect limited partnership interest in the restructured and reorganized joint ventures that own the Properties. The Affiliated Partners contributed approximately $7.8 million (of which the Partnership's share was approximately $1.9 million) to JMB/NYC which was deposited into an escrow account as collateral for such indemnification. These funds have been invested in stripped U.S. Government obligations with a maturity date of February 15, 2001. The Partnership's share of the reduction of the maximum unfunded obligation under the indemnification agreement recognized as income is a result of interest earned on amounts contributed by the Partnership and held in escrow by JMB/NYC. Such income earned reduces the Partnership's share of the maximum unfunded obligation under the indemnification agreement, which is reflected as a liability in the accompanying financial statements. The provisions of the indemnification agreement generally prohibit the Affiliated Partners from taking actions that could have an adverse effect on the operations of the REIT. Compliance, therefore, is within the control of the Affiliated Partners and non-compliance with such provisions by either the Partnership or the other Affiliated Partners is highly unlikely. Therefore, it is highly likely that the Partnership's share of the collateral will be returned (including interest earned) at the termination of the indemnification agreement. Long Beach Plaza The Partnership has not remitted all of the scheduled debt service payments for the mortgage loan secured by the Long Beach Plaza Shopping Center since June 1993. The Partnership had initiated discussions with the first mortgage lender regarding a permanent modification of its mortgage loan secured by the property. In December 1994, the lender agreed to extend the maturity of the loan until August 1995. The Partnership has been unable to secure a permanent modification of the first and second notes from the lender. The Partnership decided not to commit any significant additional amounts to the property. In March 1996, a receiver was appointed for the benefit of the lender. As a result, the Partnership was required to submit to the lender approximately $1,000,000 of 1995 cash generated from the property. Title to the property is currently expected to transfer in 1998 as a formal notice of the lender's intent to realize upon its security was received by the Partnership in March 1997. Reference is made to Item 3 of this report for a discussion of the receivership proceeding. This will result in the Partnership no longer having an ownership interest in the property and will result in a gain for financial reporting and Federal income tax purposes with no corresponding distributable proceeds. Reference is made to the Notes for a further discussion of this property. First Tennessee Plaza (Plaza Tower) Office Building On September 19, 1997, the Partnership sold the land and related improvements of the First Tennessee Plaza office building for $29,200,000. Reference is made to the Notes for a further description of such transaction. Sherry Lane Place On September 12, 1997, the Partnership sold the land and related improvements of the Sherry Lane Place office building for $44,000,000. Reference is made to the Notes for a further description of such transaction. Carrollwood Apartments On March 2, 1998, the Partnership sold its ownership interest in the Carrollwood Apartments to the unaffiliated venture partner for $4,642,140. Reference is made to the Notes for a further description of such transaction. The Glades Apartments On November 21, 1996, the Partnership sold the land and related improvements of the Glades Apartments. The sale price of the land and related improvements was $12,900,000. Reference is made to the Notes for a further description of the sale. Michael's (Marshall's) Aurora Plaza On October 15, 1997 the Partnership sold the land and related improvements of the Michael's (Marshall's) Aurora Plaza for $6,885,000. Reference is made to the Notes for a further description of such transaction. RESULTS OF OPERATIONS Significant fluctuations between periods in the accompanying consolidated financial statements are primarily the result of the sale of the Partnership's interest in the Copley Place multi-use complex in January 1997, the sales of the Sherry Lane Place and First Tennessee Office Building in September 1997, the sale of Michael's (Marshall's) Aurora Plaza in October 1997, and the sale of the Glades Apartments in November 1996. Reference is made to the Notes in the accompanying consolidated financial statements for discussions of the sales. The increase in cash and cash equivalents at December 31, 1997 as compared to December 31, 1996 is primarily due to the temporary investment of the proceeds from the sale of Michael's Aurora Plaza in October 1997 until their distribution on February 1998. The decrease in restricted funds at December 31, 1997 as compared to December 31, 1996 is primarily due to the use of cash held by the appointed receiver of the Long Beach Plaza Shopping Center to fund operating deficits at the property. The decrease in investment in unconsolidated ventures, at equity at December 31, 1997 as compared to December 31, 1996 is primarily due to a reduction of the Partnership's paid-in-capital obligation to Carlyle Managers, Inc. and Carlyle Investors, Inc. The increase in accrued interest payable at December 31, 1997 as compared to December 31, 1996 is due to the continued suspension of debt service payments on the long-term mortgage loan secured by the Long Beach Plaza. The decrease in rental income for the year ended December 31, 1997 as compared to the year ended December 31, 1996 is primarily due to the sale of Copley Place, Sherry Lane Place, First Tennessee Plaza, and Marshall's, as discussed above. The increase in rental income for the year ended December 31, 1996 as compared to December 31, 1995 is primarily due to higher average occupancy at Copley Place in 1996. The decrease in interest income for the year ended December 31, 1997 as compared to the year ended December 31, 1996 and the decrease in interest income for the year ended December 31, 1996 as compared to the year ended December 31, 1995 are primarily due to lower average balances in short term investments in 1997 and 1996 as a result of the payments of previously deferred property management and leasing fees and distributions to Holders of Interests of sale proceeds. The decrease in depreciation expense for the year ended December 31, 1997 as compared to December 31, 1996 is primarily due to the classification of the Partnership's remaining investment properties as held for sale during 1996 and the corresponding suspension of depreciation in 1997. The decrease in depreciation expense for the year ended December 31, 1996 as compared to the year ended December 31, 1995 is primarily due to the $13,000,000 value impairment recorded as of January 1, 1996 for the Long Beach Plaza Shopping Center. The decrease in property operating expenses for the year ended December 31, 1997 as compared to the year ended December 31, 1996 is primarily due to the sales noted above. The increase in property operating expenses for the year ended December 31, 1996 as compared to December 31, 1995 is primarily due to higher real estate taxes (which are partially recoverable from tenants) at the Copley Place multi-use complex, as well as a $700,000 accrual recorded for the repair costs relating to the sub- terranean termite damage at Carrollwood Apartments in 1996. The provision for value impairment in the amount of $17,600,000 for the year ended December 31, 1996 is due to the uncertainty of the Partnership's ability to recover the net carrying value of the Long Beach Plaza Shopping Center from future operations or sale. The Partnership's share of the maximum unfunded obligation under the indemnification agreement at December 31, 1997 was $4,131,258. During 1996, the Partnership contributed $1,950,802 to JMB/NYC which, along with additional contributions of $5,852,406 from the other Affiliated Partners of JMB/NYC, is held in escrow pursuant to the terms of the indemnification agreement. These funds have been invested by JMB/NYC in stripped U.S. Government obligations with a maturity date of February 15, 2001. The Partnership's share of the reduction of the maximum unfunded obligation under the indemnification agreement recognized as income during 1997 of $134,252 is a result of interest earned on amounts contributed by the Partnership and held in escrow by JMB/NYC. Such income earned reduces the Partnership's proportionate share of the maximum unfunded obligation under the indemnification agreement. The decrease in the Partnership's share of income from unconsolidated venture for the year ended December 31, 1997 compared to income from unconsolidated venture of $79,070,546, and the recognition of income from unconsolidated venture for the year ended December 31, 1996 compared to a loss of $6,600,158 for the year ended December 31, 1995 is primarily the result of the restructuring of JMB/NYC's interests in the joint ventures owning the Properties during 1996. Pursuant to the terms of the Plan, JMB/NYC converted its general partnership interest in the joint ventures which owned the Properties to a limited partnership interest and accordingly no longer has a commitment to provide financial support to the joint ventures owning the Properties. As a result, during 1996, the Partnership recognized income from restructuring of $78,704,658 from the reversal of those previously recognized losses that it is no longer obligated to fund (net of capital contributions). The Partnership's share of income from operations of unconsolidated venture during 1996 is partially offset by loss from operations prior to such reorganization. As of the Effective Date, the Partnership has discontinued the application of the equity method of accounting for its indirect interests in the Properties and additional losses from the investment in unconsolidated venture will not be recognized. The gain on sale or disposition of investment properties, net of venture partners' share of $96,019,552 for the year ended December 31, 1997 consists of gain of $71,276,721 related to the sale of the interest in Copley Place multi-use complex, a gain of $541,792 related to the sale of land at the Allied Automotive Center, a gain of $18,174,417 related to the sale of Sherry Lane Place Office Building, a gain of $5,207,750 related to the sale of the First Tennessee Plaza Office Building and a gain of $818,872 related to the sale of Michael's Aurora Plaza. The gain of $5,484,249 on the sale or disposition of investment property for the year ended December 31, 1996 is the result of the sale of the Glades Apartments and the Partnership's share of the final settlement of reimbursable development costs related to the sale of Old Orchard Shopping Center, which was sold in September 1993. The loss on sale of interest in unconsolidated ventures and the extraordinary item for the year ended December 31, 1995 is due to the 1995 sale of 2 Broadway and the related gain on the extinguishment of indebtedness. The extraordinary items of $55,468,888 for the year ended December 31, 1997 consists of the forgiveness of indebtedness of $55,183,784 on the purchase price note payable to an affiliate in connection with the sale of the interest in the Copley Place multi-use complex, and the write off of unamortized deferred mortgage expense of $285,104 resulting from the sales of the Sherry Lane Place Office Building and the First Tennessee Plaza Office Building. INFLATION Due to the decrease in the level of inflation in recent years, inflation generally has not had a material effect on rental income or property operating expenses. Inflation is not expected to significantly impact future operations. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES INDEX Independent Auditors' Report Consolidated Balance Sheets, December 31, 1997 and 1996 Consolidated Statements of Operations, years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Partners' Capital Accounts (Deficits), years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows, years ended December 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements SCHEDULE -------- Consolidated Real Estate and Accumulated Depreciation III SCHEDULES NOT FILED: All schedules other than the one indicated in the index have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. INDEPENDENT AUDITORS' REPORT The Partners CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII: We have audited the consolidated financial statements of Carlyle Real Estate Limited Partnership - XIII, a limited partnership, (the Partnership), and consolidated ventures as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these consolidated financial statements and financial statement 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 the General Partners of the Partnership, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Partnership and consolidated ventures at December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. As discussed in the Notes to the consolidated financial statements, in 1996, the Partnership and its consolidated ventures changed their method of accounting for long-lived assets and long-lived assets to be disposed of to conform with Statement of Financial Accounting Standards No. 121. KPMG PEAT MARWICK LLP Chicago, Illinois March 25, 1998 CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND 1996 ASSETS ------
1997 1996 ------------ ----------- Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 9,528,301 6,030,217 Short-term investments. . . . . . . . . . . . . . . . . . . . . . . 374,085 374,085 Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . 23,218 1,055,386 Interest, rents and other receivables . . . . . . . . . . . . . . . 2,157,413 2,576,860 Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 96,133 262,562 Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 119,254 11,435,274 ------------ ------------ Total current assets. . . . . . . . . . . . . . . . . . . . 12,298,404 21,734,384 Investment properties held for sale or disposition. . . . . . . . 14,917,470 238,208,441 ------------ ------------ Investment in unconsolidated ventures, at equity. . . . . . . . . . . 31,957 432,357 Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 219,687 5,133,689 Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . -- 447,345 Venture partners' deficits in ventures. . . . . . . . . . . . . . . . 133,368 14,639,364 ------------ ------------ $ 27,600,886 280,595,580 ============ ============ CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED BALANCE SHEETS - CONTINUED LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS) ----------------------------------------------------- 1997 1996 ------------ ----------- Current liabilities: Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 40,361,075 39,232,585 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 235,535 3,434,187 Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . 1,994,139 4,238,789 Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . 109,854 1,633,263 Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 18,302,502 17,431,535 Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . -- 1,475,510 ------------ ------------ Total current liabilities . . . . . . . . . . . . . . . . . 61,003,105 67,445,869 Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 255,538 800,941 Partnership's share of the maximum unfunded obligation under the indemnification agreement. . . . . . . . . . . 4,131,258 4,265,510 Long-term debt, less current portion. . . . . . . . . . . . . . . . . 1,479,679 384,098,834 ------------ ------------ Commitments and contingencies Total liabilities . . . . . . . . . . . . . . . . . . . . . 66,869,580 456,611,154 Partners' capital accounts (deficits): General partners: Capital contributions . . . . . . . . . . . . . . . . . . . . . 1,000 1,000 Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (18,485,486) (19,776,680) Cumulative cash distributions . . . . . . . . . . . . . . . . . (1,149,967) (1,149,967) ------------ ------------ (19,634,453) (20,925,647) ------------ ------------ Limited partners: Capital contributions, net of offering costs. . . . . . . . . . 326,224,167 326,224,167 Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (295,750,699) (440,355,677) Cumulative cash distributions . . . . . . . . . . . . . . . . . (50,107,709) (40,958,417) ------------ ------------ (19,634,241) (155,089,927) ------------ ------------ Total partners' capital (deficits). . . . . . . . . . . . . (39,268,694) (176,015,574) ------------ ------------ $ 27,600,886 280,595,580 ============ ============ See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ------------ ------------ ------------ Income: Rental income . . . . . . . . . . . . . . . . . . $ 16,385,742 68,293,433 65,729,288 Interest income . . . . . . . . . . . . . . . . . 555,587 800,510 1,034,061 ------------ ------------ ------------ 16,941,329 69,093,943 66,763,349 ------------ ------------ ------------ Expenses: Mortgage and other interest . . . . . . . . . . . 9,869,385 39,959,842 38,615,594 Depreciation. . . . . . . . . . . . . . . . . . . -- 10,267,305 13,784,147 Property operating expenses . . . . . . . . . . . 10,768,100 39,183,796 35,234,465 Professional services . . . . . . . . . . . . . . 414,224 323,882 647,443 Amortization of deferred expenses . . . . . . . . 661,788 1,570,746 1,421,951 General and administrative. . . . . . . . . . . . 540,647 695,947 781,049 Provision for value impairment. . . . . . . . . . -- 17,600,000 -- ------------ ------------ ------------ 22,254,144 109,601,518 90,484,649 ------------ ------------ ------------ (5,312,815) (40,507,575) (23,721,300) Partnership's share of the reduction of the maximum unfunded obligation under the indemnification agreement . . . . . . . . . . 134,252 -- -- Partnership's share of income (loss) from unconsolidated ventures (including income from restructuring of $78,704,658 in 1996). . . . . . . . . . . . . . . . . . . . . (400,400) 79,070,546 (6,600,158) Venture partners' share of earnings (loss) from consolidated ventures' operations . . . . . . . . (13,305) 3,536,251 4,588,759 ------------ ------------ ------------ Earnings (loss) before gains on sale or disposition of investment properties. . . . . . . . . . . . . . . . (5,592,268) 42,099,222 (25,732,699) Gains (loss) on sale or disposition of investment properties, net of venture partners' share of $14,492,690 and ($329,169) in 1997 and 1996, respectively . . . . . . . . . . . 96,019,552 5,484,249 -- Partnership's share of gain (loss) on sale of property or interest in property of unconsolidated ventures . . . . . . . -- -- (14,789,529) ------------ ------------ ------------ Earnings (loss) before extraordinary items. 90,427,284 47,583,471 (40,522,228) CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED 1997 1996 1995 ------------ ------------ ------------ Extraordinary items . . . . . . . . . . . . . . . . 55,468,888 -- 15,632,407 ------------ ------------ ------------ Net earnings (loss). . . . . . . . . . . . . $145,896,172 47,583,471 (24,889,821) ============ ============ ============ Net earnings (loss) per limited partnership interest: Earnings (loss) before gains on sale or disposition of investment properties. . . . . . . . . . . . . . . . . . $ (14.67) 110.42 (67.47) Gains (loss) on sale or disposition of investment properties. . . . . . . . . . . 259.75 14.83 -- Partnership's share of gain (loss) on sale of property or interest in property of unconsolidated ventures. . . . -- -- (39.99) Extraordinary items . . . . . . . . . . . . . . 150.05 -- 42.27 ------------ ------------ ------------ Net earnings (loss) . . . . . . . . . . . . . $ 395.13 125.25 (65.19) ============ ============ ============ See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
GENERAL PARTNERS LIMITED PARTNERS ------------------------------------------------ ----------------------------------------------------- CONTRI- BUTIONS NET NET OF NET CONTRI- EARNINGS CASH OFFERING EARNINGS CASH BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL ------- ---------- ------------- ----------- ------------ ------------ ------------------------- Balance (deficit) Decem- ber 31, 1994 . . . .$1,000 (20,494,612) (1,039,022)(21,532,634) 326,224,167 (462,331,395) (29,974,889)(166,082,117) Net earn- ings (loss). -- (1,020,879) -- (1,020,879) -- (23,868,942) -- (23,868,942) Cash distri- butions ($30 per limited partnership interest). . -- -- (110,945) (110,945) -- -- (10,983,528)(10,983,528) ------ ----------- ---------- ----------- ----------- ------------ ----------- ----------- Balance (deficit) Decem- ber 31, 1995 . . . . 1,000 (21,515,491) (1,149,967)(22,664,458) 326,224,167 (486,200,337) (40,958,417)(200,934,587) Net earn- ings (loss). -- 1,738,811 -- 1,738,811 -- 45,844,660 -- 45,844,660 ------ ----------- ---------- ----------- ----------- ------------ ----------- ----------- CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED GENERAL PARTNERS LIMITED PARTNERS ------------------------------------------------ ----------------------------------------------------- CONTRI- BUTIONS NET NET OF NET CONTRI- EARNINGS CASH OFFERING EARNINGS CASH BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL ------- ---------- ------------- ----------- ------------ ------------ ------------------------- Balance (deficit) Decem- ber 31, 1996 . . . . 1,000 (19,776,680) (1,149,967)(20,925,647) 326,224,167 (440,355,677) (40,958,417)(155,089,927) Net earn- ings (loss). -- 1,291,194 -- 1,291,194 -- 144,604,978 -- 144,604,978 Cash distri- butions ($25 per limited partner- ship interest). . -- -- -- -- -- -- (9,149,292) (9,149,292) ------ ----------- ---------- ----------- ----------- ------------ ----------- ----------- Balance (deficit) Decem- ber 31, 1997 . . . .$1,000 (18,485,486) (1,149,967)(19,634,453) 326,224,167 (295,750,699) (50,107,709)(19,634,241) ====== =========== ========== =========== =========== ============ ======================= See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ------------ ------------ ------------ Cash flows from operating activities: Net earnings (loss) . . . . . . . . . . . . . . . $145,896,172 47,583,471 (24,889,821) Items not requiring (providing) cash or cash equivalents: Depreciation. . . . . . . . . . . . . . . . . . -- 10,267,305 13,784,147 Amortization of deferred expenses . . . . . . . 661,788 1,570,746 1,421,951 Amortization of discount on long-term debt. . . 166,538 147,795 224,415 Long-term debt - deferred accrued interest. . . 629,639 12,575,684 11,980,846 Partnership's share of income (loss) from unconsolidated ventures (including income from restructuring of $78,704,658 in 1996). . 400,400 (79,070,546) 6,600,158 Partnership's share of the reduction of the maximum unfunded obligation . . . . . . . . . (134,252) -- -- Venture partners' share of ventures' operations. . . . . . . . . . . . . . . . . . 13,305 (3,536,251) (4,588,759) Gain on sale or disposition of investment properties, net of venture partner's share. . (96,019,552) (5,484,249) -- Net asset decrease resulting from the sale of investment properties . . . . . . . . 442,505 -- -- Extraordinary items . . . . . . . . . . . . . . (55,468,888) -- (15,632,407) Partnership's share of (gain) loss on sale of property or interest in property of unconsolidated ventures. . . . . . . . . . -- -- 14,789,529 Provision for value impairment. . . . . . . . . -- 17,600,000 -- Working capital decrease related to sale of interest in investment property . . . . . . . (2,318,702) -- -- Changes in: Restricted funds. . . . . . . . . . . . . . . . 735,933 256,854 (828,006) Interest, rents and other receivables . . . . . (315,451) 356,584 151,462 Prepaid expenses. . . . . . . . . . . . . . . . 11,823 26,688 29,086 Escrow deposits . . . . . . . . . . . . . . . . 1,729,227 (5,439,699) (126,335) Accrued rents receivable. . . . . . . . . . . . (30,334) 42,566 24,380 Accounts payable. . . . . . . . . . . . . . . . (1,496,748) 576,025 839,886 Unearned rents. . . . . . . . . . . . . . . . . (266,390) 1,099,239 (17,800) Accrued interest. . . . . . . . . . . . . . . . 5,421,141 4,476,029 4,140,326 Accrued real estate taxes . . . . . . . . . . . (1,474,691) 321,108 (425,059) Amounts due to affiliates . . . . . . . . . . . (1,573,492) 789,399 (9,960,695) Tenant security deposits. . . . . . . . . . . . (386,996) (846,950) 938,939 ------------ ------------ ------------ Net cash provided by (used in) operating activities. . . . . . . . . . (3,377,025) 3,311,798 (1,543,757) ------------ ------------ ------------ CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1997 1996 1995 ------------ ------------ ------------ Cash flows from investing activities: Cash proceeds from sale of investment properties, net of selling expenses . . . . . . 19,329,753 1,651,689 -- Additions to investment properties. . . . . . . . (2,494,608) (4,337,187) (3,246,082) Net sales and maturities (purchases) of short-term investments . . . . . . . . . . . -- 2,194,244 16,391,657 Partnership's distributions from unconsolidated ventures . . . . . . . . . . . . -- 1,679,901 1,186,046 Partnership's contributions to unconsolidated ventures . . . . . . . . . . . . -- (2,009,693) -- Payment of deferred expenses. . . . . . . . . . . (357,657) (1,575,688) (1,531,975) ------------ ------------ ------------ Net cash provided by (used in) investing activities. . . . . . . . . . 16,477,488 (2,396,734) 12,799,646 ------------ ------------ ------------ Cash flows from financing activities: Proceeds from refinancing of long-term debt . . . -- -- 14,900,000 Principal payments on long-term debt. . . . . . . (453,087) (793,083) (18,705,089) Venture partners' contributions to ventures . . . -- -- -- Distributions to limited partners . . . . . . . . (9,149,292) -- (10,983,528) Distributions to general partners . . . . . . . . -- -- (110,945) ------------ ------------ ------------ Net cash provided by (used in) financing activities. . . . . . . . . . (9,602,379) (793,083) (14,899,562) ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents. . . . . . . . . . 3,498,084 121,981 (3,643,673) Cash and cash equivalents, beginning of year . . . . . . . . . . . 6,030,217 5,908,236 9,551,909 ------------ ------------ ------------ Cash and cash equivalents, end of year . . . . . . . . . . . . . . $ 9,528,301 6,030,217 5,908,236 ============ ============ ============ CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1997 1996 1995 ------------ ------------ ------------ Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest . . . . $ 3,652,067 21,830,425 22,733,319 ============ ============ ============ Non-cash investing and financing activities: Reduction in investment in unconsolidated venture $ 400,000 800,000 -- ============ ============ ============ Reduction in amounts due to affiliates. . . . . $ -- (800,000) -- ============ ============ ============ Non-cash investing and financing activities: Activity due to sale of investment properties: Reduction of fixed assets, net of accumulated depreciation . . . . . . . . . . . . . . . . . $225,785,579 -- -- Reduction of working capital. . . . . . . . . . 9,495,504 -- -- Reduction of security deposits. . . . . . . . . (158,400) -- -- Reduction of deferred expenses. . . . . . . . . 4,609,869 -- -- Reduction of long-term debt . . . . . . . . . . (386,383,929) -- -- Venture partners' share of gain . . . . . . . . 14,492,690 -- -- Gain on sale or disposition of interest in investment properties, net of venture partners' share. . . . . . . . . . . . . . . . . . . . . 96,019,552 -- -- Extraordinary items . . . . . . . . . . . . . . 55,468,888 -- -- ------------ ------------ ------------ Cash sales proceeds from sale of investment properties, net of selling expenses . . . . . $ 19,329,753 -- -- ============ ============ ============ See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997, 1996 AND 1995 OPERATIONS AND BASIS OF ACCOUNTING GENERAL The Partnership holds (either directly or through joint ventures) an interest in certain real estate investments. Business activities consist of rentals to a variety of commercial companies, and the ultimate sale or disposition of such real estate. Of its four remaining investment properties at December 31, 1997, one has been sold and another is expected to be transferred to the lender during 1998. The two other investment properties of the Partnership at December 31, 1997 are its indirect interests in the 237 Park Avenue and the 1290 Avenue of the Americas properties. The accompanying consolidated financial statements include the accounts of the Partnership and its consolidated ventures - Copley Place Associates ("Copley Place") (sold January 23, 1997); Carrollwood Station Associates, Ltd. ("Carrollwood") (sold March 2, 1998), Jacksonville Cove I Associates, Ltd. ("Glades") (sold November 21, 1996); and Sherry Lane Associates ("Sherry Lane") (sold September 12, 1997) in which the Partnership has certain preferential claims and rights as discussed below. The effect of all transactions between the Partnership and the consolidated ventures has been eliminated. The Partnership holds an approximate 25% interest in JMB/NYC Office Building Associates, L.P. ("JMB/NYC") which in turn owns an indirect approximate 4.9% interest in commercial real estate in the City of New York, New York consisting of the 237 Park Avenue and 1290 Avenue of the Americas properties (the "Properties"). The equity method of accounting has been applied in the accompanying financial statements with respect to the Partnership's indirect 25% interest in JMB/NYC through Carlyle XIII Associates, L.P. through the confirmation and acceptance of the Amended Plan of Reorganization and Disclosure Statement on October 10, 1996 ("Effective Date"). Accordingly, the financial statements do not include the accounts of JMB/NYC or Carlyle XIII Associates, L.P. The share of income from unconsolidated venture in the accompanying consolidated financial statements includes the Partnership's proportionate share of the operations of the Properties through the Effective Date, as well as income from restructuring, consisting primarily of the reversal of previously recognized losses and adjustments necessary to record the restructuring. During 1996, the Partnership reversed those previously recognized losses resulting from its interest in JMB/NYC that it is no longer obligated to fund due to the conversion of JMB/NYC's general partnership interest in the joint ventures which owned the Properties to a limited partnership interest and the terms of the restructuring. The Partnership has no future funding obligations (other than that related to a certain indemnification agreement provided in connection with the restructuring) and has no influence or control over the day-to-day affairs of the joint ventures which own the Properties subsequent to the Effective Date. Accordingly, the Partnership has discontinued the application of the equity method of accounting for the indirect interests in the Properties and additional losses from the investment in unconsolidated venture will not be recognized. Should the unconsolidated venture subsequently report income, the Partnership will resume applying the equity method on its share of such income only after such income exceeds net losses not previously recognized. The Partnership records are maintained on the accrual basis of accounting as adjusted for Federal income tax reporting purposes. The accompanying consolidated financial statements have been prepared from such records after making appropriate adjustments to present the Partnership's accounts in accordance with generally accepted accounting principles ("GAAP") and to consolidate the accounts of the ventures as described above. Such GAAP and consolidation adjustments are not recorded on the records of the Partnership. The effect of these items for the years ended December 31, 1997 and 1996 is summarized as follows:
1997 1996 ------------------------------ ------------------------------ TAX BASIS TAX BASIS GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED) ------------ ---------- ----------- ---------- Total assets. . . . . . . . . . . . $ 27,600,886 32,752,686 280,595,580 66,129,981 Partners' capital accounts (deficits): General partners . . . . . . . (19,634,453) (6,247,813) (20,925,647) (29,981,225) Limited partners . . . . . . . (19,634,241) (78,092,004) (155,089,927) (263,290,961) Net earnings (loss): General partners . . . . . . . 1,291,194 23,733,412 1,738,811 976,751 Limited partners . . . . . . . 144,604,978 194,348,248 45,844,660 516,267 Net earnings (loss) per limited partnership interest. . . . . . . . . . . . . 395.13 531.05 125.25 1.41 ============ ============ ============ ============
The net earnings (loss) per limited partnership interest is based upon the limited partnership interests outstanding at the end of the period. Deficit capital accounts will result, through the duration of the Partnership, in net gain for financial reporting and Federal income tax purposes. The preparation of financial statements in accordance with GAAP requires the Partnership to make estimates and assumptions that affect the reported or disclosed amount 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. Certain amounts in the 1995 and 1996 financial statements have been reclassified to conform with the 1997 presentation. Statement of Financial Accounting Standards No. 95 requires the Partnership to present a statement which classifies receipts and payments according to whether they stem from operating, investing or financing activities. The required information has been segregated and accumulated according to the classifications specified in the pronouncement. Partnership distributions from unconsolidated ventures are considered cash flow from operating activities only to the extent of the Partnership's cumulative share of net earnings. In addition, the Partnership records amounts held in U.S. Government obligations at cost, which approximates market. For the purposes of these statements, the Partnership's policy is to consider all such amounts held with original maturities of three months or less ($8,528,571 and $5,500,762 at December 31, 1997 and 1996, respectively) as cash equivalents, which includes investments in an institutional mutual fund which holds U.S. Government obligations, with any remaining amounts (generally with original maturities of one year or less) reflected as short-term investments being held to maturity. Deferred expenses were comprised principally of leasing fees which are amortized using the straight-line method over the terms stipulated in the related agreements, and commitment fees which are amortized over the related commitment periods. Although certain leases of the Partnership provide for tenant occupancy during periods for which no rent is due and/or increases in minimum lease payments over the term of the lease, the Partnership accrues prorated rental income for the full period of occupancy on a straight-line basis. No provision for state or Federal income taxes has been made as the liability for such taxes is that of the partners rather than the Partnership. However, in certain instances, the Partnership has been or may be required under applicable law to remit directly to the tax authorities amounts representing withholding from distributions paid to partners. The Partnership acquired, either directly or through joint ventures, nine apartment complexes, three shopping centers, ten office buildings and a multi-use complex. Nineteen properties have been sold or disposed of by the Partnership as of December 31, 1997. All of the remaining properties owned at December 31, 1997 were operating and held for sale or disposition. The Partnership's interest in the Carrollwood Apartments was subsequently sold in March 1998. The cost of the investment properties represents the total cost to the Partnership or its ventures plus miscellaneous acquisi- tion costs. Depreciation on the properties has been provided over the estimated useful lives of the various components as follows: YEARS ----- Building and Improvements -- straight-line . . 30 Personal property -- straight-line . . . . . . 5 == Significant betterments and improvements are capitalized and depreciated over their estimated useful lives. Maintenance and repair expenses are charged to operations as incurred. Statement of Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" was issued in March 1995. The Partnership adopted SFAS 121 as required in the first quarter of 1996. SFAS 121 requires that the Partnership record an impairment loss on its properties to be held for investment whenever their carrying value cannot be fully recovered through estimated undiscounted future cash flows from their operations and sale. The amount of the impairment loss to be recognized would be the difference between the property's carrying value and the property's estimated fair value. The Partnership's policy is to consider a property to be held for sale or disposition when the Partnership has committed to a plan to sell or dispose of such property and active marketing activity has commenced or is expected to commence in the near term or the Partnership has concluded that it may dispose of the property by no longer funding operating deficits or debt service requirements of the property thus allowing the lender to realize upon its security. In accordance with SFAS 121, any properties identified as "held for sale or disposition" are no longer depreciated. Adjustments for impairment loss for such properties (subsequent to the date of adoption of SFAS 121) are made in each period as necessary to report these properties at the lower of carrying value or fair value less costs to sell. In certain situations, such estimated fair value could be less than the existing non-recourse debt which is secured by the property. There can be no assurance that any estimated fair value of these properties would ultimately be realized by the Partnership in any future sale or disposition transaction. Under the prior accounting policy, provisions for value impairment were recorded with respect to investment properties whenever the estimated future cash flows from a property's operations and projected sale were less than the property's carrying value. The amount of any such impairment loss recognized by the Partnership was limited to the excess, if any, of the property's carrying value over the outstanding balance of the property's non-recourse indebtedness. An impairment loss under SFAS 121 is determined without regard to the nature or the balance of such non-recourse indebtedness. Upon the disposition of a property with the related extinguishment of the long-term debt for which an impairment loss has been recognized under SFAS 121, the Partnership would recognize, at a minimum, a net gain for financial reporting purposes (comprised of gain on extinguishment of debt and gain or loss on the sale or disposition of property) to the extent of any excess of the then outstanding balance of the property's non-recourse indebtedness over the then carrying value of the property, including the effect of any reduction for impairment loss under SFAS 121. In addition, upon the disposition of an impaired property, the Partnership would generally recognize more net gain for financial reporting purposes under SFAS 121 than it would have under the Partnership's prior impairment policy, without regard to the amount, if any, of cash proceeds received by the Partnership in connection with the disposition. Although implementation of this accounting statement could significantly impact the Partnership's reported earnings, there would be no impact on cash flows. Further, any such impairment loss would not be recognized for Federal income tax purposes. The results of operations, net of venture partners' share, for consolidated properties classified as held for sale or disposition as of December 31, 1997 or sold or disposed of during the past three years were $(3,727,014), ($26,672,607) and ($9,611,539), respectively, for the years ended December 31, 1997, 1996 and 1995. In addition, the accompanying consolidated financial statements include $0, $581,147 and $194,066, respectively, of the Partnership's share of total property operations of $0, $1,162,294 and $388,131 of unconsolidated properties held for sale or disposition as of December 31, 1997 or sold or disposed of in the past three years. All investment properties are pledged as security for the long-term debt, for which generally there is no recourse to the Partnership. A portion of the long-term debt on the Copley Place multi-use complex represented a mortgage loan which was subordinated to the existing senior mortgage loan. During the second quarter of 1997, Statements of Financial Accounting Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of Information about Capital Structure") were issued. These standards became effective for reporting periods after December 15, 1997. As the Partnership's capital structure only has general and limited partnership interests, the Partnership will not experience any significant impact on its consolidated financial statements. VENTURE AGREEMENTS - GENERAL The Partnership at December 31, 1997 is a party to two operating joint venture agreements. Pursuant to such agreements, the Partnership made initial capital contributions of approximately $46,094,271 (before legal and other acquisition costs and its share of operating deficits as discussed below). In general, the joint venture partners, who are either the sellers (or their affiliates) of the property investments being acquired, or parties which have contributed an interest in the property being developed, or were subsequently admitted to the ventures, make no cash contributions to the ventures, but their retention of an interest in the property, through the joint venture, is taken into account in determining the purchase price of the Partnership's interest, which was determined by arm's-length negotiations. Under certain circumstances, either pursuant to the venture agreements or due to the Partnership's obligations as a general partner, the Partnership may be required to make additional cash contributions to the ventures. The Partnership acquired, through the above ventures, one apartment complex and three office buildings. In most instances, the joint venture partners (who were primarily responsible for constructing the properties) contributed any excess of cost over the aggregate amount available from the Partnership contributions and financing and, to the extent such funds exceeded the aggregate costs, were to retain such excesses. Certain of the venture properties were financed under various long-term debt arrangements as described below. The Partnership in certain cases had a cumulative preferred interest in net cash receipts (as defined) from the properties. Such preferential interest related to a negotiated rate of return on contributions made by the Partnership. After the Partnership received its preferential return, the venture partner was generally entitled to a non-cumulative return on its interest in the venture; net cash receipts were generally shared in a ratio relating to the various ownership interests of the Partnership and its venture partners. During 1997, 1996 and 1995, one, two and two, respectively, of the ventures' properties produced net cash receipts. In addition, the Partnership in certain cases has preferred positions (related to the Partnership's cash investment in the ventures) with respect to distribution of sale or refinancing proceeds from the ventures. In general, operating profits and losses are shared in the same ratio as net cash receipts; however, if there are no net cash receipts, substantially all profits or losses are allocated to the partners in accordance with their respective economic interest. Physical management of the properties generally was performed by affiliates of the venture partners during the development period and rent-up period. The managers were responsible for cash flow deficits (after debt service requirements). Compensation to the managers during such periods for management and leasing was limited to specified payments made by the ventures, plus any excess net cash receipts generated by the properties during the periods. Thereafter, the management agreements generally provide for an extended term during which the management fee is calculated as a percentage of certain types of cash income from the property. There are certain risks associated with the Partnership's investments made through joint ventures including the possibility that the Partnership's joint venture partners in an investment might become unable or unwilling to fulfill their financial or other obligations, or that such joint venture partners may have economic or business interests or goals that are inconsistent with those of the Partnership. INVESTMENT PROPERTIES LONG BEACH PLAZA The Partnership purchased Long Beach Plaza located in Long Beach, California for $45,839,458 (net of discount on long-term debt of $10,330,542). The Partnership has not remitted all of the scheduled debt service payments for the mortgage loan secured by the Long Beach Plaza Shopping Center since June 1993. Accordingly, the combined balances of the mortgage note and related accrued interest of approximately $52,009,000 at December 31, 1997 and approximately $47,624,000 at December 31, 1996 have been classified as current liabilities in the accompanying consolidated financial statements. The Partnership had initiated discussions with the first mortgage lender regarding a modification of its mortgage loan secured by the property, which was originally due in June 1994. The lender agreed to a short-term loan extension until August 31, 1995. The Partnership has been unable to secure a modification or further extension to the loan. The Partnership decided not to commit any significant additional amounts to the property. In March 1996, a receiver for the property was appointed for the benefit of the lender. As a result, the Partnership was required to submit to the lender approximately $1,000,000 of prior years' cash generated from the property. Title is expected to be transferred in 1998 as a formal notice of the lender's intent to realize upon its security was received by the Partnership in March 1997. This will result in the Partnership no longer having an ownership interest in such property and will result in gain for financial reporting and Federal income tax purposes to the Partnership with no corresponding distributable proceeds in 1998. On adoption of SFAS 121 as described above, the Partnership recorded a provision for value impairment of $13,100,000 as of January 1, 1996 to reflect the then estimated fair value of the property based upon the use of an appropriate capitalization rate on the property's net operating income. As of July 1, 1996, the Partnership classified this property as held for sale or disposition in the accompanying consolidated financial statements. The property was not subject to continuing depreciation. On December 31, 1996, the Partnership recorded an additional provision for value impairment of $4,500,000 to revise the estimated fair value, less costs to sell, of the property based on current net operating income. COPLEY PLACE On January 23, 1997, through a series of transactions, the Partnership sold its entire partnership interest in Copley Place Associates as described below. The Partnership acquired in 1983, through a joint venture ("Copley Place Associates") with the developer, an interest in a portion of Copley Place, a multi-use complex in Boston, Massachusetts. Initially, the Partnership purchased its joint venture interest in the complex from the developer for consideration which included a purchase price note secured by the Partnership's interest in the joint venture. The purchase price note (the "Note") with an original balance of $20,000,000, bore interest at 11.5% per annum on a compounded basis. The unpaid balance of the Note at December 31, 1996 was $88,554,145. The Partnership had also made total cash contributions of $60,000,000 for its interest in Copley Place Associates. In December 1984, an affiliate of the Corporate General Partner of the Partnership acquired ownership of the joint venture partner. As a result of such transaction, and subsequent assignments, the Note was held by an affiliate of the Corporate General Partner at December 31, 1996. The joint venture partner was obligated to fund (through capital contributions and loans, as defined) any deficiency in the Partnership's guaranteed return to 1989 and any operating deficits (as defined). Commencing January 1, 1990, the Partnership was entitled to a preferred return of $6,000,000 per year through December 31, 1991 of any available cash flow. The joint venture partner was obligated through December 31, 1991 to loan amounts to pay for any operating deficits (as defined). The joint venture partner had loaned approximately $13,648,000 through December 31, 1996 to fund its required obligation. The loans (the "Deficit Loans") accrued interest at the contract rate based on the joint venture partner's line of credit. The line of credit bore interest at a floating rate (averaging 7.57% per annum at December 31, 1996). The outstanding principal and accrued interest were to be repaid from future available cash flow, as defined. During 1996 and 1995, the joint venture paid approximately $225,000 and $1,518,000, respectively, of accrued interest on these loans. In May 1996, the venture used approximately $945,000 of Copley Place pre-loan modification cash reserves to repay a 1996 advance of approximately $720,000 from the joint venture partner with the remaining balance applied to accrued interest on the operating deficit loans discussed above. Operating profits and losses of the joint venture were allocated 50% to the Partnership and 50% to the joint venture partner. The joint venture agreement further provided that, in general, upon any sale or refinancing of the complex the first $60,000,000 of net proceeds would be distributed equally between the Partnership and the joint venture partner. The Partnership would then be entitled to receive an amount equal to any cumulative deficiencies of its annual preferred return of cash flow for 1990 and 1991 (balance at December 31, 1996 was $12,000,000). The Partnership would then be entitled to receive the next $190,000,000 plus an amount equal to certain interest which had been paid or was payable to the developer and its successors on the Note. The joint venture partner would have been entitled to receive the next $190,000,000 plus an amount equal to certain interest paid to it on the Note, with any remaining proceeds distributable equally to the Partnership and the joint venture partner. However, the Partnership was obligated to use its share of any sale or refinancing proceeds to satisfy, in full, the Note payable to the joint venture partner. The joint venture modified the existing first mortgage note effective March 1, 1992. The modification lowered the pay rate from 12% to 7-1/2% per annum through August 1998. The contract rate was lowered to 10% per annum through August 1993 and, further reduced to 8-1/2% per annum through August 1998. After each monthly payment, the difference between the contract interest rate on the outstanding principal balance on the loan, including the difference between deferred interest and interest paid at the applicable pay rate (as defined), was added to the principal balance and accrued interest at the contract interest rate. On September 1, 1996, the joint venture elected to pay mortgage interest using the contract rate of 8.5% rather than the pay rate of 7.5%. All outstanding principal, including the unpaid deferred interest, was due and payable on August 31, 1998. Any cash flow from the property, after all capital and leasing expenditures, but before payment of a portion of the property management fees, was escrowed for the purpose of paying for future capital and leasing requirements. As a result of the debt modification, the property produced cash flow since 1993. This cash flow had been escrowed for future potential capital and leasing requirements as set forth in the loan modification. From and after 1986, substantially all of the joint venture partner's interest in the joint venture was owned by the Corporate General Partner. An affiliate of the Corporate General Partner managed the portion of the complex owned by the joint venture. During 1996, the Partnership and Copley Place Associates had committed to a plan to sell the property, and therefore, classified the property as held for sale at October 1, 1996. The property was not subject to continued depreciation as of such date. In 1996, the joint venture determined that receivables due from an affiliate were uncollectible. As a result, the joint venture wrote off these amounts in 1996. The Partnership's outstanding obligations on the Note and for the Deficit Loans, and the projected continuing accruals of additional interest on such amounts made it unlikely that the Partnership's interest in Copley Place Associates would ever be sold for an amount which would result in any net proceeds to the Partnership. In order to provide the Partnership with incentive to consummate the sale of its interest, the joint venture partner, the holder of the Note and the Partnership executed an agreement whereby the net proceeds were distributed in a manner which permitted the Partnership to satisfy its obligations relative to the Note and the Deficit Loans and still realize some modest cash proceeds. In addition, the holder of the Note agreed on a discounted payoff of the Note. In general, the Partnership received $43,900,000 of sale proceeds, of which $34,000,000 was remitted to the holder of the Note as payment in full satisfaction of the Note. As a result, the Partnership was relieved of an approximately $55,000,000 obligation. The Partnership's obligation under the Deficit Loans were next satisfied in full out of the Partnership's remaining sale proceeds. After the repayment of the Note and Deficit Loans, as discussed above, the Partnership's remaining net proceeds amounted to approximately $929,000, all of which was received in cash at closing. The Partnership has retained these funds as necessary working capital reserves. The effect on the Partnership's consolidated financial statements as a result of the sale was to eliminate the Partnership's investment in Copley Place Associates and to recognize a gain on sale of the Partnership's interest in the consolidated venture of approximately $71,277,000 and a gain on the forgiveness of indebtedness of approximately $55,184,000 for financial reporting purposes in 1997. The Partnership also recognized a gain on the sale of approximately $171,500,000 for Federal income tax purposes in 1997. JMB/NYC JMB/NYC is a limited partnership among Carlyle-XIII Associates, L.P., Carlyle-XIV Associates, L.P. and Property Partners, L.P. as limited partners and Carlyle Managers, Inc. as the sole general partner. The Partnership is a 20% shareholder of Carlyle Managers, Inc. and related to this investment, the Partnership has an obligation to fund, on demand, $200,000 (reduced from $600,000 during 1996) of additional paid-in capital to Carlyle Managers, Inc. (reflected in amounts due to affiliates in the accompanying financial statements). The Partnership currently holds, indirectly as a limited partner of Carlyle-XIII Associates, L.P., an approximate 25% limited partnership interest in JMB/NYC. The sole general partner of Carlyle-XIII Associates, L.P. is Carlyle Investors, Inc., of which the Partnership is a 20% shareholder. Related to this investment, the Partnership has an obligation to fund, on demand, $200,000 (reduced from $600,000 during 1996) of additional paid-in capital (reflected in amounts due to affiliates in the accompanying financial statements). The general partner in each of JMB/NYC and Carlyle-XIII Associates, L.P. is an affiliate of the Partnership. In October 1994, the Partnership and its affiliated partners (together with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered into an agreement (the "Agreement") with the affiliates (the "Olympia & York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the venture partners in the joint ventures (the "Joint Ventures") which owned 237 Park Avenue, 1290 Avenue of the Americas and 2 Broadway, to resolve certain disputes among the Affiliated Partners and the Olympia & York affiliates. In general, the parties agreed to: (i) restructure the first mortgage loan; (ii) sell the 2 Broadway Building; (iii) reduce or eliminate approval rights of JMB/NYC with respect to virtually all property management, leasing, sale or refinancing; (iv) amend the Joint Ventures' agreements to eliminate any funding obligations by JMB/NYC and (v) establish a new preferential cash distribution level for the Olympia & York affiliates. In accordance with the Agreement and in anticipation of the sale of the 2 Broadway Building, the unpaid first mortgage indebtedness previously allocated to 2 Broadway was allocated in 1994 to 237 Park Avenue and 1290 Avenue of the Americas. As part of the Agreement, JMB/NYC and the Olympia & York affiliates agreed to file a pre-arranged bankruptcy plan for reorganization under Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and the debt encumbering the two properties remaining after the sale of 2 Broadway. In June 1995, the 2 Broadway Joint Ventures filed their pre- arranged bankruptcy plans for reorganization, and in August 1995, the bankruptcy court entered an order confirming their plans of reorganization. In September 1995, the sale of the 2 Broadway Building was completed. Such sale did not result in any distributable proceeds to JMB/NYC or the Olympia & York affiliates. Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue and 1290 Avenue of the Americas properties were made in April 1996, and in August 1996, an Amended Plan of Reorganization and Disclosure Statement (the "Plan") was filed with the Bankruptcy Court for these Joint Ventures. The Plan was accepted by the various classes of debt and equity holders and confirmed by the Court on September 20, 1996 and became effective October 10, 1996 ("Effective Date"). The Plan provides that JMB/NYC has an indirect limited partnership interest which, before taking into account significant preferences to other partners, equals approximately 4.9% of the reorganized and restructured ventures owning 237 Park and 1290 Avenue of the Americas. Neither O&Y nor any of its affiliates has any direct or indirect continuing interest in the Properties. The new ownership structure gives control of the Properties to an unaffiliated real estate investment trust ("REIT") which is owned primarily by holders of the first mortgage debt which encumbered the Properties prior to the bankruptcy. JMB/NYC has, under certain limited circumstances, through January 1, 2001 rights of consent regarding sale of the Properties or the consummation of certain other transactions that significantly reduce indebtedness of the Properties. The restructuring and reorganization discussed above eliminates any potential additional obligation of the Partnership in the future to provide additional funds under its previous joint venture agreements(other than that related to a certain indemnification agreement provided in connection with the restructuring). Pursuant to the indemnification agreement, the Affiliated Partners are jointly and severally obligated to indemnify, through a date no later than January 2, 2001, the REIT to the extent of $25 million to ensure their compliance with the terms and conditions relating to JMB/NYC's indirect limited partnership interest in the restructured and reorganized joint ventures that own the Properties. The Affiliated Partners contributed approximately $7.8 million (of which the Partnership's share was approximately $1.9 million) to JMB/NYC which was deposited into an escrow account as collateral for such indemnification. These funds have been invested in stripped U.S. Government obligations with a maturity date of February 15, 2001. The Partnership's share of the reduction of the maximum unfunded obligation under the indemnification agreement recognized as income, is a result of interest earned on amounts contributed by the Partnership and held in escrow by JMB/NYC. Such income earned reduces the Partnership's share of the maximum unfunded obligation under the indemnification agreement, which is reflected as a liability in the accompanying financial statements. The provisions of the indemnification agreement generally prohibit the Affiliated Partners from taking any actions that could have an adverse effect on the operations of the REIT. Compliance, therefore, is within the control of the Affiliated Partners and non-compliance with such provisions by either the Partnership or the other Affiliated Partners is highly unlikely. Therefore, it is highly likely that the Partnership's share of the collateral will be returned (including interest earned) at the termination of the indemnification agreement. ORCHARD ASSOCIATES The Partnership's interest in Old Orchard Shopping Center (through Orchard Associates and Old Orchard Urban Venture ("OOUV") was sold in September 1993. OOUV could have received reimbursement, under certain conditions, of up to an additional $3,400,000 (of which Orchard Associates had a 79.1667% interest) of previously incurred development costs based upon certain future earnings of the property (as defined). In December 1996, OOUV received a final settlement of $2,450,000 (of which the Partnership's share was $969,796) of such development costs related to the sale of the Old Orchard Shopping Center. At the time of redemption, OOUV retained a portion of the Orchard Associates redemption proceeds in order to fund certain contingent amounts which may have been due in the future. In July 1995, OOUV distributed to Orchard Associates a significant portion of its redemption holdback of $2,083,644. As a result, the Partnership received its share of the holdback of $1,041,820. In October 1995, OOUV distributed to Orchard Associates its share of the pre-sale settlement with Federated Department Stores of $288,452. As a result, Orchard Associates distributed to the Partnership its share of the settlement of $144,226. In 1996, OOUV distributed to Orchard Associates proceeds of $1,389,210 from the settlement of operating prorations. As a result, Orchard Associates distributed $694,605 to the Partnership representing its share of such operating prorations. The Partnership intends to retain these funds for working capital purposes. OOUV and Orchard Associates had also entered into a contribution agreement whereby they agreed to share future gains and losses which may arise with respect to potential revenues and liabilities from events which predated the contribution of the property to the new venture (including, without limitation the distribution to OOUV of the potential future distribution of $3,400,000 as described above) in accordance with their pre-contribution percentage interests. In December 1996, Orchard received its share of the earn out provision of $2,450,000, as discussed above, and distributed to each of the respective partners their share ($969,796 to the Partnership) of such amount. The Partnership recognized a gain of $870,837 for financial reporting purposes and for Federal income tax purposes in 1996. SHERRY LANE PLACE OFFICE BUILDING Pursuant to a contract entered into in July, 1997, on September 12, 1997, the Partnership, through Sherry Lane Associates, sold the Sherry Lane Place Office Building to an unaffiliated third party for $44,000,000 (before selling costs and prorations) all of which was paid in cash at closing. After repayment of the mortgage notes securing the property (approximately $41,171,000, including contingent interest (as defined)), the Partnership realized net proceeds of approximately $2,653,000. The sale resulted in a gain of approximately $18,300,000 to the Partnership in 1997 for financial reporting purposes. The Partnership recognized a gain of approximately $29,600,000 for Federal income tax purposes in 1997. Pursuant to the Sherry Lane Associates venture agreement, substantially all of the net proceeds from the sale has been distributed to the Partnership. In connection with the sale of this property and as is customary in such transactions, Sherry Lane Associates agreed to certain representations and warranties, with a stipulated survival period which expired December 15, 1997 with no liability to the Partnership. In November 1993, the Partnership reached an agreement with the current lender to further modify the existing long-term non-recourse mortgage note secured by the property. Under the terms of the remodification, the existing mortgage balance was divided into two notes. The first note of $22,000,000 bore a contract interest rate of 8% per annum for the period retroactive from January 1, 1993 through December 31, 1994, and increased to 8.5% per annum for the period from January 1, 1995 through April 1, 1998. Interest only was payable on the first note at 5.75% per annum for the period retroactive to January 1, 1993 through December 31, 1993, at 8% per annum from January 1, 1994 through December 31, 1994 and at 8.5% per annum from January 1, 1995 through April 1, 1998. The second note, consisting of the remaining unpaid principal and accrued interest, had a zero pay and accrual rate. All excess cash flow above debt service on the first note was to be applied first against accrued interest on the first note and then as contingent interest on the second note (as defined). The Partnership had committed to a plan to sell or dispose of Sherry Lane Place office building, and accordingly, as of December 31, 1996, the Partnership classified this property as held for sale or disposition in the accompanying Consolidated Financial Statements, and therefore, the property was not subject to continued depreciation after such date. CARROLLWOOD STATION APARTMENTS In September 1993, the joint venture refinanced with an unaffiliated third party lender the existing $7,200,000 mortgage loan with a new loan in the amount of $7,455,000, which was scheduled to mature in August 1998. In addition, the venture was obligated to establish an escrow account for future capital improvements. The escrow account was initially funded by the Partnership's capital contribution to the venture and has been subsequently funded by the operations of the joint venture. At December 31, 1997, the escrow account balance is approximately $108,000 and no amounts have been withdrawn. As of the date of sale of the Partnership's interest in the property as described below, any rights of the Partnership to the escrow were assigned to the unaffiliated venture partner. In April 1996, the property manager (an affiliate of the Partnership's joint venture partner in the property) of the apartment complex notified the Partnership of potential sub-terranean termite damage at the property. This damage was discovered as a result of a wood replacement project that was undertaken to prepare the property to market for sale. The property manager obtained three competitive bids to repair the damage, each of which totaled approximately $1,400,000 (all bids were received prior to the tear out and reconstruction of the prototype building as discussed below). The exterminating company that had been treating the property for several years was notified of the extensive damage and was negotiating with the property manager and the venture partners its liability regarding the damage. In August 1996, the joint venture, in conjunction with the exterminating company, reached an agreement whereby one of the complex's twenty-seven buildings was chosen as a prototype building to better survey the termite damage. This building was analyzed and repaired at a total cost of $69,430. The joint venture and the exterminating company then commenced negotiating regarding a possible settlement for the entire complex. In December 1996, the exterminating company notified the Partnership of its desire to schedule a mediation between the parties in order to resolve certain disputes regarding the repair costs. On March 19, 1997, the joint venture and the exterminating company settled these issues and agreed on a settlement in the amount of $637,500, which was received by the joint venture in full in April 1997. Such amount and the related costs of repair have been reflected in the accompanying consolidated financial statements. Upon receipt of the settlement amount, the joint venture commenced the tear-out and reconstruction of the remainder of the property, which was completed in July 1997. The amount received from the settlement covered substantially all costs of repair. The joint venture committed to a plan to sell or dispose of Carrollwood Station Apartments. Accordingly, as of December 31, 1996, the joint venture classified this property as held for sale or disposition in the accompanying Consolidated Financial Statements, and therefore, the property was not subject to continued depreciation after such date. In October 1997, the joint venture reached an agreement in principle for the sale of Carrollwood Station Apartments to an unaffiliated buyer. In December 1997, the Partnership entered into a contract with the unaffiliated buyer. As provided in the Carrollwood joint venture agreement, the unaffiliated venture partner, Lincoln Property Company No. 600, Ltd. ("Lincoln"), held the right of first refusal to purchase the Partnership's interest in Carrollwood in the event the Partnership secured a buyer for the Property. On March 2, 1998, Lincoln purchased the Partnership's interest in Carrollwood for $4,642,140, which approximates the share of proceeds that the Partnership would have received from a sale to the unaffiliated buyer. The sale of the Partnership's interest will result in a gain to the Partnership for both financial reporting and Federal income tax purposes in 1998 of approximately $5,000,000 and $8,000,000, respectively. MICHAEL'S (MARSHALL'S) AURORA PLAZA The long-term note secured by the Michael's Aurora Plaza shopping center located in Aurora, Colorado reached its scheduled maturity in June 1993. The Partnership continued remitting debt service under the original terms of the loans until January 1994, when the Partnership reached an agreement with the current lender to modify and extend the existing long- term note. The modification, which became effective in November 1993, lowered the pay and accrual rates from 12.75% per annum to 8.375% per annum and extended the loan for a three year period to November 1996. Concurrent with the closing of the modification, the Partnership paid down the existing mortgage balance in the amount of $250,000. The Partnership initiated discussions with the first mortgage lender for a short-term extension of the mortgage loan. The lender agreed to a short-term loan extension until June 2, 1997 with the payment of a loan extension fee (paid on November 1, 1996) equal to 1.25% of the outstanding balance of approximately $5,368,000 or $67,100. In June 1997, the Partnership initiated discussions with the lender for a further extension of the mortgage loan. The mortgage note was extended by the lender on a short- term basis to allow the Partnership to complete the negotiations to sell the property as described below. During the extension period, the annual interest rate increased to 9.375% through September 1, 1997 then reverted to the original 9.02% per annum rate through the date of sale. As of December 31, 1996, the Partnership committed to a plan to sell or dispose of Michael's Aurora Plaza. Accordingly, the Partnership classified this property as held for sale or disposition in the accompanying Consolidated Financial Statements, and therefore, the property was not subject to continued depreciation after such date. In August 1997, the Partnership entered into a contract to sell the property to an unaffiliated buyer. Pursuant to the contract, on October 15, 1997, the Partnership sold the land and related improvements of the Michael's Aurora Plaza. The sale price was $6,885,000 all of which was paid in cash at closing (net of selling costs). The Partnership used a substantial portion of the proceeds to repay the existing mortgage note of approximately $5,045,000, and the Partnership realized net proceeds of approximately $1,600,000. In February 1998, the Partnership made a sales distribution totaling $1,829,858 (approximately $5 per Interest) out of sales proceeds related to the sale of Michael's and prior undistributed sales proceeds. The sale resulted in a gain in 1997 to the Partnership of approximately $819,000 for financial reporting purposes and approximately $4,176,000 for Federal income tax purposes. In addition, in connection with the sale of this property and as is customary in such transactions, the Partnership agreed to certain representations and warranties, with a stipulated survival period which expires June 15, 1998. Although it is not expected, the Partnership may ultimately have some liability under such representations and warranties. FIRST TENNESSEE PLAZA (PLAZA TOWER) The first mortgage loan secured by the First Tennessee Plaza office building property matured on November 1, 1994. The Partnership reached an agreement for a short-term extension until January 1, 1995 upon paying a $15,000 extension fee to the existing lender. During January 1995, the Partnership reached another agreement with the existing lender for an extension until March 31, 1995 provided the Partnership pay down the principal balance by $1,500,000 and find an alternative source of financing. The Partnership continued to remit debt service during this period under the existing loan terms. In April 1995, the Partnership agreed with a new third party lender to refinance approximately $14,900,000 of the existing mortgage note. As such, the Partnership paid the previous mortgage lender another $1,100,000 on the existing mortgage note in order to further extend the loan until the refinancing closed. The refinancing closed in April 1995 and there were no distributable proceeds available. The Partnership committed to a plan to sell or dispose of First Tennessee Plaza office building. Accordingly, as of December 31, 1996, the Partnership classified this property as held for sale or disposition in the accompanying Consolidated Financial Statements, and therefore, the property was not subject to continued depreciation after such date. On September 19, 1997, the Partnership sold the land, related improvements, and personal property of the First Tennessee Plaza Office Building to an unaffiliated third party for $29,200,000 (before selling costs and prorations) all of which was paid in cash at closing. After repayment of the mortgage note securing the property (approximately $15,079,000), the Partnership realized net proceeds of approximately $13,462,000. The sale resulted in a gain of approximately $5,347,000 to the Partnership in 1997 for financial reporting purposes. The Partnership recognized a gain of approximately $20,131,000 for Federal income tax purposes in 1997. In connection with the sale of this property and as is customary in such transactions, the Partnership agreed to certain representations and warranties, with a stipulated survival period which expired December 15, 1997 with no liability to the Partnership. ALLIED AUTOMOTIVE CENTER On October 10, 1990, the Partnership sold the land, building, and related improvements of the Allied Automotive Center located in Southfield, Michigan. The Partnership had retained title to a defined 1.9 acre piece of land (the "Parcel"). During the buyer's due diligence investigation, the buyer found traces of contamination located on a portion of the Parcel as well as on a portion of the land owned by two affiliated selling entities. It was subsequently determined that such contamination was most likely the result of certain activities of the previous owner. As a result, the purchase price was reduced by approximately $682,000 for the Partnership's excluded land. The land was to be purchased by the buyer after the environmental clean-up was completed. During 1996, the Partnership was informed that certain regulatory agencies approved the clean-up of the site that had been performed and approved the shut-down of the clean-up operation. On March 12, 1997, the Partnership sold the Parcel for approximately $682,000. The sale of this Parcel resulted in a gain for financial reporting and Federal income tax purposes of approximately $542,000 in 1997. THE GLADES APARTMENTS The joint venture had been marketing the Glades Apartments for sale. The property was classified as held for sale or disposition as of April 1, 1996, and therefore, was not subject to continued depreciation after such date. In July 1996, the joint venture signed a letter of intent to sell the property to an unaffiliated third party. On November 21, 1996, the Partnership sold the land and related improvements of the Glades Apartments. The sale price was $12,900,000 (before selling costs). The sale price was represented by the buyer's assumption of the first mortgage loan which, at closing, had an outstanding principal balance of $9,640,000, the payoff of the second mortgage which, at closing, had an outstanding principal balance of $1,187,420, and approximately $298,450 in brokerage commissions and selling expenses in connection with the sale. The balance of the purchase price was paid in cash at closing. The Partnership recognized a gain of $4,616,259 for financial reporting purposes and $8,135,436 for Federal income tax purposes in 1996. LONG-TERM DEBT Long-term debt consists of the following at December 31, 1997 and 1996:
1997 1996 ----------- ----------- 11.5% purchase price note payable to an affiliate; secured by Partnership's interest in the joint venture that owned Copley Place multi-use complex in Boston, Massachusetts; accruing interest through August 31, 1998 when the entire balance was payable (satisfied in January, 1997 at sale) . . . . . . . . . . . . . . . . . . . . . $ -- 88,554,145 8.5% mortgage note (the note has been modified; due August 1998; secured by Copley Place multi-use complex in Boston, Massachusetts; balance originally payable in monthly installments of principal and interest of $2,184,042 through September 30, 1993 and $1,306,321 through August 31, 1996 and $1,562,215 thereafter (assumed by the purchaser of the property in January, 1997) . . . . . . . . . . . . . . . . . . . . . . . . . -- 219,052,858 9.02% mortgage note; secured by the Plaza Tower office building, payable monthly, interest only, until October 2000 when the principal and any accrued interest is due, (retired at sale of the property in September, 1997) . . . . . . . . . . . . . . . . -- 14,900,000 8.5% mortgage note; secured by the Sherry Lane Place office building in Dallas, Texas; payable in monthly installments of interest only until April 1, 1998 when the remaining principal balance is payable (as remodified), (retired at sale of the property in September, 1997). . . . . . . . . . . . . . . . . . . . -- 22,000,000 Contingent interest note; secured by the Sherry Lane Place office building in Dallas, Texas; contingent interest due annually equal to the excess cash flow of the property (as defined); due April 1, 1998, (retired at sale of the property in September, 1997). . . . . . . . -- 18,003,538 13% mortgage note (in default) secured by the Long Beach Plaza shopping center in Long Beach, California; payable in monthly installments of principal and interest of $372,583 originally due June 27, 1994 and subsequently extended to August 31, 1995 when the remaining principal balance of $33,734,354 was payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,734,354 33,734,354 1997 1996 ----------- ----------- Other mortgage loans: Long Beach Plaza Shopping Center, non-interest bearing, (net of $8,520,321 and $8,686,860 unamortized discount at 12% at December 31, 1997 and 1996, respectively), due 2014. . . . . . 1,479,679 1,313,140 Michael's (Marshall's) Aurora Plaza Shopping Center, 8.375%; payable in monthly installments of principal and interest until November 1, 1996 and subsequently extended to the sale date of the property (October 15, 1997) when the remaining principal balance was paid from proceeds of the sale . . . . . . . . . . . . . . . . . . . . -- 5,282,757 Carrollwood apartment complex, 7.45%, due August 1998 (retired in full at sale of the Partnership's interest in the property in March 1998) . . . . . . . . . . . . . 6,626,721 6,842,195 Other (satisfied in January 1997) . . . . . . . . . . . . . . . . . -- 13,648,432 ------------ ----------- Total debt. . . . . . . . . . . . . . . . . . . . . . . . . 41,840,754 423,331,419 Less current portion of long-term debt. . . . . . . . . . . 40,361,075 39,232,585 ------------ ----------- Total long-term debt. . . . . . . . . . . . . . . . . . . . $ 1,479,679 384,098,834 ============ ===========
In addition, accrued interest of $18,274,822 and $13,889,356 is in default related to the mortgage note secured by the Long Beach Shopping Center at December 31, 1997 and 1996, respectively, which is not included in the above long-term debt. Included in the above total long-term debt is $0, $84,795,053 and $72,714,370 for 1997, 1996 and 1995, respectively, which represents mortgage interest accrued but not currently payable pursuant to the terms of the various notes. Five year maturities of long-term debt are as follows: 1998 . . . . . . . . . . . . . . $ 40,361,075 1999 . . . . . . . . . . . . . . -- 2000 . . . . . . . . . . . . . . -- 2001 . . . . . . . . . . . . . . -- 2002 . . . . . . . . . . . . . . ============ PARTNERSHIP AGREEMENT Pursuant to the terms of the Partnership Agreement, net profits and losses of the Partnership from operations are allocated 96% to the Holders of Interests and 4% to the General Partners. Profits from the sale of investment properties are to be allocated to the General Partners to the greatest of (i) 1% of such profits, (ii) the amount of cash distributions to the General Partners, or (iii) an amount which will reduce the General Partners' capital account deficits (if any) to a level consistent with the gain anticipated to be realized from the sale of properties. Losses from the sale of properties are to be allocated 1% to the General Partners. The remaining profits and losses will be allocated to the Holders of Interests. The General Partners are not required to make any additional capital contributions except under certain limited circumstances upon termination of the Partnership. Distributions of "Net cash receipts" of the Partnership are allocated 90% to the Holders of Interests and 10% to the General Partners (of which 6.25% constitutes a management fee to the Corporate General Partner for services in managing the Partnership). The Partnership Agreement provides that the General Partners shall receive as a distribution of the proceeds (net after expenses and liabilities and retained working capital) from the sale or refinancing of a real property of up to 3% of the selling price of a property, and that the remaining net proceeds for any property sold be distributed 85% to the Holders of Interests and 15% to the General Partners. However, prior to such distributions being made, the Holders of Interests are entitled to receive 99% of net sale or refinancing proceeds and the General Partners are entitled to receive 1% until the Holders of Interests (i) have received cumulative cash distributions from the Partnership's operations which, when combined with net sale or refinancing proceeds previously distributed, equal a 6% annual return on the Holders' average capital investment for each year (their initial capital investment as reduced by net sale or refinancing proceeds previously distributed) and (ii) have received cash distributions of net sale or refinancing proceeds in an amount equal to the Holders' aggregate initial capital investment in the Partnership. If upon the completion of the liquidation of the Partnership and the distribution of all Partnership funds, the Holders of Interests have not received the amounts in (i) and (ii) above, the General Partners will be required to return all or a portion of the 1% distribution of net sale or refinancing proceeds described above in an amount equal to such deficiency in payments to the Holders of Interests pursuant to (i) and (ii) above. The Holders of Interests have not received and are not expected to receive distributions to the above levels. As of the date of this report, the General Partners have received $123,891 in distributions of net sale proceeds. MANAGEMENT AGREEMENTS The Partnership has entered into agreements for the operation and management of the investment properties. Such agreements are summarized as follows: The Partnership entered into an agreement with an affiliate of the seller for the operation and management of Michael's Aurora Plaza (prior to its sale in October 1997) for a management fee calculated at a percentage of certain types of cash income from the property. The Long Beach Plaza in Long Beach, California, First Tennessee Plaza (Plaza Tower) office building in Knoxville, Tennessee (prior to its sale in September 1997), Sherry Lane Place office building in Dallas, Texas (prior to its sale in September 1997), and Glades Apartments in Jacksonville, Florida (prior to its sale in November 1996) were managed by an affiliate of the Corporate General Partner until December 1994 for a fee equal to a percentage of defined gross income from the property. In December 1994, one of the affiliated property managers sold substantially all of its assets and assigned its interest in its management contracts to an unaffiliated third party. In addition, certain of the management personnel of the property manager became management personnel of the purchaser and its affiliates. The successor to the affiliated property manager's assets was acting as the property manager of the Plaza Tower office building through the date of sale the Glades Apartments in Jacksonville, Florida, and the Sherry Lane office building on the same terms that existed prior to the assignment. LEASES - AS PROPERTY LESSOR At December 31, 1997, the Partnership and its consolidated ventures principal assets are one shopping center and one apartment complex. The Partnership sold its interest in the apartment complex in March, 1998. The Partnership has determined that all leases relating to these properties are properly classified as operating leases; therefore, rental income is reported when earned and the cost of each of the properties, excluding cost of land, was depreciated over the estimated useful lives until the date such property was classified as held for sale pursuant to SFAS 121 as described above. Leases with commercial tenants range in term from one to 30 years and provide for fixed minimum rent and partial reimbursement of operating costs. In addition, leases with shopping center tenants generally provide for additional rent based upon percentages of tenants' sales volumes. With respect to the Partnership's shopping center investment, a substantial portion of the ability of retail tenants to honor their leases is dependent upon the retail economic sector. Cost or carrying value and accumulated depreciation of the leased assets are summarized as follows at December 31, 1997: Shopping center: Carrying value . . . . . . . . $ 26,202,593 Accumulated depreciation . . . 16,925,470 ------------ 9,277,123 ------------ Apartment complex: Cost . . . . . . . . . . . . 9,281,629 Accumulated depreciation . . . 3,641,282 ------------ 5,640,347 ------------ Total. . . . . . . . . $ 14,917,470 ============ Minimum lease payments receivable including amounts representing executory costs (e.g., taxes, maintenance, insurance), and any related profit in excess of specific reimbursements, to be received in the future under the above operating commercial lease agreements, are as follows: 1998. . . . . . . . . . . . $1,638,259 1999. . . . . . . . . . . . 1,419,428 2000. . . . . . . . . . . . 1,223,672 2001. . . . . . . . . . . . 1,132,186 2002. . . . . . . . . . . . 1,083,316 Thereafter. . . . . . . . . 3,017,783 ---------- Total . . . . . . . . . . . $9,514,644 ========== Additional rent based upon percentages of tenants' sales volumes included in rental income aggregated $17,689, $725,568 and $675,043, for the years ended December 31, 1997, 1996 and 1995, respectively. LEASES - AS PROPERTY LESSEE The following lease agreements have been determined to be operating leases: The Partnership owns the leasehold rights to the parking structure adjacent to the Long Beach, California shopping center. The lease has an initial term of 50 years which commenced in 1981 with one 49-year renewal option exercisable by a local municipal authority. The lease provides for annual rental of $745,000, which is subject to decrease based on formulas which relate to the amount of real estate taxes assessed against the shopping center and the parking structure. The rental expense for 1997, 1996 and 1995 under the above operating lease was $533,181, $424,783 and $633,548, respectively, and consisted exclusively of minimum rent. TRANSACTIONS WITH AFFILIATES In December 1984, Urban Holdings, Inc., an affiliate of the Corporate General Partner of the Partnership, purchased all the outstanding stock of the developer (joint venture partner) and property manager of the Old Orchard Shopping Center and the Copley Place multi-use complex, and successor entities to the developer and property manager continue in their respective capacities. Consequently, the joint venture partner was an affiliate of the Corporate General Partner and continued to possess all of the rights and obligations granted the original developer under the terms of the respective acquisition and related agreements. The Partnership, pursuant to the Partnership Agreement, is permitted to engage in various transactions involving the Corporate General Partner and its affiliates including the reimbursement for salaries and salary- related expenses of its employees, certain of its officers, and other direct expenses relating to the administration of the Partnership and the operation of the Partnership's investment properties. Fees, commissions and other expenses required to be paid by the Partnership to the General Partners and their affiliates as of December 31, 1997, 1996 and 1995 are as follows: UNPAID AT DECEMBER 31, 1997 1996 1995 1997 -------- --------- --------- ------------ Property management and leasing fees . . . . $ 89,060 1,575,148 1,459,783 1,321,500 Insurance commissions . . 70,890 67,579 65,185 -- Reimbursement (at cost) for accounting services. 36,297 23,862 164,441 13,313 Reimbursement (at cost) for portfolio manage- ment services. . . . . . 43,856 40,841 74,396 11,274 Reimbursement (at cost) for legal services . . . 18,423 18,386 9,267 2,750 Reimbursement (at cost) for administrative charges and other out- of-pocket expenses . . . 164 91,596 208,625 63 -------- --------- --------- --------- $258,690 1,817,412 1,981,697 1,348,900 ======== ========= ========= ========= Payment of certain pre-1993 property management and leasing fees payable under the terms of the management agreements ($1,321,500, approximately $4 per Interest) at December 31, 1997 has been deferred. All amounts currently payable do not bear interest and were paid in 1998. All property management fees and leasing fees are being paid currently. In February 1995, the Partnership paid $10,000,000 of previously deferred property management and leasing fees to an affiliate of the General Partner and an additional $1,500,000 in April 1997. The amounts unpaid at December 31, 1997 were paid in 1998. Reference is made to the JMB/NYC discussion above regarding the Partnership's obligation to fund, on demand, $200,000 and $200,000 to Carlyle Managers, Inc. and Carlyle Investors, Inc., respectively, of additional paid-in capital (reflected in amounts due to affiliates in the accompanying financial statements). As of December 31, 1997, these obligations bore interest at 5.93% per annum and cumulative interest accrued on these obligations was $272,639. The affiliated joint venture partner was obligated through December 31, 1991 to loan amounts (the "Deficit Loans") to pay for any operating deficits (as defined) of Copley Place. Through December 31, 1996, the affiliated joint venture partner had loaned approximately $13,648,000 at an interest rate based on its line of credit, which bore interest at a floating rate (averaging 7.57% per annum at December 31, 1996). During 1996, approximately $1,234,000 of interest accrued on these loans, and the joint venture paid approximately $225,000 of accrued interest (including a portion accrued from a prior year) on these loans. As of January 23, 1997, these Deficit Loans were paid in full as discussed above. The consideration paid by the Partnership for its interest in Copley Place Associates included a purchase price note with an original principal balance of $20,000,000 and bearing interest at 11.5% per annum (the "Note"). The unpaid balance of the Note at December 31, 1996 was $88,554,145 and was payable to an affiliate of the Corporate General Partner, as discussed above. As of January 23, 1997 this note was retired in full as discussed above. SCHEDULE III CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1997
COSTS CAPITALIZED INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED PARTNERSHIP (a) ACQUISITION AT CLOSE OF PERIOD (b) ------------------------- ------------- ----------------------------------- LAND AND BUILDINGS LAND PROVISION LAND AND BUILDINGS ENCUM- LEASEHOLD AND BUILDINGS AND FOR VALUE LEASEHOLD AND DESCRIPTION BRANCE INTEREST IMPROVEMENTS IMPROVEMENTS IMPAIRMENT(d) INTEREST IMPROVEMENTS TOTAL(f) - -------------------- ----------- -------------------------- ----------- ---------- ------------ ---------- APARTMENT BUILDING: Tampa, Florida (c). . . . .$6,626,7211,092,010 7,408,618 781,001 -- 1,092,010 8,189,619 9,281,629 COSTS CAPITALIZED INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED PARTNERSHIP (a) ACQUISITION AT CLOSE OF PERIOD (b) ------------------------- ------------- ----------------------------------- LAND AND BUILDINGS LAND PROVISION LAND AND BUILDINGS ENCUM- LEASEHOLD AND BUILDINGS AND FOR VALUE LEASEHOLD AND DESCRIPTION BRANCE INTEREST IMPROVEMENTS IMPROVEMENTS IMPAIRMENT(d) INTEREST IMPROVEMENTS TOTAL(f) - -------------------- ----------- -------------------------- ----------- ---------- ------------ ---------- SHOPPING CENTER: Long Beach, Califor- nia. . . . .$35,214,0333,801,066 42,765,277 (2,763,750) (17,600,000) 1,179,046 25,023,547 26,202,593 ------------ ---------- ----------- ----------- ----------- ---------- ---------------------- Total . . .$41,840,7544,893,076 50,173,895 (1,982,749) (17,600,000) 2,271,056 33,213,166 35,484,222 ============ ========== =========== ========== =========== ========== ======================
SCHEDULE III - CONTINUED CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1997
LIFE ON WHICH DEPRECIATION IN LATEST STATEMENT OF 1997 ACCUMULATED DATE OF DATE OPERATION REAL ESTATE DESCRIPTION DEPRECIATION(g) CONSTRUCTION ACQUIRED IS COMPUTED TAXES - ----------- ---------------- ------------ ---------- --------------- ----------- APARTMENT BUILDING: Tampa, Florida (c) . . . 3,641,282 1984 12/16/83 5-30 years 201,114 SHOPPING CENTER: Long Beach, California . 16,925,470 1982 6/22/83 5-30 years 508,022 ----------- ---------- Total. . . . . . . . $20,566,752 709,136 =========== ========== SCHEDULE III - CONTINUED CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1997 - --------------- Notes: (a) The initial cost to the Partnership represents the original purchase price of the properties, including amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired. (b) The aggregate cost of real estate owned at December 31, 1997 for Federal income tax purposes was $52,703,663. (c) Property owned and operated by a joint venture. (d) A provision for value impairment of $13,100,000 was recorded January 1, 1996 at the Long Beach Plaza investment property. On December 31, 1996, the Partnership recorded an additional provision for value impairment of $4,500,000, as more fully described in the Notes. (e) During 1996, all the Partnership's remaining consolidated investment properties were classified as held for sale or disposition, as more fully described in the Notes.
SCHEDULE III - CONTINUED CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1997
1997 1996 1995 ------------- ------------- ------------- (f) Reconciliation of real estate carrying costs: Balance at beginning of period . . . . . . . . . $407,809,347 433,222,805 429,976,723 Additions during period. . . . . . . . . . . . . 2,494,608 4,337,187 3,246,082 Reductions during period . . . . . . . . . . . . (374,819,733) (12,150,645) -- Provisions for value impairment. . . . . . . . . -- (17,600,000) -- ------------ ------------ ------------ Balance at end of period . . . . . . . . . . . . $ 35,484,222 407,809,347 433,222,805 ============ ============ ============ (g) Reconciliation of accumulated depreciation: Balance at beginning of period . . . . . . . . . $169,600,906 163,309,553 149,525,406 Depreciation expense . . . . . . . . . . . . . . -- 10,267,305 13,784,147 Reductions during period . . . . . . . . . . . . (149,034,154) (3,975,952) -- ------------ ------------ ------------ Balance at end of period . . . . . . . . . . . . $ 20,566,752 169,600,906 163,309,553 ============ ============ ============
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with accountants during fiscal year 1997 and 1996. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP The Corporate General Partner of the Partnership is JMB Realty Corporation ("JMB"), a Delaware corporation. Substantially all of the outstanding shares of JMB are owned, directly or indirectly, by certain of its officers, directors, members of their families and their affiliates. JMB as the Corporate General Partner has responsibility for all aspects of the Partnership's operations, subject to the requirement that purchases and sales of real property must be approved by the Associate General Partner of the Partnership, ABPP Associates, L.P., an Illinois limited partnership with JMB as its sole general partner. The limited partners of ABPP Associates, L.P. are generally officers, directors and affiliates of JMB or its affiliates. The Partnership is subject to certain conflicts of interest arising out of its relationships with the General Partners and their affiliates as well as the fact that the General Partners and their affiliates are engaged in a range of real estate activities. Certain services have been and may in the future be provided to the Partnership or its investment properties by affiliates of the General Partners, including property management services and insurance brokerage services. In general, such services are to be provided on terms no less favorable to the Partnership than could be obtained from independent third parties and are otherwise subject to conditions and restrictions contained in the Partnership Agreement. The Partnership Agreement permits the General Partners and their affiliates to provide services to, and otherwise deal and do business with, persons who may be engaged in transactions with the Partnership, and permits the Partnership to borrow from, purchase goods and services from, and otherwise to do business with, persons doing business with the General Partners or their affiliates. The General Partners and their affiliates may be in competition with the Partnership under certain circumstances, including, in certain geographical markets, for tenants for properties and/or for the sale of properties. Because the timing and amount of cash distributions and profits and losses of the Partnership may be affected by various determinations by the General Partners under the Partnership Agreement, including whether and when to sell or refinance a property, the establishment and maintenance of reasonable reserves, the timing of expenditures and the allocation of certain tax items under the Partnership Agreement, the General Partners may have a conflict of interest with respect to such determinations. The names, positions held and length of service therein of each director and the executive and certain other officers of the Corporate General Partner of the Partnership are as follows: SERVED IN NAME OFFICE OFFICE SINCE - ---- ------ ------------ Judd D. Malkin Chairman 5/03/71 Director 5/03/71 Chief Financial Officer 2/22/96 Neil G. Bluhm President 5/03/71 Director 5/03/71 Burton E. Glazov Director 7/01/71 Stuart C. Nathan Executive Vice President 5/08/79 Director 3/14/73 A. Lee Sacks Director 5/09/88 John G. Schreiber Director 3/14/73 H. Rigel Barber Chief Executive Officer 8/01/93 Executive Vice President 1/02/87 Glenn E. Emig Executive Vice President 1/01/93 Chief Operating Officer 1/01/95 Gary Nickele Executive Vice President 1/01/92 General Counsel 2/27/84 Gailen J. Hull Senior Vice President 6/01/88 Howard Kogen Senior Vice President 1/02/86 Treasurer 1/01/91 There is no family relationship among any of the foregoing directors or officers. The foregoing directors have been elected to serve a one-year term until the annual meeting of the Corporate General Partner to be held on June 3, 1998. All of the foregoing officers have been elected to serve one-year terms until the first meeting of the Board of Directors held after the annual meeting of the Corporate General Partner to be held on June 3, 1998. There are no arrangements or understandings between or among any of said directors or officers and any other person pursuant to which any director or officer was elected as such. JMB is the Corporate General Partner of Carlyle Real Estate Limited Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB Mortgage Partners, Ltd.-III ("Mortgage Partners-III"), JMB Mortgage Partners, Ltd-IV ("Mortgage Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the managing general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties, Ltd.-X ("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB Income Properties, Ltd.-XII ("JMB Income-XII"), and JMB Income Properties, Ltd.-XIII ("JMB Income-XIII"). JMB is also the sole general partner of the associate general partner of most of the foregoing partnerships. Most of the foregoing directors and officers are also officers and/or directors of various affiliated companies of JMB including Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners, L.P. ("Arvida")) and Income Growth Managers, Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd. ("IDS/BIG")). Most of such directors and officers are also partners, directly or indirectly, of certain partnerships which are associate general partners in the following real estate limited partnerships: the Partnership, Carlyle-VII, Carlyle-XI, Carlyle-XII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle- XVII, JMB Income-VII, JMB Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG. Certain of such officers are also officers and the sole director of Carlyle Managers, Inc., the sole general partner of JMB/NYC. The business experience during the past five years of each such director and officer of the Corporate General Partner of the Partnership in addition to that described above is as follows: Judd D. Malkin (age 60) is an individual general partner of JMB Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since October, 1969. Mr. Malkin is also a director of Urban Shopping Centers, Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment trust in the business of owning, managing and developing shopping centers. He is a Certified Public Accountant. Neil G. Bluhm (age 60) is an individual general partner of JMB Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm is also a principal of Walton Street Real Estate Fund I, L.P. and a director of USC, Inc. He is a member of the Bar of the State of Illinois and a Certified Public Accountant. Burton E. Glazov (age 59) has been associated with JMB since June, 1971 and served as an Executive Vice President of JMB until December 1990. He is a member of the Bar of the State of Illinois and a Certified Public Accountant. Stuart C. Nathan (age 56) has been associated with JMB since July, 1972. He is a member of the Bar of the State of Illinois. A. Lee Sacks (age 64) has been associated with JMB since December, 1972. He is also President and a director of JMB Insurance Agency, Inc. John G. Schreiber (age 51) has been associated with JMB since December, 1970 and served as an Executive Vice President of JMB until December 1990. Mr. Schreiber is President of Schreiber Investments, Inc. a company which is engaged in the real estate investing business. He is also a senior advisor and partner of Blackstone Real Estate Advisors L.P., an affiliate of the Blackstone Group, L.P. Mr. Schreiber is a director of USC, Inc., a Trustee of Amli Residential Property Trust, and a director of a number of investment companies advised or managed by T. Rowe Price Associates and its affiliates. Mr. Schreiber holds a Masters degree in Business Administration from Harvard University Graduate School of Business. H. Rigel Barber (age 48) has been associated with JMB since March, 1982. He holds a J.D. degree from the Northwestern Law School and is a member of the Bar of the State of Illinois. Glenn E. Emig (age 50) has been associated with JMB since December 1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig was Executive Vice President and Treasurer of JMB Institutional Realty Corporation. He holds a Masters degree in Business Administration from Harvard University Graduate School of Business and is a Certified Public Accountant. Gary Nickele (age 45) has been associated with JMB since February, 1984. He holds a J.D. degree from the University of Michigan Law School and is a member of the Bar of the State of Illinois. Gailen J. Hull (age 49) has been associated with JMB since March, 1982. He holds a Masters degree in Business Administration from Northern Illinois University and is a Certified Public Accountant. Howard Kogen (age 62) has been associated with JMB since March, 1973. He is a Certified Public Accountant. Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Securities Exchange Act of 1934, as amended, requires, among others, executive officers of the Corporate General Partner to file reports of changes in beneficial ownership of Interests on Form 4 or Form 5 with the Securities and Exchange Commission ("SEC"). Such persons are also required by SEC rules to furnish the Partnership a copy of such reports filed with the SEC. H. Rigel Barber and Gary Nickele did not file two required reports each (one Form 4 and one Form 5) to reflect the change in their respective beneficial ownership of Interests during 1997 resulting from one transaction. ITEM 11. EXECUTIVE COMPENSATION The Partnership has no officers or directors. The Partnership is required to pay a management fee to the Corporate General Partner and the General Partners are entitled to receive a share of cash distributions, when and as cash distributions are made to the Holders of Interests, and a share of profits or losses. Reference is made to the Notes for a description of such distributions and allocations. In 1997, the General Partners received no distributions and the Corporate General Partner received no management fee. The General Partners received a share of Partnership gains for Federal income tax purposes aggregating $24,171,365 in 1997. The Partnership is permitted to engage in various transactions involving affiliates of the Corporate General Partner of the Partnership, as described in the Notes. The relationship of the Corporate General Partner (and its directors and officers) to its affiliates is set forth above in Item 10. Payment of certain pre-1993 property management and leasing fees payable under the terms of the management agreements ($1,321,500, approximately $4 per $1,000 interest) at December 31, 1997 had been deferred. All amounts currently payable do not bear interest and were paid in 1998. In 1997, the Partnership paid $1,500,000 of previously deferred management and leasing fees to an affiliate of the General Partner. JMB Insurance Agency, Inc., an affiliate of the Corporate General Partner, earned insurance brokerage commissions in 1997 aggregating $70,890 in connection with the providing of insurance coverage for certain of the real property investments of the Partnership, all of which was paid at December 31, 1997. Such commissions are at rates set by insurance companies for the classes of coverage provided. An affiliate of the General Partners provided property management and leasing services at one of the Partnership's properties during 1997 and earned property management and leasing commissions of $89,060, all of which was paid. As set forth in the Prospectus of the Partnership, the Corporate General Partner must negotiate such agreements on terms no less favorable to the Partnership than those customarily charged for similar services in the relevant geographical area (but in no event at rates greater than 6% of the gross income from a property), and such agreements must be terminable by either party thereto, without penalty, upon 60 days' notice. The General Partners of the Partnership or their affiliates may be reimbursed for their direct expenses or out-of-pocket expenses and salaries and related salary expenses relating to the administration of the Partnership and the acquisition and operation of the Partnership's real property investments. In 1997, the Corporate General Partner of the Partnership or its affiliates were due reimbursement for such out-of-pocket expenses in the amount of $164, of which $63 was unpaid at December 31, 1997. The General Partners are also entitled to reimbursements for portfolio management, legal and accounting services. Such costs for 1997 were $43,856, $18,423 and $36,297, respectively, of which $11,274, $2,750 and $13,313, respectively, was unpaid at December 31, 1997. The Partnership had obligations to fund, on demand, $200,000 and $200,000 to Carlyle Managers, Inc. and Carlyle Investors, Inc., respectively, of additional paid-in capital (reflected in amounts due to affiliates in the accompanying financial statements). As of December 31, 1997, these obligations bore interest at 5.93% per annum and interest accrued on these obligations was $272,639. The affiliated joint venture partner in Copley Place Associates was obligated through December 31, 1991 to loan amounts to pay for any operating deficits (as defined) of Copley Place. Through December 31, 1996, the affiliated joint venture partner had loaned approximately $13,648,000 at an interest rate based on its line of credit, which bore interest at a floating rate (averaging 7.57% per annum at December 31, 1996). During 1996, approximately $1,234,000 of interest accrued on these loans, and the joint venture paid approximately $225,000 of accrued interest (including a portion accrued from a prior year) on these loans. As of January 23, 1997, these Deficit Loans were paid in full as discussed below. The consideration paid by the Partnership for its interest in Copley Place Associates included a purchase price note with an original principal balance of $20,000,000 and bearing interest at 11.5% per annum (the "Note"). The unpaid balance of the Note at December 31, 1996 was $88,554,145 and was payable to an affiliate of the Corporate General Partner. In connection with the sale of its interest in Copley Place Associates to an unaffiliated third party, the Partnership entered into an agreement with the affiliated joint venture partner and the holder of the note whereby the net proceeds from the sale of the Partnership's interest were distributed in a manner which permitted the Partnership to satisfy its obligations relative to the note and the Deficit Loans and still realize some modest cash proceeds. In addition, the holder of the Note agreed on a discounted payoff of the Note. In general, the Partnership received $43,900,000 of sale proceeds, of which $34,000,000 was remitted to the holder of the Note as payment in full satisfaction of the Note. As a result, the Partnership was relieved of an approximately $55,000,000 obligation. The Partnership's obligation under the Deficit Loans were next satisfied in full out of the Partnership's remaining sale proceeds. After the repayment of the Note and Deficit Loans, as discussed above, the Partnership's remaining net proceeds amounted to approximately $929,000, all of which was received in cash at closing.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding Interests of the Partnership. (b) The Corporate General Partner, its officers and directors and the Associate General Partner own the following Interests of the Partnership: NAME OF AMOUNT AND NATURE BENEFICIAL OF BENEFICIAL PERCENT TITLE OF CLASS OWNER OWNERSHIP OF CLASS - -------------- ---------- ----------------- -------- Limited Partnership Interests JMB Realty Corporation 5 Interests directly Less than 1% Limited Partnership Interests Corporate General 59.99897 Interests Less than 1% Partner, its officers directly (1) and directors and the Associate General Partner as a group (1) Includes 54.99897 Interests owned by certain officers for which each such officer has sole investment and voting power as to such Interests so owned. No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire beneficial ownership of Interests of the Partnership. Reference is made to Item 10 for information concerning ownership of the Corporate General Partner. (c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date result in a change in control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There were no significant transactions or business relationships with the Corporate General Partner, affiliates or their management other than those described in Items 10 and 11 above. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) Financial Statements (See Index to Financial Statements filed with this annual report). (2) Exhibits. 3-A.* Amended and Restated Agreement of Limited Partnership set forth as Exhibit A to the Prospectus, and which is hereby incorporated by reference. 3-B. Acknowledgement of rights and duties of the General Partners of the Partnership between ABPP Associates, L.P. (a successor Associated General Partner of the Partnership) and JMB Realty Corporation as of December 31, 1995 is hereby incorporated herein by reference to the Partnership's Report for September 30, 1996 on Form 10-Q (File No. 0-12791) dated November 8, 1996. 4-A. Documents relating to the mortgage loan secured by the Copley Place multi-use complex, in Boston Massachusetts, are also hereby incorporated herein by reference to Post-Effective Amendment No. 2 in the Partnership's Registration Statement on Form S-11 (File No. 2-81125) dated June 9, 1983. 4-B.* Documents relating to the modification of the mortgage loan secured by the Copley Place multi-use complex are hereby incorporated herein by reference. 10-A. Acquisition documents relating to the purchase by the Partnership of an interest in the Copley Place multi-use complex in Boston, Massachusetts, are hereby incorporated herein by reference to Post- Effective Amendment No. 2 to the Partnership's Registration Statement on Form S-11 (File No. 2-81125) dated June 9, 1983. 10-B. Documents relating to the sale by the Partnership of an interest in the Allied Automotive Center, in Southfield, Michigan, are hereby incorporated herein by reference to the Partnership's Report on Form 8-K (File No. 0-12791) for October 10, 1990, dated October 30, 1990. 10-C. Agreement of Limited Partnership of Carlyle-XIII Associates L.P. is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-12791) dated May 14, 1993. 10-D. Documents relating to the sale by the Partnership of its interest in the Old Orchard Urban Venture are herein incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-12791) for August 30, 1993, dated November 12, 1993. 10-E. Second Amended and Restated Articles of Partnership of JMB/NYC Office Building Associates, L.P. are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-12791) for December 31, 1993 dated March 28, 1994. 10-F. Amended and Restated Certificate of Incorporation of Carlyle-XIV Managers, Inc., are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-12791) for December 31, 1993 dated March 28, 1994. 10-G. Amended and Restated Certificate of Incorporation of Carlyle-XIII Managers, Inc., are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-12791) for December 31, 1993 dated March 28, 1994. 10-H. $600,000 demand note between Carlyle-XIII Associates, L.P. and Carlyle Managers, Inc., are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-12791) for December 31, 1993 dated March 28, 1994. 10-I. $600,000 demand note between Carlyle-XIII Associates, L.P. and Carlyle Investors, Inc., are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0- 12791) for December 31, 1993 dated March 28, 1994. 10-J. Assumption Agreements dated October 14, 1994 made by 237 Park Avenue Associates and by 1290 Associates in favor and for the benefit of O&Y Equity Company, L.P., O&Y NY Building Corp. and JMB/NYC Office Building Associates, L.P., copies of which are herein incorporated by reference to the Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-12791) dated March 27, 1995. 10-K. Assumption Agreements dated October 14, 1994 made by O&Y Equity Company, L.P., and by O&Y NY Building Corp. and by JMB/NYC Office Building Associates, L.P. in favor and for the benefit of 2 Broadway Associates and 2 Broadway Land Company, copies of which are herein incorporated by reference to the Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-12791) dated March 27, 1995. 10-L. Amendment No. 1 to the Agreement of Limited Partnership of Carlyle-XIII Associates, L.P. is hereby incorporated by reference to the Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-12791) dated May 11, 1995. 10-M. Amendment No. 1 to the Second Amended and Restated Articles of Partnership of JMB/NYC Office Building Associates, L.P. is hereby incorporated by reference to the Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-12791) dated May 11, 1995. 10-N. Agreement of Sale between 2 Broadway Associates, L.P. and 2 Broadway Acquisition Corp. dated August 10, 1995, is hereby incorporated by reference to the Partnership's Report for December 31, 1995 on Form 10-K (File No. 0-12791) dated March 25, 1996. 10-O. Agreement of Conversion of 1290 Associates into 1290 Associates, L.L.C. dated October 10, 1995 among JMB/NYC Office Building Associates, L.P., an Illinois limited partnership, O&Y Equity Company, L.P., a Delaware limited partnership and O&Y NY Building Corp., a Delaware corporation, is hereby incorporated by reference to the Partnership's Report for December 31, 1995 on Form 10-K (File No. 0-12791) dated March 25, 1996. 10-P. Agreement of Conversion of 237 Park Avenue Associates into 237 Park Avenue Associates, L.L.C., dated October 10, 1995 among JMB/NYC Office Building Associates, L.P., an Illinois limited partnership, O&Y Equity Company, L.P., a Delaware limited partnership and O&Y NY Building Corp., a Delaware corporation, is hereby incorporated by reference to the Partnership's Report for December 31, 1995 on Form 10-K (File No. 0-12791) dated March 25, 1996. 10-Q. Disclosure Statement for the Second Amended Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C. dated August 9, 1996 is hereby incorporated by reference to the Partnership's Report for September 30, 1996 on Form 10-Q (File No. 0-12791) dated November 8, 1996. 10-R. Consent of Director of Carlyle-XIV Managers, Inc. (known as Carlyle Managers, Inc.) dated October 31, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-S. Consent of Director of Carlyle-XIII, Managers, Inc. (known as Carlyle Investors, Inc.) dated October 31, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-T. Allonge to demand note between Carlyle Real Estate Limited Partnership - XIII and Carlyle Managers, Inc. dated October 31, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-U. Allonge to demand note between Carlyle Real Estate Limited Partnership - XIII and Carlyle Investors, Inc., dated October 31, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-V. Indemnification agreement between Property Partners, L.P., Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates, L.P. dated as of October 10, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0- 12791) dated March 21, 1997. 10-W. Agreement of Limited Partnership of 237/1290 Lower Tier Associates, L.P. dated as of October 10, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-X. Amended and Restated Limited Partnership Agreement of 237/1290 Upper Tier Associates, L.P. dated as of October 10, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-Y Purchase Agreement and amendments thereto between Sherry Lane Associates and Cottonwood Realty Services, L.L.C. dated July 7, 1997 is incorporated herein by reference to the Partnership's Report for September 12, 1997 on Form8-K (file No. 0-12791) dated September 26, 1997. 10-Z Purchase Agreement and amendments thereto between Carlyle Real Estate Limited Partnership - XIII and Parkway Properties, L.P. dated August 20, 1997 is incorporated herein by reference to the Partnership's Report for September 19, 1997 on Form 8-K (File No. 0-12791) dated October 3, 1997. 10-AA Purchase Agreement and Joint Escrow Instructions between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate Services, Inc. dated August 4, 1997 is incorporated herein by reference to the Partnership's Report for October 15, 1997 on Form 8-K (File No. 0- 12791) dated October 30, 1997). 10-BB Letter agreement related to the Purchase Agreement between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate Services, Inc. dated September 3, 1997 is incorporated herein by reference to the Partnership's Report for October 15, 1997 on Form 8-K (File No. 0-12791) dated October 30, 1997). 21. List of Subsidiaries. 24. Powers of Attorney. 27. Financial Data Schedule. Although certain additional long-term debt instruments of the Registrant have been excluded from Exhibit 4 above, pursuant to Rule 601(b)(4)(iii), the Registrant commits to provide copies of such agreements to the SEC upon request. (b) The following reports on Form 8-K were filed since the beginning of the last quarter of the period covered by this report. (i) The Partnership's Report on Form 8-K (File No. 0-12791) for October 15, 1997 (describing the sale of the Michael's (Marshall's) Aurora Plaza) was filed. This report was dated October 30, 1997 and includes a discussion of the sale (Item 2) and narrative pro forma financial information with respect to the sale (Item 7). (ii) The Partnership's Report on Form 8-K (File No. 0-12791) for September 19, 1997 (describing the sale of the First Tennessee Plaza Office Building in Knoxville, Tennessee) was filed. This report was dated October 3, 1997 and includes a discussion of the sale (Item 2) and narrative pro forma financial information with respect to the sale (Item 7). ---------------- * Previously filed as Exhibits 3, 4-C and 4-D, respectively, to the Partnership's Report for December 31, 1992 on Form 10-K to the Securities Exchange Act of 1934 (File No. 0-12791) dated March 30, 1993 are hereby incorporated herein by reference. No annual report or proxy material for the fiscal year 1997 has been sent to the Partners of the Partnership. An annual report will be sent to the Partners subsequent to this filing. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII By: JMB Realty Corporation Corporate General Partner GAILEN J. HULL By: Gailen J. Hull Senior Vice President Date: March 25, 1998 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. By: JMB Realty Corporation Corporate General Partner JUDD D. MALKIN* By: Judd D. Malkin, Chairman and Chief Financial Officer Date: March 25, 1998 NEIL G. BLUHM* By: Neil G. Bluhm, President and Director Date: March 25, 1998 H. RIGEL BARBER* By: H. Rigel Barber, Chief Executive Officer Date: March 25, 1998 GLENN E. EMIG* By: Glenn E. Emig, Chief Operating Officer Date: March 25, 1998 GAILEN J. HULL By: Gailen J. Hull, Senior Vice President Principal Accounting Officer Date: March 25, 1998 By: A. LEE SACKS* A. Lee Sacks, Director Date: March 25, 1998 By: STUART C. NATHAN* Stuart C. Nathan, Executive Vice President and Director Date: March 25, 1998 *By: GAILEN J. HULL, Pursuant to a Power of Attorney GAILEN J. HULL By: Gailen J. Hull, Attorney-in-Fact Date: March 25, 1998 CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII EXHIBIT INDEX Document Incorporated By Reference Page ------------ ---- 3-A. Amended and Restated Agreement of Limited Partnership set forth as Exhibit A to the Prospectus Yes 3-B. Acknowledgement of rights and duties of the General Partners of the Partnership between ABPP Associates, L.P. (a successor Associated General Partner of the Partnership) and JMB Realty Corporation as of December 31, 1995 Yes 4-A. Mortgage loan documents secured by the Copley Place multi-use complex Yes 4-B. Remodification of mortgage loan documents secured by Copley Place multi-use complex. Yes 10-A. Acquisition documents related to the Copley Place multi-use complex Yes 10-B. Documents related to the sale of Allied Automotive Center. Yes 10-C. Agreement of Limited Partnership of Carlyle-XIII Associates L.P. Yes 10-D. Documents relating to the sale of its interest in the Old Orchard Urban Venture Yes 10-E. Second Amended and Restated Articles of Partnership of JMB/NYC Office Building Associates, L.P. Yes 10-F. Amended and Restated Certificate of Incorporation of Carlyle-XIV Managers, Inc. Yes 10-G. Amended and Restated Certificate of Incorporation of Carlyle-XIII Managers, Inc. Yes 10-H. $600,000 demand note between Carlyle-XIII Associates, Ltd. and Carlyle Managers, Inc. Yes 10-I. $600,000 demand note between Carlyle-XIII Associates, Ltd. and Carlyle Investors, Inc. Yes 10-J. Assumption Agreements dated October 14, 1994 made by 237 Park Avenue Associates and by 1290 Associates in favor and for the benefit of O&Y Equity Company, L.P., O&Y NY Building Corp. and JMB/NYC Office Building Associates, L.P. Yes CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII EXHIBIT INDEX - CONTINUED Document Incorporated By Reference Page ------------ ---- 10-K. Assumption Agreements dated October 14, 1994 made by O&Y Equity Company, L.P., and by O&Y NY Building Corp. and by JMB/NYC Office Building Associates, L.P. in favor and for the benefit of 2 Broadway Associates and 2 Broadway Land Company Yes 10-L. Amendment No. 1 to Carlyle-XIII Associates Yes 10-M. Amendment No. 1 to JMB/NYC Office Building Associates, L.P. Yes 10-N. Agreement of Sale between 2 Broadway Associates, L.P. and 2 Broadway Acquisition Corp. dated August 10, 1995 Yes 10-O. Agreement of Conversion of 1290 Associates into 1290 Associates, L.L.C. dated October 10, 1995 Yes 10-P. Agreement of Conversion of 237 Park Avenue Associates into 237 Park Avenue Associates, L.L.C. dated October 10, 1995 Yes 10-Q. Disclosure statement for the Second Amended Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290 Associates, L.L.C. dated August 9, 1996 Yes 10-R. Consent of Director of Carlyle-XIV Managers, Inc. (known as Carlyle Managers, Inc.) dated October 31, 1996 Yes 10-S. Consent of Director of Carlyle-XIII, Managers, Inc. (known as Carlyle Investors, Inc.) dated October 31, 1996 Yes 10-T. Allonge to demand note between Carlyle Real Estate Limited Partnership-XIII and Carlyle Managers, Inc. dated October 31, 1996 Yes 10-U. Allonge to demand note between Carlyle Real Estate Limited Partnership-XIII and Carlyle Investors, Inc., dated October 31, 1996 Yes 10-V. Indemnification agreement between Property Partners, L.P., Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates, L.P. dated as of October 10, 1996 Yes CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII EXHIBIT INDEX - CONTINUED Document Incorporated By Reference Page ------------ ---- 10-W. Agreement of Limited Partnership of 237/1290 Lower Tier Associates, L.P. dated as of October 10, 1996 Yes 10-X. Amended and Restated Limited Partnership of 237/1290 Upper Tier Associates, L.P. dated as of October 10, 1996 Yes 10-Y. Purchase Agreement and amendments thereto between Sherry Lane Associates and Cottonwood Realty Services, L.L.C. dated as of July 7, 1997 Yes 10-Z. Purchase Agreement and amendments thereto between Carlyle Real Estate Limited Partnership - XIII and Parkway Properties, L.P. dated as of August 20, 1997 Yes 10-AA. Purchase Agreement and Joint Escrow Instructions between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate Services, Inc. dated August 4, 1997 Yes 10-BB. Letter of Agreement related to the Purchase Agreement between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate Services, Inc. dated September 3, 1997 Yes 21. List of Subsidiaries No 24. Powers of Attorney No 27. Financial Data Schedule No - ------------------ * Previously filed as exhibits to the Partnership's Registration Statement on Form S-11 (as amended) under the Securities Exchange Act of 1933 and the Partnership's prior Reports on Form 8-K and Form 10-K of the Securities Exchange Act of 1934. EX-21 2 EXHIBIT 21 LIST OF SUBSIDIARIES The Partnership is a partner of Carrollwood Station Associates, Ltd., a limited partnership which holds title to the Carrollwood Station Apartments in Tampa, Florida. The developer of the property is a partner in the joint venture. The Partnership is a 20% shareholder in Carlyle Managers, Inc. and 20% shareholder in Carlyle Investors, Inc. Reference is made to the Notes for a description of the terms of such joint venture partnerships. The Partnership's interest in the joint ventures and the results of its operations are included in the Consolidated Financial Statements of the Partnership filed with this annual report. EX-24 3 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII, do hereby nominate, constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the undersigned with full power of authority to sign in the name and on behalf of the undersigned officers a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1997, and any and all amendments thereto, hereby ratifying and confirming all that said attorneys and agents and any of them may do by virtue hereof. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney the 30th day of January, 1998. H. RIGEL BARBER - ----------------------- H. Rigel Barber Chief Executive Officer GLENN E. EMIG - ----------------------- Glenn E. Emig Chief Operating Officer The undersigned hereby acknowledge and accept such power of authority to sign, in the name and on behalf of the above named officers, a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1997, and any and all amendments thereto, the 30th day of January, 1998. GARY NICKELE ----------------------- Gary Nickele GAILEN J. HULL ----------------------- Gailen J. Hull DENNIS M. QUINN ----------------------- Dennis M. Quinn EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII, do hereby nominate, constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the undersigned with full power of authority to sign in the name and on behalf of the undersigned officers a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1997, and any and all amendments thereto, hereby ratifying and confirming all that said attorneys and agents and any of them may do by virtue hereof. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney the 30th day of January, 1998. NEIL G. BLUHM - ----------------------- President and Director Neil G. Bluhm JUDD D. MALKIN - ----------------------- Chairman and Chief Financial Officer Judd D. Malkin A. LEE SACKS - ----------------------- Director of General Partner A. Lee Sacks STUART C. NATHAN - ----------------------- Executive Vice President Stuart C. Nathan Director of General Partner The undersigned hereby acknowledge and accept such power of authority to sign, in the name and on behalf of the above named officers, a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1997, and any and all amendments thereto, the 30th day of January, 1998. GARY NICKELE ----------------------- Gary Nickele GAILEN J. HULL ----------------------- Gailen J. Hull DENNIS M. QUINN ----------------------- Dennis M. Quinn EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT. 12-MOS DEC-31-1997 DEC-31-1997 9,528,301 374,085 2,396,018 0 0 12,298,404 14,917,470 0 27,600,886 61,003,105 1,479,679 0 0 0 (39,268,694) 27,600,886 16,385,742 16,941,329 0 11,429,888 954,871 0 9,869,385 (5,312,815) 0 (5,592,268) 96,019,552 55,468,888 0 145,896,172 395.13 395.13
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