CARLYLE REAL ESTATE LTD PARTNERSHIP VII
10-Q, 1995-05-15
OPERATORS OF NONRESIDENTIAL BUILDINGS
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                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549



                                     FORM 10-Q



                    Quarterly Report Under Section 13 or 15(d)
                      of the Securities Exchange Act of 1934




For the quarter ended March 31, 1995          Commission file number 0-8915   




                   CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
              (Exact name of registrant as specified in its charter)




             Illinois                                    36-2875192           
      (State of organization)              (IRS Employer Identification No.)  




  900 N. Michigan Ave., Chicago, IL                        60611              
(Address of principal executive office)                  (Zip Code)           




Registrant's telephone number, including area code 312/915-1987




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 

                                 TABLE OF CONTENTS




PART I       FINANCIAL INFORMATION


Item 1.      Financial Statements. . . . . . . . . . . . . . . . . . .      3

Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations . . . . . . . . . . .     11



PART II      OTHER INFORMATION


Item 5.      Other Information . . . . . . . . . . . . . . . . . . . .     14

Item 6.      Exhibits and Reports on Form 8-K. . . . . . . . . . . . .     15


<TABLE>
PART I.  FINANCIAL INFORMATION
     ITEM 1.  FINANCIAL STATEMENTS

                                        CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                                   (A LIMITED PARTNERSHIP)
                                                  AND CONSOLIDATED VENTURES

                                                 CONSOLIDATED BALANCE SHEETS

                                            MARCH 31, 1995 AND DECEMBER 31, 1994

                                                         (UNAUDITED)


                                                           ASSETS
                                                           ------
<CAPTION>
                                                                                           MARCH 31,       DECEMBER 31,
                                                                                             1995             1994     
                                                                                         ------------      ----------- 
<S>                                                                                     <C>               <C>          
Current assets:
  Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . .       $  5,061,010        2,047,492 
  Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . . .          1,625,539          122,949 
  Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . .            256,627          397,575 
  Restricted construction loan proceeds (note 2(b)). . . . . . . . . . . . . . . .          8,000,000            --    
  Escrow deposits and other assets . . . . . . . . . . . . . . . . . . . . . . . .            396,536          968,312 
                                                                                         ------------      ----------- 
        Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .         15,339,712        3,536,328 
                                                                                         ------------      ----------- 

Investment property, at cost:
  Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2,179,147        2,179,147 
  Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . .         25,281,679       25,021,609 
                                                                                         ------------      ----------- 
                                                                                           27,460,826       27,200,756 
  Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . .         16,859,684       16,700,459 
                                                                                         ------------      ----------- 
        Total investment property, net of accumulated depreciation . . . . . . . .         10,601,142       10,500,297 

Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,222,737          932,899 
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            820,403          808,365 
Venture partner's deficit in venture . . . . . . . . . . . . . . . . . . . . . . .            979,561          616,099 
                                                                                         ------------      ----------- 

                                                                                         $ 28,963,555       16,393,988 
                                                                                         ============      =========== 
                                        CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                                   (A LIMITED PARTNERSHIP)
                                                  AND CONSOLIDATED VENTURES

                                           CONSOLIDATED BALANCE SHEETS - CONTINUED

                                    LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
                                    -----------------------------------------------------

                                                                                           MARCH 31,       DECEMBER 31,
                                                                                             1995             1994     
                                                                                         ------------      ----------- 
Current liabilities:
  Current portion of long-term debt, (note 2(b)) . . . . . . . . . . . . . . . . .       $  1,304,203          503,634 
  Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,388,796        1,306,228 
  Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            205,983          108,954 
  Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .            133,254            --    
                                                                                         ------------      ----------- 
        Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . .          3,032,236        1,918,816 

Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             56,140           65,106 
Long-term debt, less current portion, (note 2(b)). . . . . . . . . . . . . . . . .         25,592,407       13,741,800 
                                                                                         ------------      ----------- 
Commitments and contingencies (note 2)

        Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .         28,680,783       15,725,722 

Venture partner's subordinated equity in venture . . . . . . . . . . . . . . . . .            105,529          105,529 

Partners' capital accounts (deficits):
  General partners:
    Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .              1,000            1,000 
    Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (773,618)        (758,198)
    Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . .           (279,075)        (279,075)
                                                                                         ------------      ----------- 
                                                                                           (1,051,693)      (1,036,273)
                                                                                         ------------      ----------- 
  Limited partners (18,005 interests):
    Capital contributions, net of offering costs . . . . . . . . . . . . . . . . .         16,269,038       16,269,038 
    Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . .         12,200,794       12,570,868 
    Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . .        (27,240,896)     (27,240,896)
                                                                                         ------------      ----------- 
                                                                                            1,228,936        1,599,010 
                                                                                         ------------      ----------- 
        Total partners' capital accounts (deficits). . . . . . . . . . . . . . . .            177,243          562,737 
                                                                                         ------------      ----------- 
                                                                                         $ 28,963,555       16,393,988 
                                                                                         ============      =========== 
<FN>
                                See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
                                        CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                                   (A LIMITED PARTNERSHIP)
                                                  AND CONSOLIDATED VENTURES

                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                         THREE MONTHS ENDED MARCH 31, 1995 AND 1994
                                                         (UNAUDITED)
<CAPTION>
                                                                                              1995               1994    
                                                                                          ------------       ----------- 
<S>                                                                                      <C>                <C>          
Income:
  Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  1,696,456         1,669,373 
  Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          33,241            28,860 
                                                                                          ------------       ----------- 
                                                                                             1,729,697         1,698,233 
                                                                                          ------------       ----------- 
Expenses:
  Mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . .         521,657           404,921 
  Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         159,225           123,758 
  Property operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .         832,715           771,728 
  Professional services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          47,920            40,055 
  Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . .          37,157            37,523 
  Management fees to corporate general partner . . . . . . . . . . . . . . . . . . . .           --                4,078 
  General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          15,919            16,029 
                                                                                          ------------       ----------- 
                                                                                             1,614,593         1,398,092 
                                                                                          ------------       ----------- 
       Operating earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         115,104           300,141 
Venture partner's share of venture's  operations . . . . . . . . . . . . . . . . . . .         (68,568)         (161,249)
                                                                                          ------------       ----------- 
       Net operating earnings before extraordinary item. . . . . . . . . . . . . . . .          46,536           138,892 

Extraordinary item:
  Prepayment penalty and deferred mortgage expense on refinanced
    long-term debt, net of venture partners share of $432,030 (note 2(b)). . . . . . .        (432,030)            --    
                                                                                          ------------       ----------- 
       Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $   (385,494)          138,892 
                                                                                          ============       =========== 
       Net earnings (loss) per limited partnership interest (note 1):
           Net operating earnings (loss) . . . . . . . . . . . . . . . . . . . . . . .    $      (2.48)             7.41 
           Extraordinary item. . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (23.03)            --    
                                                                                          ------------       ----------- 
           Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (20.55)             7.41 
                                                                                          ============       =========== 
       Cash distributions per limited partnership interest . . . . . . . . . . . . . .    $      --                 5.00 
                                                                                          ============       =========== 
<FN>
                                See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
                                        CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                                   (A LIMITED PARTNERSHIP)
                                                  AND CONSOLIDATED VENTURES

                                            CONSOLIDATED STATEMENTS OF CASH FLOWS

                                         THREE MONTHS ENDED MARCH 31, 1995 AND 1994

                                                         (UNAUDITED)

<CAPTION>
                                                                                              1995               1994    
                                                                                          ------------       ----------- 
<S>                                                                                      <C>                <C>          
Cash flows from operating activities:
  Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $  (385,494)          138,892 
  Items not requiring (providing) cash or cash equivalents:
    Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         159,225           123,758 
    Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . .          37,157            37,523 
    Venture partner's share of venture's operations  . . . . . . . . . . . . . . . . .          68,568           161,249 
    Extraordinary item, net of venture partners share of $432,030. . . . . . . . . . .         432,030           432,030 
  Changes in:
    Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . .         140,948           214,831 
    Escrow deposits and other assets . . . . . . . . . . . . . . . . . . . . . . . . .         374,780          (122,919)
    Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (12,038)            2,611 
    Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          82,568          (114,118)
    Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          97,029              (849)
    Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .         133,254           131,689 
    Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (8,966)              623 
                                                                                          ------------       ----------- 
          Net cash provided by operating activities. . . . . . . . . . . . . . . . . .       1,119,061           573,290 
                                                                                          ------------       ----------- 
Cash flows from investing activities:
  Restricted construction loan proceeds. . . . . . . . . . . . . . . . . . . . . . . .      (8,000,000)            --    
  Net purchases of short-term investments. . . . . . . . . . . . . . . . . . . . . . .      (1,502,590)          (23,308)
  Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . . . .        (260,070)           (6,935)
  Payments of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . .        (285,825)            --    
                                                                                          ------------       ----------- 
          Net cash used in investing activities. . . . . . . . . . . . . . . . . . . .     (10,048,485)          (30,243)
                                                                                          ------------       ----------- 
                                        CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                                                   (A LIMITED PARTNERSHIP)
                                                  AND CONSOLIDATED VENTURES

                                      CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED



                                                                                              1995               1994    
                                                                                          ------------       ----------- 

Cash flows from financing activities:
  Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . .     (14,348,824)         (110,998)
  Proceeds received on refinanced long-term debt . . . . . . . . . . . . . . . . . . .      27,000,000             --    
    Prepayment penalty on long-term debt . . . . . . . . . . . . . . . . . . . . . . .        (708,234)            --    
  Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . . . .           --              (90,025)
  Distributions to general partners. . . . . . . . . . . . . . . . . . . . . . . . . .           --               (3,751)
                                                                                          ------------       ----------- 
          Net cash provided by (used in) financing activities. . . . . . . . . . . . .      11,942,942          (204,774)
                                                                                          ------------       ----------- 
          Net increase in cash and cash equivalents. . . . . . . . . . . . . . . . . .       3,013,518           338,273 

          Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . .       2,047,492         1,260,020 
                                                                                          ------------       ----------- 

          Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . .    $  5,061,010         1,598,293 
                                                                                          ============       =========== 

Supplemental disclosure of cash flow information:
  Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . . .    $    424,628           405,770 
  Non-cash investing and financing activities. . . . . . . . . . . . . . . . . . . . .    $      --                --    
                                                                                          ============       =========== 



<FN>
                                See accompanying notes to consolidated financial statements.
</TABLE>
                   CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                              (A LIMITED PARTNERSHIP)
                             AND CONSOLIDATED VENTURES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MARCH 31, 1995 AND 1994

                                    (UNAUDITED)


     Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1994 which are
included in the Partnership's 1994 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.


(1)  BASIS OF ACCOUNTING

     The accompanying consolidated financial statements include the
accounts of the Partnership and its ventures (note 2), Oakridge Associates
("Oakridge") and Dallas Tollway Partners ("Dallas Tollway").  The effect of
all transactions between the Partnership and the ventures have been
eliminated.

     The Partnership's 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 reflect the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to include the accounts of the ventures described above.  Such
adjustments are not recorded on the records of the Partnership.  The net
effect of the adjustments is summarized as follows for the three months
ended March 31:
                                    1995                        1994         
                         -----------------------   ------------------------ 
                        GAAP BASIS     TAX BASIS     GAAP BASIS    TAX BASIS 
                        ----------     ---------     ----------    --------- 

Net earnings
 (loss). . . . . . . .   $(385,494)     (311,393)       138,892      225,802 
Net earnings 
 (loss) per
 limited partner-
 ship interest . . . .   $  (20.55)       (16.60)          7.41        12.54 
                         =========      ========        =======      ======= 

     The net earnings (loss) per limited partnership interest is based upon
the limited partnership interests outstanding at the end of each period
(18,005).  Deficit capital accounts will result, through the duration of
the Partnership, in net gain for financial reporting and Federal income tax
purposes.

     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.  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 ($322,061 and $1,832,040 at March 31,
1995 and at December 31, 1994, respectively) as cash equivalents, with any
remaining amounts (generally with original maturities of one year or less)
reflected as short-term investments being held to maturity.

                   CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                             AND CONSOLIDATED VENTURES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



     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
required under applicable law to remit directly to the taxing authorities
amounts representing withholding from distributions paid to Partners.


(2)  OAKRIDGE

     The Partnership has acquired, through Oakridge, a regional shopping
mall in San Jose, California which is in operation at March 31, 1995. 
Pursuant to such venture agreement, the Partnership made initial capital
contributions of $3,352,642 (before legal and other acquisition costs). 
Under certain circumstances, either pursuant to the venture agreement or
due to the Partnership's obligation as a general partner, the Partnership
may be required  to make additional cash contributions to the venture.  The
cost of the investment property represents the total cost to the
Partnership plus certain acquisition costs.

     There are certain risks associated with the Partnership's investment
made through a joint venture including the possibility that the
Partnership's venture partner in an investment might become unable or
unwilling to fulfill its financial or other obligations, or that such
venture partner may have economic or business interests or goals that are
inconsistent with those of the Partnership.

     Oakridge had been seeking a refinancing of the mortgage loan to
provide it with funds for a proposed expansion and major remodeling of the
mall.  In February 1995, Oakridge refinanced the existing mortgage loan
secured by the property (which had a balance of approximately $14,165,000
at the February 1995 closing) in the amount of $27,000,000.  The venture
received approximately $4,300,000 in net proceeds including the refundable
deposit of $540,000 (after payoff of the existing loan, closing costs and a
prepayment penalty of approximately $708,000 on the original mortgage
loan).   These proceeds will be utilized for capital expenditures and
deferred maintenance at the mall.  The lender held back $8,000,000 of the
remaining loan proceeds to be drawn down as needed as Oakridge commenced
construction of the remodeling of the mall in April 1995 and is scheduled
to be completed in November, 1995.  Therefore, there will be no
distribution of proceeds from this refinancing.  The terms of the
refinanced mortgage loan require monthly payments of principal and interest
at 9.19% based on a 12 year amortization schedule until maturity in
February, 1998.  The principal and interest payment required to be made
monthly is $310,165.  In addition, the loan has the option for two 3 year
extensions.  The interest rate on these extensions would be adjusted at
each period based on the then current three year U.S. Treasury rates and
would require similar payments of principal and interest.  At the time of
application, the Oakridge Venture was required to make a refundable deposit
of $540,000, which was returned at the February 1995 closing.  Also, the
Oakridge Venture was required to pay a non-refundable $135,000 loan
commitment fee.  The Partnership and its venture partner made contributions
to the Oakridge Venture in 1994 to fund their respective share of these
costs.  
                   CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
                             AND CONSOLIDATED VENTURES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED


     In January 1992, the prior parent organization of the Macy's store at
the Oakridge Mall had filed for protection under Chapter 11 of the United
States Bankruptcy Code.  In December 1994, Macy's was acquired by Federated
Department Stores and was removed from protection under Chapter 11 of the
United States Bankruptcy Code.  The Macy's store continued to operate and
although the Macy's store owns its site and facility, it was required to
make certain contributions towards common area maintenance costs, all of
which were paid as of the date of this report.

     The Oakridge Venture was notified that Nordstrom (which owns its own
store) left the center in March 1995.  Nordstrom had an obligation to
operate their department store under their trade name through August 22,
1993 and operate a department store under any name through August 22, 1998.

Nordstrom has agreed, in principle, to assign, transfer and convey its
interest in the Sublease and Reciprocal Easement Agreements to Sears
Roebuck and Co., with a planned opening of November, 1995.  It is not
expected that the Nordstrom closing and Sears Roebuck and Co. opening will
have a significant adverse impact on the operations of the Partnership
taken as a whole.  The property's other anchor tenants, Montgomery Wards
and R.H. Macy, are also subject to a Reciprocal Easement Agreement ("REA").

The REA's requirement to operate a department store under each tenant's
specific name expired in August 1993 and in addition, the REA's requirement
for each tenant to operate a department store expires in August 1998.  The
Partnership and its joint venture partner are currently negotiating with
all of the anchor tenants for an extension of the REA under both
requirements.  The expansion and remodeling are significant factors in
finalizing an extension of the REA.


(3)  TRANSACTIONS WITH AFFILIATES

     Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of March 31,
1995 and for the three months ended March 31, 1995 and 1994 are as follows:

                                                                     Unpaid at  
                                                                     March 31,  
                                           1995         1994           1995     
                                          ------       ------      -------------
Management fees to corporate 
  general partner. . . . . . . . .        $  --         4,078            --     
Reimbursement (at cost) for 
  out-of-pocket expenses . . . . .         8,748        2,932            --     
                                          ------        -----           -----   

                                          $8,748        7,010            --     
                                          ======        =====           =====   

     The Limited Partners have received an amount from sale or refinancing
proceeds in excess of their initial capital investment plus any deficiency
in a 6% cumulative annual return on their average capital investment.


(4)  ADJUSTMENTS

     In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1995 and for the three months ended March 31, 1995 and 1994.

PART I.  FINANCIAL INFORMATION

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


LIQUIDITY AND CAPITAL RESOURCES

     All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.

     At March 31, 1995, the Partnership and its consolidated ventures had
cash and cash equivalents of approximately $5,061,000.  Such funds and
short-term investments of approximately $1,625,000 along with the
$8,000,000 holdback from the refinancing will be utilized for working
capital requirements (including costs to be incurred for capital additions
at the Oakridge Shopping Mall).  The Partnership and its consolidated
venture have currently budgeted approximately $1,542,000 in 1995 for tenant
improvements and other capital expenditures at the Oakridge investment
property (approximately $260,000 has been incurred at March 31, 1995).  The
Partnership's share of such items in 1995 is currently budgeted to be
approximately $771,000.  The Oakridge property will require significant
capital expenditures and roof replacement in 1995.  Although all of
Oakridge venture's cash flow is being retained for future capital costs,
the property's operations are to be insufficient to totally fund these
costs, as described below.  Future capital expenditures related to
expansion and remodeling are to be funded by the net proceeds received in
refinancing the mortgage loan which closed in February 1995 (as described
below and in Note 2(b)).  Pursuant to the Oakridge venture agreement, 50%
of any partner funding obligations for items such as capital costs are
required to be funded by each venture partner.  In 1994, the Partnership
and its venture partner have each contributed $837,500 for funding capital
improvements, prior deferred maintenance, the refundable deposit and loan
commitment fee related to refinancing the mortgage loan.  Additional
funding obligations are not expected to be required due to the February
1995 mortgage loan refinancing.  Actual amounts expended in 1995 may vary
depending on a number of factors including actual leasing activity, results
of property operations, liquidity considerations and other market
conditions over the course of the year.  Also, in anticipation of the
significant capital expenditures at the Oakridge investment property, the
Partnership has temporarily suspended distributions to the partners
effective with the first quarter of 1994.  The sources of capital (in
addition to the cash and cash equivalents, short-term investments and
refinancing of the first mortgage loan noted above) for such items and for
both short-term and long-term future liquidity and distributions are
expected to be through net cash generated by the Partnership's remaining
Oakridge investment property and from its sale and/or refinancing.  In such
regard, reference is made to the Partnership's property specific
discussions below.  The Partnership's and its Venture's mortgage obligation
and its replacement financing secured by the Oakridge investment property
is non-recourse.  Therefore, the Partnership and its Venture are not
obligated to pay mortgage indebtedness unless the related property produces
sufficient net cash flow from operations or sale.

     There are certain risks associated with the Partnership's investment
made through a joint venture including the possibility that the
Partnership's joint venture partner in an investment might become unable or
unwilling to fulfill their financial or other obligations, or that such
joint venture partner may have economic or business interests or goals that
are inconsistent with those of the Partnership.

     Oakridge had been seeking a refinancing of the mortgage loan to
provide it with funds for a proposed expansion and major remodeling of the
mall.  In February 1995, Oakridge refinanced the existing mortgage loan
secured by the property (which had a balance of approximately $14,165,000
at the February 1995 closing) in the amount of $27,000,000.  The venture
received approximately $4,300,000 in net proceeds including the refundable
deposit of $540,000 (after payoff of the existing loan closing costs and a
prepayment penalty of approximately $708,000 on the original mortgage
loan).  These proceeds will be utilized for capital expenditures and
deferred maintenance at the mall.  The lender held back $8,000,000 of the
remaining loan proceeds to be drawn down as needed as Oakridge commenced
construction of the remodeling of the mall in April, 1995 and is scheduled
to be completed in November, 1995.  Therefore, there will be no
distribution of proceeds from this refinancing.  The terms of the
refinanced mortgage loan require monthly payments of principal and interest
at 9.19% based on a 12 year amortization schedule until maturity in
February, 1998.  The principal and interest payment required to be made
monthly is $310,165.  In addition, the loan has the option for two 3 year
extensions.  The interest rate on these extensions would be adjusted at
each period based on the then current three year U.S. Treasury rates and
would require similar payments of principal and interest.  At the time of
application, Oakridge was required to make a refundable deposit of
$540,000, which was returned at the February 1995 closing.  Also, the
Oakridge Venture was required to pay a non-refundable $135,000 loan
commitment fee.  The Partnership and its venture partner made contributions
to the Oakridge Venture in 1994 to fund their respective share of these
costs.  

     The Partnership has been advised that Oakridge Mall has not been
adversely affected by the recent heavy rains and flooding in the State of
California.

     In January 1992, the prior parent organization of the Macy's store at
the Oakridge Mall had filed for protection under Chapter 11 of the United
States Bankruptcy Code.  In December 1994, Macy's was acquired by Federated
Department Stores and was removed from protection under Chapter 11 of the
United States Bankruptcy Code.  The Macy's store continued to operate and
although the Macy's store owns its site and facility, it was required to
make certain contributions towards common area maintenance costs, all of
which were paid as of the date of this report.

     The Oakridge Venture was notified that Nordstrom (which owns its own
store) left the center in March 1995.  Nordstrom had an obligation to
operate their department store under their trade name through August 22,
1993 and operate a department store under any name through August 22, 1998.

Nordstrom has agreed, in principle, to assign, transfer and convey its
interest in the Sublease and Reciprocal Easement Agreements to Sears
Roebuck and Co., with a planned opening of November, 1995.  It is not
expected that the Nordstrom closing and Sears Roebuck and Co. opening will
have a significant adverse impact on the operations of the Partnership
taken as a whole.  The property's other anchor tenants, Montgomery Wards
and R.H. Macy, are also subject to a Reciprocal Easement Agreement ("REA").

The REA's requirement to operate a department store under each tenant's
specific name expired in August 1993 and in addition, the REA's requirement
to operate a department store expires in August 1998.  The Partnership and
its joint venture partner are currently negotiating with all of the anchor
tenants for an extension of the REA under both requirements.  The expansion
and remodeling are significant factors in finalizing an extension of the
REA.

     While the real estate markets are recuperating, highly competitive
market conditions continue to exist in most locations.  The Partnership's
approach has been to aggressively and creatively manage the Partnership's
real estate assets to attract and retain tenants.  Net effective rents to
the landlord from renewal tenants are much more favorable than lease terms
which can be negotiated with new tenants.  However, the Partnership's
capital resources must also be preserved and allocated in such a manner as
to maximize the value of its remaining property.  As a result of the real
estate market conditions discussed above, the Partnership continues to
conserve its working capital.  All expenditures are carefully analyzed and
certain capital projects are deferred when appropriate.  By conserving
working capital, the Partnership will be in a better position to meet its
future needs since outside sources of capital may be limited.  Due to these
factors, the Partnership has held its remaining investment property longer
than originally anticipated in an effort to maximize the return to the
Limited Partners.<PAGE>
RESULTS OF OPERATIONS

     The increase in cash and cash equivalents, short-term investments,
restricted construction loan proceeds, deferred expenses, current portion
of long-term debt, long-term debt, accrued interest at March 31, 1995 as
compared to December 31, 1994 and the increase in mortgage and other
interest, venture partner's share of venture's operations and the
extraordinary item for the three months ended March 31, 1995 as compared to
the same period in 1994 is primarily due to refinancing of the mortgage
debt at the Oakridge investment property in February, 1995.  Reference is
made to Note 2(b).

     The decrease in rents and other receivables at March 31, 1995 as
compared to December 31, 1994 is primarily due to the 1995 receipt of
certain 1994 escalations from tenants at the Oakridge investment property.

     The increase in depreciation expense for the three months ended March
31, 1995 as compared to the same period in 1994 is primarily due to the
capital additions incurred in 1994 at the Oakridge Mall investment
property.

     The decrease in management fees to corporate general partner for the
three months ended March 31, 1995 as compared to the same period in 1994 is
primarily due to the temporary suspension of operating distributions to
partners as discussed above, a portion of which is its management fee to
the corporate general partner.

<TABLE>
PART II.  OTHER INFORMATION

     ITEM 5.  OTHER INFORMATION


                                                          OCCUPANCY

     The following is a listing of approximate physical occupancy levels by quarter for the Partnership's
investment properties.

<CAPTION>
                                                            1994                                     1995               
                                             -------------------------------------        ------------------------------
                                           At          At          At          At       At        At       At        At 
                                          3/31        6/30        9/30       12/31     3/31      6/30     9/30     12/31
                                          ----        ----        ----       -----     ----      ----    -----     -----
<S>                                     <C>         <C>         <C>         <C>       <C>       <C>      <C>      <C>   

1. Oakridge Mall
    San Jose, California . . . . .         88%         92%         92%         93%      91%



</TABLE>
PART II.  OTHER INFORMATION

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

       (a)    Exhibits

              10-A.  Acquisition documents relating to the purchase by the
Partnership of an interest in Oakridge mall in San Jose, California, are
hereby incorporated herein by reference to the Partnership's Registration
Statement on Form S-11 (File No. 2-59231) dated October 17, 1977 as
amended.

              10-B.  Sale documents relating to the sale by the Partnership
of the wrap-around mortgage note in Walnut Bend Apartments located in
Dallas, Texas are hereby incorporated herein by reference to the
Partnership's report for December 31, 1993 on Form 10-K (File No. 0-8915)
dated March 25, 1994.

              10-C.  Closing statement dated February 15, 1995 relating to
the refinancing by Oakridge Associates, Ltd. which owns Oakridge Mall in
San Jose, California, a copy of which  is filed herewith.

              10-D.  Secured promissory note #1 dated February 15, 1995 in
the amount of $23,900,000 relating to the refinancing of the mortgage note
by Oakridge Associates, Ltd. which owns Oakridge Mall in San Jose,
California, a copy of which is filed herewith.

              10-E.  Secured promissory note #2 dated February 15, 1995 in
the amount of $3,100,000 relating to the refinancing of the mortgage note
by Oakridge Associates, Ltd. which owns Oakridge Mall in San Jose,
California, a copy of which is filed herewith.

              27.    Financial Data Schedule

       (b)    No reports on Form 8-K have been filed for the quarter covered
by this report.
                                    
                                    SIGNATURES


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


                   CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII

                   BY:    JMB Realty Corporation
                          (Corporate General Partner)




                          By:    GAILEN J. HULL
                                 Gailen J. Hull, Senior Vice President
                          Date:  May 11, 1995


     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.



                                 GAILEN J. HULL
                                 Gailen J. Hull, Principal Accounting Officer
                          Date:  May 11, 1995


                      SECURED PROMISSORY NOTE 1

$23,900,000.00                              San Jose, California
                                            February 15, 1995

      FOR VALUE RECEIVED, the undersigned, OAKRIDGE ASSOCIATES, a
California general partnership the "Undersigned"), hereby promises to pay
to the order of PRINCIPAL MUTUAL LIFE INSURANCE COMPANY, an Iowa
corporation ("Obligee'" hereinafter used to refer to Principal Mutual Life
Insurance Company or to its successors, assigns or subsequent holders, as
the case may be) at the Home Office of Obligee at 711 High Street, Des
Moines, Iowa 50392 or at such other place as Obligee may designate, the
principal sum of TWENTY-THREE MILLION NINE HUNDRED AND 00/100 DOLLARS
($23,900,000) or so much thereof as shall from time to time have been
advanced, together with interest on the unpaid balance of said sum from
February 15, 1995 at an interest rate per annum (the "Initial Interest
Rate") equal to Nine and Nineteen Hundredths percent (9.19%) per annum,
computed on the basis of a 360-day year composed of twelve 30-day months,
in installments as follows:

      Beginning on March 1, 1995, principal and interest shall be due and
payable if not sooner paid in installments of TWO HUNDRED SEVENTY-FOUR
THOUSAND FIVE HUNDRED FIFTY-THREE AND 13/100 DOLLARS ($274,553.13), with an
installment in a like amount due and payable on the same day of each month
thereafter until said principal and interest are fully paid, except that
all remaining principal and interest shall be due and payable on February
1, 2004 (the "Maturity Date").  The foregoing is subject to adjustment as
provided in this Note.  Each installment shall be credited first upon
interest then accrued and the remainder upon principal, and interest shall
cease to accrue upon principal so credited.  If on the date of the first
installment, interest is accrued for more or less than one installment
period, the amount of said installment shall be increased or decreased by
the amount that the interest accrued exceeds or is less than the interest
for one installment period based on the actual number of days elapsed to
the date of said installment.  All principal and interest shall be paid in
lawful money of the United States of America, by wire transfer of
immediately available funds to Obligee at Norwest Bank, Iowa, N.A., 7th and
Walnut Streets, Des Moines, Iowa 50304 for credit to Principal Mutual Life
Insurance Company, Account No. 7069975, re Loan No. D 750502, with
reference to the Undersigned.  The term the "Other Note" as used herein
shall mean that certain Secured Promissory Note of even date herewith given
by the Undersigned to Obligee.  Any default by the Undersigned under the
Other Note shall constitute a default under this Note.

      1.     As security for the payment of the moneys owing hereon and on
the Other Note (sometimes referred to as the "Loan"), the Undersigned has
executed and delivered to Obligee a deed of trust, assignment of rents,
security agreement and fixture filing, of even date herewith (the "Deed of
Trust"), on land located in the City of San Jose, County of Santa Clara,
State of California, commonly referred to as Oakridge Mall (the "Mortgaged
Premises"), and an assignment of leases and rents, of even date herewith
(the "Assignment").  In addition Obligee and the Undersigned have entered
into a Construction Loan Agreement, of even date herewith (the
"Construction Loan Agreement").  Any Event of Default under and as defined
in the Deed of Trust, the Assignment or the Construction Loan Agreement
(which covenants and conditions are made a part hereof as though set forth
herein at length), shall be an Event of Default under this Note.  The Deed
of Trust, the Assignment, the Construction Loan Agreement, this note and
the Other Note, together with any other instrument executed as of the date
hereof or in the future by the Undersigned and delivered by the Undersigned
to Obligee which by its terms further secures this Note, as any of the same
may be amended or modified by a written agreement executed by both Obligor
and Obligee, are herein referred to as the "Loan Documents."

      2.   The following provisions relate to interest rate adjustment:

           (a)   The monthly payments of principal and interest described
above are based on the annual interest rate of 9.19% and a 12-year
amortization schedule, and shall be due and payable through and including
February 1, 1998.

           (b)   Obligee shall adjust the interest rate to be in effect on
February 1, 1998 and continuing to January 31, 2001 (the "First Adjusted
Rate").  Obligee shall notify you in writing of the Three Year U.S.
Treasury Issue ("Treasury Issue I") as then shown on the Telerate Financial
Information Network System (the "System") or, if the System is no longer in
operation, as shown in an equivalent reporting service and the basis point
spread established by Obligee (the "Point Spread I") to be used in the
calculation of the First Adjusted Rate, no later than August 1, 1997.  If
the Undersigned accepts Point Spread I, then the Undersigned shall notify
Obligee in writing of its acceptance of Point Spread I and pay to Obligee a
$1,000 transaction fee (the "Transaction Fee") no later than September 1,
1997.  If Obligee shall not have received written acceptance and the
Transaction Fee on or before September 1, 1997, the indebtedness hereunder
shall become due and payable in full without the Premium (as hereinafter
defined) or any other penalty or premium on February 1, 1998.  In the event
Obligee shall have received the Undersigned's written acceptance and the
transaction fee as specified herein, the Undersigned shall notify Obligee
in writing of the date on which to establish the First Adjusted Rate, which
selection date shall be subject to Obligee's approval and shall comply with
the following: the selection date shall not be prior to November 1, 1997;
shall note be earlier than the date on which notice is provided to Obligee;
and shall be no later than December 15, 1997 ("Selection Date I).  If
Obligee shall not have received the Undersigned's notice of selection
before December 15, 1997, Obligee shall establish the First Adjusted Rate
on December 15, 1997, using the then current yield in effect on Treasury
Issue I as of December 15, 1997 plus point Spread I rounded up to the
nearest 1/1000 of 1%, Obligee shall notify the Undersigned in writing of
the First Adjusted Rate by January 15, 1998 and such rate shall be
effective on February 1, 1998.  If the Undersigned shall not have received
such notice by January 15, 1998, it shall promptly notify Obligee who, in
response thereto, will notify the Undersigned and the revised rate shall be
effective on February 1, 1998.  In the event Obligee shall have received
the Undersigned's notice of the selection date as specified herein, the
First Adjusted Rate shall be established on the selection date as specified
in the Undersigned's notice and shall be equal to the yield on U.S.
Treasury I which is in effect at the close of business on the date
specified plus Point Spread I, and rounded up to the nearest 1/100 of 1%;
and shall become effective on February 1, 1998.  For the purposes of notice
of selection, Obligee will accept a telecopy notice of selection at (515)
248-8090 or telephone notice at (515) 246-7584 followed by an overnight
delivered written notice of selection, sent in accordance with the notice
provisions of the Deed of Trust.  The monthly payments of principal and
interest commencing March 1, 1998 and continuing through February 1, 2001,
shall be determined using the First Adjusted Rate and a nine-year
amortization schedule.

           (c)   Obligee shall adjust the interest rate to be in effect on
February 1, 2001, and continuing to maturity (the "Second Adjusted Rate"). 
Obligee shall notify the Undersigned in writing of the Three Year U.S.
Treasury Issue ("Treasury Issue II") as then shown on the System or, if the
System is no longer in operation, as shown in an equivalent reporting
service and the basis point spread established by Obligee ("Point Spread
II") to be used in the calculation of the Second Adjusted Rate no later
than August 1, 2000.  If the Undersigned accepts Point Spread II, then the
Undersigned shall notify Obligee in writing of its acceptance of Point
Spread II and pay to Obligee the Transaction Fee no later than September 1,
2000.  If Obligee shall not have received written acceptance and the
Transaction Fee on or before September 1, 2000, the indebtedness hereunder
shall become due and payable in full without the Premium or other penalty
or premium on February 1, 2001.  In the event Obligee shall have received
the Undersigned's written acceptance and the Transaction Fee, the
Undersigned shall notify Obligee in writing of the date on which to
establish the Second Adjusted Rate, which selection date shall be subject
to Obligee's approval and shall comply with the following: the date
selected shall not be prior to November 1, 2000; shall not be earlier than
the date on which notice is provided to Obligee and shall be no later than
December 15, 2000 ("Selection Date II").  If Obligee shall not have
received the Undersigned's notice of selection before December 15, 2000,
Oblegee shall establish the Second Adjusted Rate on December 15, 2000 using
the then current yield in effect as of November 15, 2000 on Treasury Issue
II and Point Spread II rounded up to the nearest 1/1000 of 1%, Obligee
shall notify the Undersigned in writing of the Second Adjusted Rate by
January 15, 2001, and such rate shall be effective on February 1, 2001.  If
the Undersigned shall not have received such notice by January 15, 2001, it
shall promptly notify Obligee of same, who in response thereto will notify
the Undersigned and the revised rate shall be effective on February 1,
2001.  In the event Obligee shall have received the Undersigned's notice of
selection date as specified herein, the Second Adjusted Rate shall be
established on Selection Date II specified in the Undersigned's notice and
shall be equal to the yield on U.S. Treasury II which is in effect at the
close of business on the date specified plus Point Spread II, and rounded
up to the nearest 1/1000 of 1%; and shall become effective on February 1,
2001.  For the purposes of notice of selection, Obligee will accept a
telecopy notice of selection at (515) 248-8090 or telephone notice at (515)
246-7584 followed by an overnight delivered written notice of selection,
sent in accordance with the notice provisions of the Deed of Trust.  The
monthly payments of principal and interest commencing February 1, 2001, and
continuing to the Maturity Date shall be determined using the Second
Adjusted Rate and a six-year amortization schedule.

           Notwithstanding the foregoing , (i) the First Adjusted Rate
shall be the same for this Note and the Other Note and (ii) the Second
Adjusted Rate shall be the same for this Note and the Other Note.

           (d)   In the event the Undersigned accepts the First Adjusted
Interest Rate or the Second Adjusted Interest Rate, as applicable, the
Undersigned is required to provide Obligee, at the Undersigned's expense,
an endorsement updating the ALTA standard loan title policy issued in
connection with the making of the Loan (or, if such endorsement is not
obtainable, a new ALTA standard loan policy) for the amount of the then
outstanding principal amount of the Loan, in form and by an issuer
reasonably satisfactory to Obligee at the time of the applicable rate
adjustment.  The endorsement or policy, as applicable, shall insure the
Deed of Trust at the First Adjusted Rate or the Second Adjusted Rate, as
applicable, to be a first lien on the Mortgaged Premises, subject only to
those exceptions which were previously approved by Obligee and additional
permitted exceptions and shall provide coverage against mechanics' liens
and usury (provided, however, that, in lieu of obtaining a usury
endorsement, the Undersigned may provide an opinion of counsel satisfactory
to Obligee that the First Adjusted Rate or Second Adjusted Rate, as
applicable, does not violate the usury laws of the State of California).

      3.   No privilege is reserved by the Undersigned to prepay any
principal of this Note prior to the Maturity Date except in the following
instances and provided there is paid all principal and interest to the date
of payment under this Note, along with all sums, amounts, advances or
changes due under all Loan Documents and further provided that the
Undersigned simultaneously prepays the Other Note, in whole or in part, as
applicable, as provided thereon.  In those instances under this Note in
which the premium described in paragraph 4 shall apply (the "Premium"), it
shall apply notwithstanding any Event of Default by the Undersigned and
acceleration of the Loan by Obligee.

           (a)   In the event Obligee shall notify the Undersigned of the
Point Spread I and Obligee shall not have received the Undersigned's
written acceptance and the Transaction Fee as provided in paragraph 2 of
this Note, this Note shall become due and payable in full, without the
Premium, including accrued and unpaid interest at the date of prepayment,
on February 1, 1998.

           (b)   In the event Obligee shall notify the Undersigned of the
Point Spread II and Obligee shall not have received the Undersigned's
written acceptance and the Transaction Fee as provided in paragraph 2 of
the Note, this Note shall become due and payable in full, without the
Premium, including accrued and unpaid interest to the date of prepayment,
on February 1, 2001.

           (c)   The Undersigned shall have the privilege, at its option,
to prepay this Note in full, including accrued and unpaid interest to the
date of prepayment, together with the Premium, commencing March 1, 1995,
and continuing through February 1, 2004, upon 60 days' prior written notice
to Obligee.

           (d)   Notwithstanding subparagraph (c) above, the Undersigned
shall have the privilege, at its option, to prepay this Note in full,
including accrued and unpaid interest to the date of  prepayment, without
the Premium, during the periods commencing December 1, 1997, and continuing
to February 1, 1998, and commencing on December 1, 2000, and continuing
through the Maturity Date, upon 60 days' prior written notice to Obligee.

           (e)   Notwithstanding the foregoing, so long as no Event of
Default has occurred and is continuing and provided that Obligee receives
the Undersigned's written request for an extension no later than 30 days
prior to (i) February 1, 1998 (if the Undersigned has not accepted the
First Adjusted Rate) or (ii) February 1, 2001 (if the Undersigned has not
accepted the Second Adjusted Rate), as applicable, and provided, further,
that such request for an extension is accompanied by the Undersigned's
notification of the date on which to establish the First Adjusted Rate or
Second Adjusted Rate, as applicable (solely for the purpose of establishing
the extension interest rate as set forth below), Obligee shall grant to the
undersigned a six-month extension of the date on which the Loan is to be
repaid, subject to Obligee's receipt, on the regularly scheduled
installment payment dates during such period, of payments of principal and
interest (based on a nine-year amortization schedule for the extension
following on February 1, 1998 and a six-year amortization schedule for the
extension following February 1, 2001).  During such extension periods, the
applicable interest rate shall be the greater of (I) the then current
interest rate on this Note (which, in the case of an extension period
following February 1, 1998, shall be the Initial Interest Rate and, in the
case of the extension period following February, 1, 2001, shall be the
First Adjusted Rate) (II) an adjusted interest rate established by Obligee
(which, in the case of an extension period following February 1, 1998,
shall be the First Adjusted Rate and, in the case of an extension period
following February 1, 2001, shall be the Second Adjusted Interest Rate) and
(III) an interest rate per annum equal to 200 basis points over the then
current yield in effect for the six-month U.S. Treasury selected by
Obligee; provided, however, that the Undersigned shall be entitled to
prepay this Note in full without the Premium at any time during such
extension period upon 60 days' prior written notice to Obligee.

      4.   The make whole premium (the "Premium") shall be the greater of
one percent (1%) of the principal amount to be prepaid or a premium
calculated as follows:

           (1)   Determine the "Reinvestment Yield."  The Reinvestment
Yield will be equal to the yield on the respective U.S. Treasury Issue (the
"primary issue") for the appropriate prepayment period as indicated in the
table below, published two weeks prior to the date of prepayment and
converted to an equivalent monthly compounded nominal yield, plus 50 basis
points;

           (2)   Calculate the "Present Value of the Note."  The Present
Value of the Note is the present value of the payments to be made in
accordance with this Note (all installment payments to (i) for the first
two prepayment periods, the day following the last day of the applicable
prepayment period or (ii) in the case of the last prepayment period, the
Maturity Date, in each case as indicated in the table below, plus any
principal which would be outstanding and any remaining payments due on such
date) discounted at the Reinvestment Yield for the number of months
remaining from the date of prepayment to the last day of the applicable
period;

           (3)   Subtract the amount of the prepaid proceeds from the
Present Value of the Note as of the date of prepayment.  Any positive
differential shall be the Premium.

                                TABLE

U.S. TREASURY ISSUE                         PREPAYMENT PERIOD

                                 From                 To

5 1/8%     March 1998            The date hereof      January 31,
1998

7 3/4%     February 2001         February 1, 1998     January 31,
2001

5 7/8%     February 2004         February 1, 2001     Maturity Date

(a)   In the event there is no market activity involving the primary issue
at the time of prepayment, the Obligee shall choose a comparable Treasury
Bond, Note or Bill (the "secondary issue") which Obligee deems to be
similar to the primary issues' characteristics (i.e., rate, remaining time
to maturity, yield).

(b)   In the event of a partial payment, (i) the Present Value of this Note
shall be calculated in accordance with subparagraph (2) above multiplied by
the fraction which results from dividing the amount of the prepayment by
the outstanding principal amount immediately prior to prepayment and (ii)
the prepaid proceeds shall be applied pro rata to the prepayment of this
Note and the Other Note.  All prepayments shall be made on a regular
installment date in multiples of $1,000, and shall be first applied to any
payments in inverse order due and not defer the due date of any payments.

      5.   The Undersigned agrees that, if Obligee accelerates the whole
or any part of the principal sum evidenced hereby pursuant to paragraph 7
hereof, or applies any escrowed funds pursuant to the Construction Loan
Agreement or applies any proceeds to the payment of this Note as if such
application had been made as a result of such acceleration pursuant to the
provisions of the Deed of Trust, the Undersigned waives any right to prepay
said principal sum in whole or in part without premium and agrees to pay,
as liquidated damages and not as a penalty, the "Default Premium," which
shall be calculated in accordance with paragraph 4 of this Note (except
that, in determining the Reinvestment Yield pursuant to subparagraph (2)
thereof, 50 basis points shall not be added to the primary issue), on the
amount accelerated or applied, as the case may be.  By placing its initials
in the spaces hereinafter provided, the Undersigned expressly (i)
acknowledges that Obligee is entitled to be paid the Default Premium when
it accelerates the maturity of this Note upon an Event of Default,
including, without limitation, an Event of Default occasioned by the
Undersigned's conveyance of any right, title or interest in the Mortgaged
Premises in violation of the terms of paragraph 1(1) of the Deed of Trust
and waives the right to prepay without the Default Premium in such
circumstances and (ii) acknowledges that the Default Premium constitutes a
material inducement to Obligee to enter into the Loan and is supported by
adequate consideration.

      INITIAL HERE:  
                   ----------------------------------

      Notwithstanding anything contained in this Note to the contrary,
Obligee shall at all times be entitled to enforce all of its rights under
the Loan Documents, including, without limitation, the right, as
hereinafter set forth, to have interest accrue at the Default Rate (as
hereinafter defined) upon the occurrence and continuance of an Event of
Default.

      6.  If any payment of principal, interest or premium is not made when
due, damages will be incurred by Obligee, including additional expense in
handling overdue payments, the amount of which is difficult and impractical
to ascertain.  The Undersigned therefore agrees to pay, upon demand, the
sum of four cents ($.04) for each one dollar ($1.00) of each said payment
which becomes overdue as a reasonable estimate of the amount of said
damages, subject, however, to the limitations contained in the second
immediately succeeding paragraph.  Notwithstanding the foregoing, Obligee
agrees to waive the requirement for receipt of a late payment fee no more
than once during each 12 month period that the Loan remains outstanding
provided that, upon receipt by any of the following representatives of the
Undersigned:  Wendy Godoy, Aubrey MacLean, Paul Christman or Laurie Sneve
or their respective successors as designated in a writing delivered to
Obligee of telephonic notice at (619) 546-1001 of the overdue payment, such
payment is in possession of Obligee no later than the immediately following
business day.

      7.  If any default in the payment of principal, interest or premium
under this Note is not cured within 10 days following written notice of
said default or if any Event of Default has occurred or is continuing under
any Loan Document, the entire principal balance, interest then accrued, and
Default Premium, whether or not otherwise then due, shall, at the option of
Obligee, become immediately due and payable without demand or notice. 
Whether or not Obligee has exercised said option, interest shall accrue on
the entire principal balance, interest then accrued, and Default Premium
then due, at a rate equal to the lesser of (i) four percent (4%) per annum
above the then applicable rate of interest payable under this Note or (ii)
the maximum rate allowed by applicable law until fully paid or, if Obligee
has not exercised said option, for the duration of such Event of Default.

      8.  Notwithstanding anything herein or in any instrument by which
this Note may be secured to the contrary, no provision contained herein or
therein which purports to obligate the Undersigned to pay any amount of
interest or any fees, costs or expenses which are in excess of the maximum
permitted by applicable law, shall be effective to the extent it calls for
the payment of any interest or other amount in excess of such maximum.  Any
such excess shall, at the option of Obligee, either be paid to the
Undersigned or be credited to principal.  All agreements between the
Undersigned and Obligee with respect to the Loan, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of demand for payment or acceleration
of the maturity hereof or otherwise, shall the interest contracted for,
charged or received by Obligee exceed the maximum amount permissible under
applicable law.  If, from any circumstance whatsoever, interest would
otherwise be payable to the Obligee in excess of the maximum lawful amount,
the interest payable to Obligee shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance Obligee shall
ever receive anything of value deemed interest by applicable law in excess
of the maximum lawful amount, an amount equal to any excessive interest
shall, at the option of Obligee, be applied to the reduction of the
principal hereof without premium and not to the payment of interest or, if
such excessive interest exceeds the unpaid principal balance hereof, such
excess shall be refunded to the Undersigned.  This paragraph shall control
all agreements between the Undersigned and Obligee with respect to the
Loan.

      9.  Except as otherwise expressly set forth herein, the Undersigned
and any endorsers or guarantors waive presentment, protest and demand,
notice of protest, demand and dishonor and nonpayment, and notice of
default, notice of intent to accelerate maturity and notice of acceleration
of maturity and agree the due date of this Note or any installment may be
extended without affecting any liability hereunder, and further promises to
pay all reasonable costs and expenses, including reasonable attorneys'
fees, incurred by Obligee in connection with any default, Event of Default,
or in any judicial proceeding to interpret and/or enforce any provision of
this Note or any instrument by which it is secured.

      10.  No release of the Undersigned from liability hereunder shall
release any other maker, endorser or guarantor hereof.

      11.  This Note and the Other Note are secured by the Loan Documents,
creating among other things legal and valid encumbrances on and an
assignment of all of the Undersigned's interest in any leases of the
Mortgaged Premises.  Terms used herein which are defined in such Loan
Documents and not otherwise defined herein have the same definition as in
such instruments and agreements.  In no event shall the Loan Documents be
construed inconsistently with the terms of this Note and, in the event of
any discrepancy between any Loan Document and this Note, the terms hereof
shall govern.  The proceeds of this Note are to be used for business,
commercial, investment or other similar purposes, and no portion thereof
will be used for any personal, family or household use.

      12.  Anything in this Note of any other Loan Document or any
instrument or certificate executed in connection therewith or Sections
726.5 or 736 of the California Code of Civil Procedure, to the contrary
notwithstanding, the Undersigned and the Other Holders (as hereinafter
defined) (collectively, the "Exculpated Parties") shall have no personal
liability directly or indirectly for the payment of any principal, interest
or premium due under this Note or the performance of any other obligation
under the Loan Documents or any liability under Sections 726.5 or 736 of
the California Code of Civil Procedure, and Obligee shall not seek any
deficiency judgement against the Exculpated Parties or make any resort
therefor to any property of the Exculpated Parties other than the Mortgaged
Premises and the rents, issues, proceeds and profits thereof.  Without
limiting the foregoing, for the purposes of this paragraph 12 (including
subparagraph (a) hereof), neither the negative capital account of any
Partner (as hereinafter defined) nor any obligation of any Partner to
restore a negative capital account or to contribute capital to the
Undersigned or to any Other Holder shall at any time be deemed to be the
property or an asset of the Undersigned or any such Other Holder (and
neither Obligee nor any of its successors or assigns shall have any right
to collect, enforce or proceed against or with respect to any such negative
capital account or partner's obligation to restore or contribute).  For the
purposes of the foregoing, "Other Holders" shall mean:  (i) any present or
future limited or general partner in, or agent of, the Undersigned or any
present or future limited or general partner in any partnership that has or
acquires a direct or indirect interest (through any one or more
partnerships) in the Undersigned ("Partner") or any principal, shareholder,
officer, controlling person, affiliate, director, employee, trustee,
beneficiary, real estate investment advisor or other similar fiduciary or
agent of an entity that has or acquires a direct or indirect partnership
interest in the Undersigned as described in item (i) above.  For the
purposes of the following, "misapplication" shall mean the use of the
amounts in question for a purpose other than fixed or operating expenses,
capital expenditures or debt service with respect to the Mortgaged
Premises.

           (a)  Notwithstanding the foregoing, the provisions of this
paragraph 12 shall not:

                 (i)  limit or impair the Undersigned's liability for (x)
"Cost Overruns" (as defined in paragraph 5 of Section II of the
Construction Loan Agreement) but subject to the limitations set forth
therein or (y) its obligations under the Environmental Indemnity Agreement,
dated as of the date hereof (the "Environmental Indemnity"), from the
Undersigned to Obligee, the environmental indemnity contained in
subparagraph 1 (p) of the Deed of Trust and Sections 726.5 and 736 of the
California Code of Civil Procedure; provided, however, that in each case
the recourse of Obligee shall be limited solely to the assets of the
Undersigned (including, but not limited to, the Mortgaged Premises);

                 (ii) limit or impair the lien or enforcement of the Deed
of Trust and any other Loan Document or the right of Obligee to collect all
sums due hereunder or thereunder except as expressly limited by this
paragraph;

                 (iii) cause the failure of the Undersigned to make all
payments of principal, interest and premium or to perform any obligation
under the Deed of Trust and any other Loan Document within the time periods
provided herein or therein from being an Event of Default thereunder;

                 (iv) limit the Undersigned's personal liability, or
impair the right of Obligee to bring suit against any Exculpated Party
(except for any limited partner of a Partner), for:

                      (1) misapplication of any rents (including prepaid
rents or other similar sums) or other income from the Mortgaged Premises
during such time as Event of Default has occurred and is continuing;

                      (2) any misappropriation of security deposits or
reserve accounts (i.e., to the extent not applied in accordance with the
applicable leases);

                      (3) misappropriation of any insurance or
condemnation proceeds; and/or

                      (4)  any misapplication, following the occurrence
of an Event of Default, of any other sums paid in connection with the
Mortgaged Premises.

In the event of any f the exceptions of subparagraphs (1) through (4) in
paragraph (iv) above, the liability of the Undersigned shall only be to the
extent of the misapplication or misappropriation of such proceeds, awards,
security deposits, reserve accounts, rents, income and other harm caused by
the foregoing items, along with all reasonable costs, charges and expenses
incurred or expended by Obligee in connection with the enforcement of such
action.  Notwithstanding the foregoing, so long as Ernest W. Hahn, Inc., a
California corporation ("Hahn"), or a "Trizec-Approved Control Party" (as
such term is defined in the Deed of Trust) is a least a 50% general partner
of the Undersigned and continues and to manage the Mortgaged Premises, the
exceptions set forth in subparagraphs (1) through (4) of paragraph (iv)
above shall not apply to (x) JMB Realty Corporation, a Delaware corporation
("Realty") or (y) a corporation, partnership, trust or other entity that
has, among its officers, directors or shareholders, persons who are senior
level officer, managing directors or majority shareholders of Realty.

      (b)  In the event of either of the following two occurrences, the
agreement not to pursue recourse liability shall become null and void and
shall have no further force and effect:

           (i)  A breach or violation of the Undersigned's agreement set
forth in paragraph 1 (1) of the Deed of Trust not to, directly or
indirectly, due to assignment of beneficial interest under a trust,
partnership interest in a partnership, or otherwise, cause or permit any
sale, transfer or conveyance of the Mortgaged Premises or create, suffer or
permit any encumbrance or lien on the Mortgaged Premises other than the
lien of the Deed of Trust and any other instrument or agreement by which
this Note is secured, the leases of the Mortgaged Premises assigned to
Obligee and such other transfers, liens, or encumbrances, if any, as are
expressly permitted under the Deed or Trust or any other instrument or
agreement by which this Note is secured (and other than a non-material
breach or violation of such paragraphs such as the filing of a non-material
mechanic's lien affecting the Mortgaged Premises, the granting of any
utility or other easement or servitude burdening the Mortgaged Premises, or
any other transfer or encumbrance not in the nature of transfer, reduction
or impairment of any material economic interest in the Mortgaged Premises);
or

           (ii)  Any fraud or willful misrepresentation by the Undersigned
regarding  the Mortgaged Premises, or the making or delivery of this Note
or any other Loan Document or in any written materials or information
provided by the Undersigned in connection with the Loan.

      Notwithstanding the foregoing, so long as Hahn or a Trizec-Approved
Control Party is at least a 59% general partner of the Undersigned and
continues to mange the Mortgaged Premises, the exceptions set forth in
paragraphs (b) (i) and (b) (ii) above shall not apply to (x) Realty or (y)
a corporation, partnership, trust or other entity that has, among its
officers, directors or shareholders, persons who are senior level officers,
managing directors or majority shareholders of Realty.

      12.1.  In the event that the Undersigned transfers the Mortgaged
Premises in accordance with paragraph 1 (1) of the Deed of Trust, then the
provisions of paragraph 12 this Note shall continue to apply to the
Undersigned and the Other Holders; and the provisions of this paragraph
12.1 shall apply to a transferee and references in this paragraph 12.1 to
the Undersigned shall refer to a transferee.  Anything in this Note or any
other Loan Document or any instrument or certificate executed in connection
therewith to the contrary notwithstanding, the Undersigned shall have no
personal liability directly or indirectly for the payment of any principal,
interest or premium due under this Note or the performance of any other
obligation under the Loan Documents, and Obligee shall not seek any
deficiency judgment against the Undersigned or make any resort therefor to
any property of the Undersigned other than the Mortgaged Premises and the
rents, issues, proceeds and profits thereof.

           (a)  Notwithstanding the foregoing, the provisions of this
paragraph 12.1 shall not:

                 (i)  limit or impair the Undersigned's liability
regarding its obligations under the Environmental Indemnity and the
environmental indemnity contained in subparagraph 1(p) of the Deed of
Trust.

                 (ii)  limit or impair the lien or enforcement of the Deed
of Trust and any other Loan Document or the right of Obligee to collect all
sums due hereunder or thereunder except as expressly limited by this
paragraph;

                 (iii)  cause the failure of the Undersigned to make all
payments of principal, interest and premium or to perform any obligation
under the Deed of Trust and any other Loan Document within the time periods
provided herein or therein from being an Event of Default thereunder;

                 (iv)  limit the Undersigned's personal liability, or
impair the right of Obligee to bring suit against any Exculpated Party,
for:

           (1)  misapplication of any rents (including prepaid rents or
other similar sums) or other income from the Mortgaged Premises during such
time an Event of Default has occurred and is continuing;

           (2)  any misappropriation of security deposits or reserve
accounts (i.e., to the extent not applied in accordance with the applicable
leases);

           (3)  misappropriation of any insurance or condemnation
proceeds; and/or

           (4)  any misapplication, following the occurrence of an Event
of Default, of any other sums paid in connection with the Mortgaged
Premises.

In the event of any of the exceptions in paragraph (i) and subparagraphs
(1) through (4) of paragraph (iv) above, the recourse of Obligee shall be
limited solely to the assets of the Undersigned (including, but not limited
to, the Mortgaged Premises), but only to the extent of the misapplication
or misappropriation of such proceeds, awards, security deposits, reserve
accounts, rents, income, and other harm caused by the foregoing items,
along with all reasonable costs, charges and expenses incurred or expending
by Obligee in connection with the enforcement of such action.

      (b)  In the event of either of the following two occurrences, the
agreement not to pursue recourse liability shall become null and void and
shall have no further force and effect:

                 (i)  A breach or violation of the Undersigned's agreement
not to, directly or indirectly, due to assignment of beneficial interest
under a trust, partnership interest in a partnership, or otherwise, cause
or permit any sale, transfer or conveyance of the Mortgaged Premises or
create, suffer or permit any encumbrance or lien on the Mortgaged Premises
other than the lien of the Deed of Trust and any other instrument or
agreement by which this Note is secured, the leases of the Mortgaged
Premises assigned to Obligee and such other transfers, liens, or
encumbrances if any, as are expressly permitted under the Deed of Trust or
any other instrument or agreement by which this Note is secured (and other
than a non-material mechanic's lien affecting the Mortgaged Premises, the
granting of any utility or other easement or servitude burdening the
Mortgaged Premises, or any other transfer or encumbrance not in the nature
of transfer, reduction or impairment of any material economic interest in
the Mortgaged Premises); or

                 (ii)  Any fraud or willful misrepresentation by the
Undersigned regarding the Mortgaged Premises, or the making or delivery of
this Note or any other Loan Document or in any written materials or
information provided by the Undersigned in connection with the Loan.

      13.  If more than one, all obligations and agreements of the
Undersigned are joint and several.  Subject to the limitations set forth in
paragraph 12 above, the liability of all general partners of the
Undersigned shall be joint and several.

      14.  The remedies of Obligee, as provided herein, shall be cumulative
and concurrent and may be pursued singly, successively or together, at the
sole discretion of Obligee, and may be exercised as often as occasion
therefor shall occur; and the failure to exercise any such right or remedy
shall in no event be construed as a waiver or release thereof.

      15.  This Note shall be construed and enforced in accordance with the
substantive law of the State of California; the Courts of California shall
have exclusive jurisdiction over suits as to the indebtedness and the other
documents described above; and the Undersigned hereby consents to the
jurisdiction of the Courts of California.

      16.  This Note may not be changed or terminated orally, but only by
an agreement in writing and signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.  All of the
rights, privileges and obligations hereunder shall inure to the benefit of
the heirs, successors and assigns of the Obligee and shall bind the hears,
successors and assigns of the Undersigned.

      17.  If any provision of this Note shall, for any reason, be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.

      18.  Nothing herein shall limit, restrict or prohibit Obligee's
ability to sell, assign or transfer all or a portion of its interest in the
Loan and the Loan Documents.  A single servicer ("Servicer") shall be
authorized to act on behalf of any lender or lenders ("Lender") holding an
interest in the Loan, in accordance with the terms of any agreement between
the Lender and Servicer, throughout the term of the Loan, provided no Event
of Default exists under the Loan Documents.  Principal Mutual Life
Insurance Company is hereby designated as the Servicer as of the date
hereof and will remain the Servicer until completion of the Project, as
defined in the Construction Loan Agreement.  Any notices, requests,
approval, consents, deliveries, or other forms of communication between the
Undersigned and Servicer shall be deemed adequate and sufficient as if
given by or to Lender.  In the event Principal Mutual Life Insurance
Company ceases to service the Loan, a new Servicer will be appointed by
Lender and the Undersigned will be provided with written notice as to who
the new Servicer will be.
<PAGE>
      IN WITNESS WHEREOF, the Undersigned has caused this Note to be
executed and delivered on the date first hereinabove written.

                           OAKRIDGE ASSOCIATES, a California
                           general partnership

                           By: Ernest W. Hahn, Inc., a
                           California corporation, a partner

                           By:   
                                 --------------------
                                 Name:Wendy M. Godoy
                                 Title:     Vice President Finance and
Treasurer

                           By Carlyle Real Estate Limited
                           Partnership-VII, an Illinois
                           limited partnership, a partner

                           By:   JMB Realty Corporation,
                                 a Delaware corporation
                                 Its Managing General Partner

                                 By:  
                                      --------------------
                                      Name:
                                      Title: 

      IN WITNESS WHEREOF, the Undersigned has caused this Note to be
executed and delivered on the date first hereinabove written.

                           OAKRIDGE ASSOCIATES, a California
                           general partnership

                           By: Ernest W. Hahn, Inc., a
                           California corporation, a partner

                           By: 
                                 --------------------
                                 Name:
                                 Title:

                           By Carlyle Real Estate Limited
                           Partnership-VII, an Illinois
                           limited partnership, a partner

                           By:   JMB Realty Corporation,
                                 a Delaware corporation
                                 Its Managing General Partner

                                 By:  
                                      --------------------
                                      Name: Julie A. Strocchia
                                      Title:     Vice-President 

                      SECURED PROMISSORY NOTE 2

$3,100,000                                  San Jose, California
                                            February 15, 1995

      FOR VALUE RECEIVED, the undersigned, OAKRIDGE ASSOCIATES, a
California general partnership the "Undersigned"), hereby promises to pay
to the order of PRINCIPAL MUTUAL LIFE INSURANCE COMPANY, an Iowa
corporation ("Obligee'" hereinafter used to refer to Principal Mutual Life
Insurance Company or to its successors, assigns or subsequent holders, as
the case may be) at the Home Office of Obligee at 711 High Street, Des
Moines, Iowa 50392 or at such other place as Obligee may designate, the
principal sum of THREE MILLION ONE HUNDRED AND 00/100 DOLLARS ($3,100,000)
or so much thereof as shall from time to time have been advanced, together
with interest on the unpaid balance of said sum from February 15, 1995 at
an interest rate per annum (the "Initial Interest Rate") equal to Nine and
Nineteen Hundredths percent (9.19%) per annum, computed on the basis of a
360-day year composed of twelve 30-day months, in installments as follows:

      Beginning on March 1, 1995, principal and interest shall be due and
payable if not sooner paid in installments of THIRTY-FIVE THOUSAND SIX
HUNDRED AND 49/100 DOLLARS ($35,611.49), with an installment in a like
amount due and payable on the same day of each month thereafter until said
principal and interest are fully paid, except that all remaining principal
and interest shall be due and payable on February 1, 2004 (the "Maturity
Date").  The foregoing is subject to adjustment as provided in this Note. 
Each installment shall be credited first upon interest then accrued and the
remainder upon principal, and interest shall cease to accrue upon principal
so credited.  If on the date of the first installment, interest is accrued
for more or less than one installment period, the amount of said
installment shall be increased or decreased by the amount that the interest
accrued exceeds or is less than the interest for one installment period
based on the actual number of days elapsed to the date of said installment.

All principal and interest shall be paid in lawful money of the United
States of America, by wire transfer of immediately available funds to
Obligee at Norwest Bank, Iowa, N.A., 7th and Walnut Streets, Des Moines,
Iowa 50304 for credit to Principal Mutual Life Insurance Company, Account
No. 7069975, re Loan No. D 750502, with reference to the Undersigned.  The
term the "Other Note" as used herein shall mean that certain Secured
Promissory Note of even date herewith given by the Undersigned to Obligee. 
Any default by the Undersigned under the Other Note shall constitute a
default under this Note.

      1.     As security for the payment of the moneys owing hereon and on
the Other Note (sometimes referred to as the "Loan"), the Undersigned has
executed and delivered to Obligee a deed of trust, assignment of rents,
security agreement and fixture filing, of even date herewith (the "Deed of
Trust"), on land located in the City of San Jose, County of Santa Clara,
State of California, commonly referred to as Oakridge Mall (the "Mortgaged
Premises"), and an assignment of leases and rents, of even date herewith
(the "Assignment").  In addition Obligee and the Undersigned have entered
into a Construction Loan Agreement, of even date herewith (the
"Construction Loan Agreement").  Any Event of Default under and as defined
in the Deed of Trust, the Assignment or the Construction Loan Agreement
(which covenants and conditions are made a part hereof as though set forth
herein at length), shall be an Event of Default under this Note.  The Deed
of Trust, the Assignment, the Construction Loan Agreement, this note and
the Other Note, together with any other instrument executed as of the date
hereof or in the future by the Undersigned and delivered by the Undersigned
to Obligee which by its terms further secures this Note, as any of the same
may be amended or modified by a written agreement executed by both Obligor
and Obligee, are herein referred to as the "Loan Documents."

      2.   The following provisions relate to interest rate adjustment:

           (a)   The monthly payments of principal and interest described
above are based on the annual interest rate of 9.19% and a 12-year
amortization schedule, and shall be due and payable through and including
February 1, 1998.

           (b)   Obligee shall adjust the interest rate to be in effect on
February 1, 1998 and continuing to January 31, 2001 (the "First Adjusted
Rate").  Obligee shall notify you in writing of the Three Year U.S.
Treasury Issue ("Treasury Issue I") as then shown on the Telerate Financial
Information Network System (the "System") or, if the System is no longer in
operation, as shown in an equivalent reporting service and the basis point
spread established by Obligee (the "Point Spread I") to be used in the
calculation of the First Adjusted Rate, no later than August 1, 1997.  If
the Undersigned accepts Point Spread I, then the Undersigned shall notify
Obligee in writing of its acceptance of Point Spread I and pay to Obligee a
$1,000 transaction fee (the "Transaction Fee") no later than September 1,
1997.  If Obligee shall not have received written acceptance and the
Transaction Fee on or before September 1, 1997, the indebtedness hereunder
shall become due and payable in full without the Premium (as hereinafter
defined) or any other penalty or premium on February 1, 1998.  In the event
Obligee shall have received the Undersigned's written acceptance and the
transaction fee as specified herein, the Undersigned shall notify Obligee
in writing of the date on which to establish the First Adjusted Rate, which
selection date shall be subject to Obligee's approval and shall comply with
the following: the selection date shall not be prior to November 1, 1997;
shall note be earlier than the date on which notice is provided to Obligee;
and shall be no later than December 15, 1997 ("Selection Date I).  If
Obligee shall not have received the Undersigned's notice of selection
before December 15, 1997, Obligee shall establish the First Adjusted Rate
on December 15, 1997, using the then current yield in effect on Treasury
Issue I as of December 15, 1997 plus point Spread I rounded up to the
nearest 1/1000 of 1%, Obligee shall notify the Undersigned in writing of
the First Adjusted Rate by January 15, 1998 and such rate shall be
effective on February 1, 1998.  If the Undersigned shall not have received
such notice by January 15, 1998, it shall promptly notify Obligee who, in
response thereto, will notify the Undersigned and the revised rate shall be
effective on February 1, 1998.  In the event Obligee shall have received
the Undersigned's notice of the selection date as specified herein, the
First Adjusted Rate shall be established on the selection date as specified
in the Undersigned's notice and shall be equal to the yield on U.S.
Treasury I which is in effect at the close of business on the date
specified plus Point Spread I, and rounded up to the nearest 1/100 of 1%;
and shall become effective on February 1, 1998.  For the purposes of notice
of selection, Obligee will accept a telecopy notice of selection at (515)
248-8090 or telephone notice at (515) 246-7584 followed by an overnight
delivered written notice of selection, sent in accordance with the notice
provisions of the Deed of Trust.  The monthly payments of principal and
interest commencing March 1, 1998 and continuing through February 1, 2001,
shall be determined using the First Adjusted Rate and a nine-year
amortization schedule.

           (c)   Obligee shall adjust the interest rate to be in effect on
February 1, 2001, and continuing to maturity (the "Second Adjusted Rate"). 
Obligee shall notify the Undersigned in writing of the Three Year U.S.
Treasury Issue ("Treasury Issue II") as then shown on the System or, if the
System is no longer in operation, as shown in an equivalent reporting
service and the basis point spread established by Obligee ("Point Spread
II") to be used in the calculation of the Second Adjusted Rate no later
than August 1, 2000.  If the Undersigned accepts Point Spread II, then the
Undersigned shall notify Obligee in writing of its acceptance of Point
Spread II and pay to Obligee the Transaction Fee no later than September 1,
2000.  If Obligee shall not have received written acceptance and the
Transaction Fee on or before September 1, 2000, the indebtedness hereunder
shall become due and payable in full without the Premium or other penalty
or premium on February 1, 2001.  In the event Obligee shall have received
the Undersigned's written acceptance and the Transaction Fee, the
Undersigned shall notify Obligee in writing of the date on which to
establish the Second Adjusted Rate, which selection date shall be subject
to Obligee's approval and shall comply with the following: the date
selected shall not be prior to November 1, 2000; shall not be earlier than
the date on which notice is provided to Obligee and shall be no later than
December 15, 2000 ("Selection Date II").  If Obligee shall not have
received the Undersigned's notice of selection before December 15, 2000,
Oblegee shall establish the Second Adjusted Rate on December 15, 2000 using
the then current yield in effect as of November 15, 2000 on Treasury Issue
II and Point Spread II rounded up to the nearest 1/1000 of 1%, Obligee
shall notify the Undersigned in writing of the Second Adjusted Rate by
January 15, 2001, and such rate shall be effective on February 1, 2001.  If
the Undersigned shall not have received such notice by January 15, 2001, it
shall promptly notify Obligee of same, who in response thereto will notify
the Undersigned and the revised rate shall be effective on February 1,
2001.  In the event Obligee shall have received the Undersigned's notice of
selection date as specified herein, the Second Adjusted Rate shall be
established on Selection Date II specified in the Undersigned's notice and
shall be equal to the yield on U.S. Treasury II which is in effect at the
close of business on the date specified plus Point Spread II, and rounded
up to the nearest 1/1000 of 1%; and shall become effective on February 1,
2001.  For the purposes of notice of selection, Obligee will accept a
telecopy notice of selection at (515) 248-8090 or telephone notice at (515)
246-7584 followed by an overnight delivered written notice of selection,
sent in accordance with the notice provisions of the Deed of Trust.  The
monthly payments of principal and interest commencing February 1, 2001, and
continuing to the Maturity Date shall be determined using the Second
Adjusted Rate and a six-year amortization schedule.

           Notwithstanding the foregoing , (i) the First Adjusted Rate
shall be the same for this Note and the Other Note and (ii) the Second
Adjusted Rate shall be the same for this Note and the Other Note.

           (d)   In the event the Undersigned accepts the First Adjusted
Interest Rate or the Second Adjusted Interest Rate, as applicable, the
Undersigned is required to provide Obligee, at the Undersigned's expense,
an endorsement updating the ALTA standard loan title policy issued in
connection with the making of the Loan (or, if such endorsement is not
obtainable, a new ALTA standard loan policy) for the amount of the then
outstanding principal amount of the Loan, in form and by an issuer
reasonably satisfactory to Obligee at the time of the applicable rate
adjustment.  The endorsement or policy, as applicable, shall insure the
Deed of Trust at the First Adjusted Rate or the Second Adjusted Rate, as
applicable, to be a first lien on the Mortgaged Premises, subject only to
those exceptions which were previously approved by Obligee and additional
permitted exceptions and shall provide coverage against mechanics' liens
and usury (provided, however, that, in lieu of obtaining a usury
endorsement, the Undersigned may provide an opinion of counsel satisfactory
to Obligee that the First Adjusted Rate or Second Adjusted Rate, as
applicable, does not violate the usury laws of the State of California).

      3.   No privilege is reserved by the Undersigned to prepay any
principal of this Note prior to the Maturity Date except in the following
instances and provided there is paid all principal and interest to the date
of payment under this Note, along with all sums, amounts, advances or
changes due under all Loan Documents and further provided that the
Undersigned simultaneously prepays the Other Note, in whole or in part, as
applicable, as provided thereon.  In those instances under this Note in
which the premium described in paragraph 4 shall apply (the "Premium"), it
shall apply notwithstanding any Event of Default by the Undersigned and
acceleration of the Loan by Obligee.

           (a)   In the event Obligee shall notify the Undersigned of the
Point Spread I and Obligee shall not have received the Undersigned's
written acceptance and the Transaction Fee as provided in paragraph 2 of
this Note, this Note shall become due and payable in full, without the
Premium, including accrued and unpaid interest at the date of prepayment,
on February 1, 1998.

           (b)   In the event Obligee shall notify the Undersigned of the
Point Spread II and Obligee shall not have received the Undersigned's
written acceptance and the Transaction Fee as provided in paragraph 2 of
the Note, this Note shall become due and payable in full, without the
Premium, including accrued and unpaid interest to the date of prepayment,
on February 1, 2001.

           (c)   The Undersigned shall have the privilege, at its option,
to prepay this Note in full, including accrued and unpaid interest to the
date of prepayment, together with the Premium, commencing March 1, 1995,
and continuing through February 1, 2004, upon 60 days' prior written notice
to Obligee.

           (d)   Notwithstanding subparagraph (c) above, the Undersigned
shall have the privilege, at its option, to prepay this Note in full,
including accrued and unpaid interest to the date of  prepayment, without
the Premium, during the periods commencing December 1, 1997, and continuing
to February 1, 1998, and commencing on December 1, 2000, and continuing
through the Maturity Date, upon 60 days' prior written notice to Obligee.

           (e)   Notwithstanding the foregoing, so long as no Event of
Default has occurred and is continuing and provided that Obligee receives
the Undersigned's written request for an extension no later than 30 days
prior to (i) February 1, 1998 (if the Undersigned has not accepted the
First Adjusted Rate) or (ii) February 1, 2001 (if the Undersigned has not
accepted the Second Adjusted Rate), as applicable, and provided, further,
that such request for an extension is accompanied by the Undersigned's
notification of the date on which to establish the First Adjusted Rate or
Second Adjusted Rate, as applicable (solely for the purpose of establishing
the extension interest rate as set forth below), Obligee shall grant to the
undersigned a six-month extension of the date on which the Loan is to be
repaid, subject to Obligee's receipt, on the regularly scheduled
installment payment dates during such period, of payments of principal and
interest (based on a nine-year amortization schedule for the extension
following on February 1, 1998 and a six-year amortization schedule for the
extension following February 1, 2001).  During such extension periods, the
applicable interest rate shall be the greater of (I) the then current
interest rate on this Note (which, in the case of an extension period
following February 1, 1998, shall be the Initial Interest Rate and, in the
case of the extension period following February, 1, 2001, shall be the
First Adjusted Rate) (II) an adjusted interest rate established by Obligee
(which, in the case of an extension period following February 1, 1998,
shall be the First Adjusted Rate and, in the case of an extension period
following February 1, 2001, shall be the Second Adjusted Interest Rate) and
(III) an interest rate per annum equal to 200 basis points over the then
current yield in effect for the six-month U.S. Treasury selected by
Obligee; provided, however, that the Undersigned shall be entitled to
prepay this Note in full without the Premium at any time during such
extension period upon 60 days' prior written notice to Obligee.

      4.   The make whole premium (the "Premium") shall be the greater of
one percent (1%) of the principal amount to be prepaid or a premium
calculated as follows:

           (1)   Determine the "Reinvestment Yield."  The Reinvestment
Yield will be equal to the yield on the respective U.S. Treasury Issue (the
"primary issue") for the appropriate prepayment period as indicated in the
table below, published two weeks prior to the date of prepayment and
converted to an equivalent monthly compounded nominal yield, plus 50 basis
points;

           (2)   Calculate the "Present Value of the Note."  The Present
Value of the Note is the present value of the payments to be made in
accordance with this Note (all installment payments to (i) for the first
two prepayment periods, the day following the last day of the applicable
prepayment period or (ii) in the case of the last prepayment period, the
Maturity Date, in each case as indicated in the table below, plus any
principal which would be outstanding and any remaining payments due on such
date) discounted at the Reinvestment Yield for the number of months
remaining from the date of prepayment to the last day of the applicable
period;

           (3)   Subtract the amount of the prepaid proceeds from the
Present Value of the Note as of the date of prepayment.  Any positive
differential shall be the Premium.

                                TABLE

U.S. TREASURY ISSUE                         PREPAYMENT PERIOD

                                 From                 To

5 1/8%     March 1998            The date hereof      January 31,
1998

7 3/4%     February 2001         February 1, 1998     January 31,
2001

5 7/8%     February 2004         February 1, 2001     Maturity Date

(a)   In the event there is no market activity involving the primary issue
at the time of prepayment, the Obligee shall choose a comparable Treasury
Bond, Note or Bill (the "secondary issue") which Obligee deems to be
similar to the primary issues' characteristics (i.e., rate, remaining time
to maturity, yield).

(b)   In the event of a partial payment, (i) the Present Value of this Note
shall be calculated in accordance with subparagraph (2) above multiplied by
the fraction which results from dividing the amount of the prepayment by
the outstanding principal amount immediately prior to prepayment and (ii)
the prepaid proceeds shall be applied pro rata to the prepayment of this
Note and the Other Note.  All prepayments shall be made on a regular
installment date in multiples of $1,000, and shall be first applied to any
payments in inverse order due and not defer the due date of any payments.

      5.   The Undersigned agrees that, if Obligee accelerates the whole
or any part of the principal sum evidenced hereby pursuant to paragraph 7
hereof, or applies any escrowed funds pursuant to the Construction Loan
Agreement or applies any proceeds to the payment of this Note as if such
application had been made as a result of such acceleration pursuant to the
provisions of the Deed of Trust, the Undersigned waives any right to prepay
said principal sum in whole or in part without premium and agrees to pay,
as liquidated damages and not as a penalty, the "Default Premium," which
shall be calculated in accordance with paragraph 4 of this Note (except
that, in determining the Reinvestment Yield pursuant to subparagraph (2)
thereof, 50 basis points shall not be added to the primary issue), on the
amount accelerated or applied, as the case may be.  By placing its initials
in the spaces hereinafter provided, the Undersigned expressly (i)
acknowledges that Obligee is entitled to be paid the Default Premium when
it accelerates the maturity of this Note upon an Event of Default,
including, without limitation, an Event of Default occasioned by the
Undersigned's conveyance of any right, title or interest in the Mortgaged
Premises in violation of the terms of paragraph 1(1) of the Deed of Trust
and waives the right to prepay without the Default Premium in such
circumstances and (ii) acknowledges that the Default Premium constitutes a
material inducement to Obligee to enter into the Loan and is supported by
adequate consideration.

      INITIAL HERE:  
                   ----------------------------------

      Notwithstanding anything contained in this Note to the contrary,
Obligee shall at all times be entitled to enforce all of its rights under
the Loan Documents, including, without limitation, the right, as
hereinafter set forth, to have interest accrue at the Default Rate (as
hereinafter defined) upon the occurrence and continuance of an Event of
Default.

      6.  If any payment of principal, interest or premium is not made when
due, damages will be incurred by Obligee, including additional expense in
handling overdue payments, the amount of which is difficult and impractical
to ascertain.  The Undersigned therefore agrees to pay, upon demand, the
sum of four cents ($.04) for each one dollar ($1.00) of each said payment
which becomes overdue as a reasonable estimate of the amount of said
damages, subject, however, to the limitations contained in the second
immediately succeeding paragraph.  Notwithstanding the foregoing, Obligee
agrees to waive the requirement for receipt of a late payment fee no more
than once during each 12 month period that the Loan remains outstanding
provided that, upon receipt by any of the following representatives of the
Undersigned:  Wendy Godoy, Aubrey MacLean, Paul Christman or Laurie Sneve
or their respective successors as designated in a writing delivered to
Obligee of telephonic notice at (619) 546-1001 of the overdue payment, such
payment is in possession of Obligee no later than the immediately following
business day.

      7.  If any default in the payment of principal, interest or premium
under this Note is not cured within 10 days following written notice of
said default or if any Event of Default has occurred or is continuing under
any Loan Document, the entire principal balance, interest then accrued, and
Default Premium, whether or not otherwise then due, shall, at the option of
Obligee, become immediately due and payable without demand or notice. 
Whether or not Obligee has exercised said option, interest shall accrue on
the entire principal balance, interest then accrued, and Default Premium
then due, at a rate equal to the lesser of (i) four percent (4%) per annum
above the then applicable rate of interest payable under this Note or (ii)
the maximum rate allowed by applicable law until fully paid or, if Obligee
has not exercised said option, for the duration of such Event of Default.

      8.  Notwithstanding anything herein or in any instrument by which
this Note may be secured to the contrary, no provision contained herein or
therein which purports to obligate the Undersigned to pay any amount of
interest or any fees, costs or expenses which are in excess of the maximum
permitted by applicable law, shall be effective to the extent it calls for
the payment of any interest or other amount in excess of such maximum.  Any
such excess shall, at the option of Obligee, either be paid to the
Undersigned or be credited to principal.  All agreements between the
Undersigned and Obligee with respect to the Loan, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of demand for payment or acceleration
of the maturity hereof or otherwise, shall the interest contracted for,
charged or received by Obligee exceed the maximum amount permissible under
applicable law.  If, from any circumstance whatsoever, interest would
otherwise be payable to the Obligee in excess of the maximum lawful amount,
the interest payable to Obligee shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance Obligee shall
ever receive anything of value deemed interest by applicable law in excess
of the maximum lawful amount, an amount equal to any excessive interest
shall, at the option of Obligee, be applied to the reduction of the
principal hereof without premium and not to the payment of interest or, if
such excessive interest exceeds the unpaid principal balance hereof, such
excess shall be refunded to the Undersigned.  This paragraph shall control
all agreements between the Undersigned and Obligee with respect to the
Loan.

      9.  Except as otherwise expressly set forth herein, the Undersigned
and any endorsers or guarantors waive presentment, protest and demand,
notice of protest, demand and dishonor and nonpayment, and notice of
default, notice of intent to accelerate maturity and notice of acceleration
of maturity and agree the due date of this Note or any installment may be
extended without affecting any liability hereunder, and further promises to
pay all reasonable costs and expenses, including reasonable attorneys'
fees, incurred by Obligee in connection with any default, Event of Default,
or in any judicial proceeding to interpret and/or enforce any provision of
this Note or any instrument by which it is secured.

      10.  No release of the Undersigned from liability hereunder shall
release any other maker, endorser or guarantor hereof.

      11.  This Note and the Other Note are secured by the Loan Documents,
creating among other things legal and valid encumbrances on and an
assignment of all of the Undersigned's interest in any leases of the
Mortgaged Premises.  Terms used herein which are defined in such Loan
Documents and not otherwise defined herein have the same definition as in
such instruments and agreements.  In no event shall the Loan Documents be
construed inconsistently with the terms of this Note and, in the event of
any discrepancy between any Loan Document and this Note, the terms hereof
shall govern.  The proceeds of this Note are to be used for business,
commercial, investment or other similar purposes, and no portion thereof
will be used for any personal, family or household use.

      12.  Anything in this Note of any other Loan Document or any
instrument or certificate executed in connection therewith or Sections
726.5 or 736 of the California Code of Civil Procedure, to the contrary
notwithstanding, the Undersigned and the Other Holders (as hereinafter
defined) (collectively, the "Exculpated Parties") shall have no personal
liability directly or indirectly for the payment of any principal, interest
or premium due under this Note or the performance of any other obligation
under the Loan Documents or any liability under Sections 726.5 or 736 of
the California Code of Civil Procedure, and Obligee shall not seek any
deficiency judgement against the Exculpated Parties or make any resort
therefor to any property of the Exculpated Parties other than the Mortgaged
Premises and the rents, issues, proceeds and profits thereof.  Without
limiting the foregoing, for the purposes of this paragraph 12 (including
subparagraph (a) hereof), neither the negative capital account of any
Partner (as hereinafter defined) nor any obligation of any Partner to
restore a negative capital account or to contribute capital to the
Undersigned or to any Other Holder shall at any time be deemed to be the
property or an asset of the Undersigned or any such Other Holder (and
neither Obligee nor any of its successors or assigns shall have any right
to collect, enforce or proceed against or with respect to any such negative
capital account or partner's obligation to restore or contribute).  For the
purposes of the foregoing, "Other Holders" shall mean:  (i) any present or
future limited or general partner in, or agent of, the Undersigned or any
present or future limited or general partner in any partnership that has or
acquires a direct or indirect interest (through any one or more
partnerships) in the Undersigned ("Partner") or any principal, shareholder,
officer, controlling person, affiliate, director, employee, trustee,
beneficiary, real estate investment advisor or other similar fiduciary or
agent of an entity that has or acquires a direct or indirect partnership
interest in the Undersigned as described in item (i) above.  For the
purposes of the following, "misapplication" shall mean the use of the
amounts in question for a purpose other than fixed or operating expenses,
capital expenditures or debt service with respect to the Mortgaged
Premises.

           (a)  Notwithstanding the foregoing, the provisions of this
paragraph 12 shall not:

                 (i)  limit or impair the Undersigned's liability for (x)
"Cost Overruns" (as defined in paragraph 5 of Section II of the
Construction Loan Agreement) but subject to the limitations set forth
therein or (y) its obligations under the Environmental Indemnity Agreement,
dated as of the date hereof (the "Environmental Indemnity"), from the
Undersigned to Obligee, the environmental indemnity contained in
subparagraph 1 (p) of the Deed of Trust and Sections 726.5 and 736 of the
California Code of Civil Procedure; provided, however, that in each case
the recourse of Obligee shall be limited solely to the assets of the
Undersigned (including, but not limited to, the Mortgaged Premises);

                 (ii) limit or impair the lien or enforcement of the Deed
of Trust and any other Loan Document or the right of Obligee to collect all
sums due hereunder or thereunder except as expressly limited by this
paragraph;

                 (iii) cause the failure of the Undersigned to make all
payments of principal, interest and premium or to perform any obligation
under the Deed of Trust and any other Loan Document within the time periods
provided herein or therein from being an Event of Default thereunder;

                 (iv) limit the Undersigned's personal liability, or
impair the right of Obligee to bring suit against any Exculpated Party
(except for any limited partner of a Partner), for:

                      (1) misapplication of any rents (including prepaid
rents or other similar sums) or other income from the Mortgaged Premises
during such time as Event of Default has occurred and is continuing;

                      (2) any misappropriation of security deposits or
reserve accounts (i.e., to the extent not applied in accordance with the
applicable leases);

                      (3) misappropriation of any insurance or
condemnation proceeds; and/or

                      (4)  any misapplication, following the occurrence
of an Event of Default, of any other sums paid in connection with the
Mortgaged Premises.

In the event of any f the exceptions of subparagraphs (1) through (4) in
paragraph (iv) above, the liability of the Undersigned shall only be to the
extent of the misapplication or misappropriation of such proceeds, awards,
security deposits, reserve accounts, rents, income and other harm caused by
the foregoing items, along with all reasonable costs, charges and expenses
incurred or expended by Obligee in connection with the enforcement of such
action.  Notwithstanding the foregoing, so long as Ernest W. Hahn, Inc., a
California corporation ("Hahn"), or a "Trizec-Approved Control Party" (as
such term is defined in the Deed of Trust) is a least a 50% general partner
of the Undersigned and continues and to manage the Mortgaged Premises, the
exceptions set forth in subparagraphs (1) through (4) of paragraph (iv)
above shall not apply to (x) JMB Realty Corporation, a Delaware corporation
("Realty") or (y) a corporation, partnership, trust or other entity that
has, among its officers, directors or shareholders, persons who are senior
level officer, managing directors or majority shareholders of Realty.

      (b)  In the event of either of the following two occurrences, the
agreement not to pursue recourse liability shall become null and void and
shall have no further force and effect:

           (i)  A breach or violation of the Undersigned's agreement set
forth in paragraph 1 (1) of the Deed of Trust not to, directly or
indirectly, due to assignment of beneficial interest under a trust,
partnership interest in a partnership, or otherwise, cause or permit any
sale, transfer or conveyance of the Mortgaged Premises or create, suffer or
permit any encumbrance or lien on the Mortgaged Premises other than the
lien of the Deed of Trust and any other instrument or agreement by which
this Note is secured, the leases of the Mortgaged Premises assigned to
Obligee and such other transfers, liens, or encumbrances, if any, as are
expressly permitted under the Deed or Trust or any other instrument or
agreement by which this Note is secured (and other than a non-material
breach or violation of such paragraphs such as the filing of a non-material
mechanic's lien affecting the Mortgaged Premises, the granting of any
utility or other easement or servitude burdening the Mortgaged Premises, or
any other transfer or encumbrance not in the nature of transfer, reduction
or impairment of any material economic interest in the Mortgaged Premises);
or

           (ii)  Any fraud or willful misrepresentation by the Undersigned
regarding  the Mortgaged Premises, or the making or delivery of this Note
or any other Loan Document or in any written materials or information
provided by the Undersigned in connection with the Loan.

      Notwithstanding the foregoing, so long as Hahn or a Trizec-Approved
Control Party is at least a 59% general partner of the Undersigned and
continues to mange the Mortgaged Premises, the exceptions set forth in
paragraphs (b) (i) and (b) (ii) above shall not apply to (x) Realty or (y)
a corporation, partnership, trust or other entity that has, among its
officers, directors or shareholders, persons who are senior level officers,
managing directors or majority shareholders of Realty.

      12.1.  In the event that the Undersigned transfers the Mortgaged
Premises in accordance with paragraph 1 (1) of the Deed of Trust, then the
provisions of paragraph 12 this Note shall continue to apply to the
Undersigned and the Other Holders; and the provisions of this paragraph
12.1 shall apply to a transferee and references in this paragraph 12.1 to
the Undersigned shall refer to a transferee.  Anything in this Note or any
other Loan Document or any instrument or certificate executed in connection
therewith to the contrary notwithstanding, the Undersigned shall have no
personal liability directly or indirectly for the payment of any principal,
interest or premium due under this Note or the performance of any other
obligation under the Loan Documents, and Obligee shall not seek any
deficiency judgment against the Undersigned or make any resort therefor to
any property of the Undersigned other than the Mortgaged Premises and the
rents, issues, proceeds and profits thereof.

           (a)  Notwithstanding the foregoing, the provisions of this
paragraph 12.1 shall not:

                 (i)  limit or impair the Undersigned's liability
regarding its obligations under the Environmental Indemnity and the
environmental indemnity contained in subparagraph 1(p) of the Deed of
Trust.

                 (ii)  limit or impair the lien or enforcement of the Deed
of Trust and any other Loan Document or the right of Obligee to collect all
sums due hereunder or thereunder except as expressly limited by this
paragraph;

                 (iii)  cause the failure of the Undersigned to make all
payments of principal, interest and premium or to perform any obligation
under the Deed of Trust and any other Loan Document within the time periods
provided herein or therein from being an Event of Default thereunder;

                 (iv)  limit the Undersigned's personal liability, or
impair the right of Obligee to bring suit against any Exculpated Party,
for:

           (1)  misapplication of any rents (including prepaid rents or
other similar sums) or other income from the Mortgaged Premises during such
time an Event of Default has occurred and is continuing;

           (2)  any misappropriation of security deposits or reserve
accounts (i.e., to the extent not applied in accordance with the applicable
leases);

           (3)  misappropriation of any insurance or condemnation
proceeds; and/or

           (4)  any misapplication, following the occurrence of an Event
of Default, of any other sums paid in connection with the Mortgaged
Premises.

In the event of any of the exceptions in paragraph (i) and subparagraphs
(1) through (4) of paragraph (iv) above, the recourse of Obligee shall be
limited solely to the assets of the Undersigned (including, but not limited
to, the Mortgaged Premises), but only to the extent of the misapplication
or misappropriation of such proceeds, awards, security deposits, reserve
accounts, rents, income, and other harm caused by the foregoing items,
along with all reasonable costs, charges and expenses incurred or expending
by Obligee in connection with the enforcement of such action.

      (b)  In the event of either of the following two occurrences, the
agreement not to pursue recourse liability shall become null and void and
shall have no further force and effect:

                 (i)  A breach or violation of the Undersigned's agreement
not to, directly or indirectly, due to assignment of beneficial interest
under a trust, partnership interest in a partnership, or otherwise, cause
or permit any sale, transfer or conveyance of the Mortgaged Premises or
create, suffer or permit any encumbrance or lien on the Mortgaged Premises
other than the lien of the Deed of Trust and any other instrument or
agreement by which this Note is secured, the leases of the Mortgaged
Premises assigned to Obligee and such other transfers, liens, or
encumbrances if any, as are expressly permitted under the Deed of Trust or
any other instrument or agreement by which this Note is secured (and other
than a non-material mechanic's lien affecting the Mortgaged Premises, the
granting of any utility or other easement or servitude burdening the
Mortgaged Premises, or any other transfer or encumbrance not in the nature
of transfer, reduction or impairment of any material economic interest in
the Mortgaged Premises); or

                 (ii)  Any fraud or willful misrepresentation by the
Undersigned regarding the Mortgaged Premises, or the making or delivery of
this Note or any other Loan Document or in any written materials or
information provided by the Undersigned in connection with the Loan.

      13.  If more than one, all obligations and agreements of the
Undersigned are joint and several.  Subject to the limitations set forth in
paragraph 12 above, the liability of all general partners of the
Undersigned shall be joint and several.

      14.  The remedies of Obligee, as provided herein, shall be cumulative
and concurrent and may be pursued singly, successively or together, at the
sole discretion of Obligee, and may be exercised as often as occasion
therefor shall occur; and the failure to exercise any such right or remedy
shall in no event be construed as a waiver or release thereof.

      15.  This Note shall be construed and enforced in accordance with the
substantive law of the State of California; the Courts of California shall
have exclusive jurisdiction over suits as to the indebtedness and the other
documents described above; and the Undersigned hereby consents to the
jurisdiction of the Courts of California.

      16.  This Note may not be changed or terminated orally, but only by
an agreement in writing and signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.  All of the
rights, privileges and obligations hereunder shall inure to the benefit of
the heirs, successors and assigns of the Obligee and shall bind the hears,
successors and assigns of the Undersigned.

      17.  If any provision of this Note shall, for any reason, be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.

      18.  Nothing herein shall limit, restrict or prohibit Obligee's
ability to sell, assign or transfer all or a portion of its interest in the
Loan and the Loan Documents.  A single servicer ("Servicer") shall be
authorized to act on behalf of any lender or lenders ("Lender") holding an
interest in the Loan, in accordance with the terms of any agreement between
the Lender and Servicer, throughout the term of the Loan, provided no Event
of Default exists under the Loan Documents.  Principal Mutual Life
Insurance Company is hereby designated as the Servicer as of the date
hereof and will remain the Servicer until completion of the Project, as
defined in the Construction Loan Agreement.  Any notices, requests,
approval, consents, deliveries, or other forms of communication between the
Undersigned and Servicer shall be deemed adequate and sufficient as if
given by or to Lender.  In the event Principal Mutual Life Insurance
Company ceases to service the Loan, a new Servicer will be appointed by
Lender and the Undersigned will be provided with written notice as to who
the new Servicer will be.
<PAGE>
      IN WITNESS WHEREOF, the Undersigned has caused this Note to be
executed and delivered on the date first hereinabove written.

                           OAKRIDGE ASSOCIATES, a California
                           general partnership

                           By: Ernest W. Hahn, Inc., a
                           California corporation, a partner

                           By: 
                                 --------------------
                                 Name:Wendy M. Godoy
                                 Title:     Vice President Finance and
Treasurer

                           By Carlyle Real Estate Limited
                           Partnership-VII, an Illinois
                           limited partnership, a partner

                           By:   JMB Realty Corporation,
                                 a Delaware corporation
                                 Its Managing General Partner

                                 By:  
                                      --------------------
                                      Name:
                                      Title: 

      IN WITNESS WHEREOF, the Undersigned has caused this Note to be
executed and delivered on the date first hereinabove written.

                           OAKRIDGE ASSOCIATES, a California
                           general partnership

                           By: Ernest W. Hahn, Inc., a
                           California corporation, a partner

                           By: 
                                 --------------------
                                 Name:Wendy M. Godoy
                                 Title:     Vice President Finance and
Treasurer

                           By Carlyle Real Estate Limited
                           Partnership-VII, an Illinois
                           limited partnership, a partner

                           By:   JMB Realty Corporation,
                                 a Delaware corporation
                                 Its Managing General Partner

                                 By:  
                                      --------------------
                                      Name:
                                      Title: 
<PAGE>
      IN WITNESS WHEREOF, the Undersigned has caused this Note to be
executed and delivered on the date first hereinabove written.

                           OAKRIDGE ASSOCIATES, a California
                           general partnership

                           By: Ernest W. Hahn, Inc., a
                           California corporation, a partner

                           By: 
                                 --------------------
                                 Name:Wendy M. Godoy
                           Title:Vice President Finance and Treasurer

                           By Carlyle Real Estate Limited
                           Partnership-VII, an Illinois
                           limited partnership, a partner

                           By:   JMB Realty Corporation,
                                 a Delaware corporation
                                 Its Managing General Partner

                                 By:  
                                      --------------------
                                      Name: Julie A. Strocchia
                                      Title:     Vice-President

<TABLE> <S> <C>




<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<CIK>   0000215371
<NAME>  CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII

       
<S>                       <C>
<PERIOD-TYPE>             3-MOS
<FISCAL-YEAR-END>         DEC-31-1995
<PERIOD-END>              MAR-31-1995

<CASH>                              5,061,010 
<SECURITIES>                        1,625,539 
<RECEIVABLES>                       8,653,163 
<ALLOWANCES>                                0 
<INVENTORY>                                 0 
<CURRENT-ASSETS>                   15,339,712 
<PP&E>                             27,460,826 
<DEPRECIATION>                     16,859,684 
<TOTAL-ASSETS>                     28,963,555 
<CURRENT-LIABILITIES>               3,032,236 
<BONDS>                            25,592,407 
<COMMON>                                    0 
                       0 
                                 0 
<OTHER-SE>                            177,243 
<TOTAL-LIABILITY-AND-EQUITY>       28,963,555 
<SALES>                             1,696,456 
<TOTAL-REVENUES>                    1,729,697 
<CGS>                                       0 
<TOTAL-COSTS>                       1,029,097 
<OTHER-EXPENSES>                       63,839 
<LOSS-PROVISION>                            0 
<INTEREST-EXPENSE>                    521,657 
<INCOME-PRETAX>                       115,104 
<INCOME-TAX>                                0 
<INCOME-CONTINUING>                    46,536 
<DISCONTINUED>                              0 
<EXTRAORDINARY>                      (432,030)
<CHANGES>                                   0 
<NET-INCOME>                         (385,494)
<EPS-PRIMARY>                          (20.55)
<EPS-DILUTED>                               0 

        


</TABLE>

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