CARLYLE REAL ESTATE LTD PARTNERSHIP VII, 10-K, 1996-03-28

CARLYLE REAL ESTATE LTD PARTNERSHIP VII
10-K, 1996-03-28
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year
ended December 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) (I.R.S. Employer Identification No.)

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

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

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each class which registered
- ------------------- -------------------------------

None None

Securities registered pursuant to Section 12(g) of the Act:

LIMITED PARTNERSHIP INTERESTS
(Title of class)

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

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

State the aggregate market value of the voting stock held by non-affiliates
of the Registrant. Not applicable.

Documents incorporated by reference: None

TABLE OF CONTENTS

Page
----
PART I

Item 1. Business. . . . . . . . . . . . . . . . . . . . 1

Item 2. Properties. . . . . . . . . . . . . . . . . . . 5

Item 3. Legal Proceedings . . . . . . . . . . . . . . . 7

Item 4. Submission of Matters to a
Vote of Security Holders. . . . . . . . . . . . 7

PART II

Item 5. Market for the Partnership's Limited
Partnership Interests and
Related Security Holder Matters . . . . . . . . 7

Item 6. Selected Financial Data . . . . . . . . . . . . 8

Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . 12

Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . . . . . 16

Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure. . . . . . . . . . . . 41

PART III

Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . . . . 41

Item 11. Executive Compensation. . . . . . . . . . . . . 44

Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . . . . . 45

Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . 46

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . 46

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 48

PART I

ITEM 1. BUSINESS

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

The registrant, Carlyle Real Estate Limited Partnership-VII (the
"Partnership"), is a limited partnership formed in 1976 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois to invest in improved income-producing commercial and residential
real property. The Partnership sold $18,000,000 in Limited Partnership
Interests (the "Interests") to the public commencing on October 17, 1977
pursuant to a Registration Statement on Form S-11 under the Securities Act
of 1933 (Registration No. 2-59231). A total of 18,000 Interests were sold
to the public at $1,000 per Interest. A total of 11,045 Interests were
sold to the public in 1977; the remaining 6,955 Interests were sold to the
public in 1978. The offering closed March 31, 1978. No Limited Partner
has made any additional capital contribution after such date. The Limited
Partners of the Partnership share in their portion of the benefits of
ownership of the Partnership's real property investments according to the
number of Interests held.

The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or through
joint venture partnership interests. The Partnership's real estate
investment is located in the State of California and it has no real estate
investments located outside of the United States or in any other country.
A presentation of information about industry segments, geographic regions,
raw materials, or seasonality is not applicable and would not be material
to an understanding of the Partnership's business taken as a whole.
Pursuant to the Partnership Agreement, the Partnership is required to
terminate no later than December 31, 2027. The Partnership is self-
liquidating in nature. At sale of a particular property, the net proceeds,
if any, are generally distributed or reinvested in existing properties
rather than invested in acquiring additional properties. As discussed
further in Item 7, the marketplace in which the property operates and real
estate markets in general are in a recovery mode. The Partnership
currently expects to conduct an orderly liquidation of its remaining
investment property as quickly as practicable and to wind up its affairs
not later than December 31, 1999, barring any unforeseen economic
developments. (Reference is also made to Note 1.)

The Partnership has made the real property investments set forth in
the following table:

<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (H) SIZE PURCHASE CAPITAL PERCENTAGE (A) TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Waterford Corners
Shopping Center
Waterford Township,
Michigan . . . . . . 73,000 3-8-77 3-17-78 fee ownership of land and
sq.ft. improvements
g.l.a.
2. Place II Apartments
Phoenix, Arizona . . 161 units 6-6-77 4-1-82 fee ownership of land and
improvements
3. Southland Mall
Columbus, Ohio . . . 119,000 7-15-77 1-1-84 fee ownership of land and
sq.ft. improvements
g.l.a.
4. Walnut Bend
Apartments
Dallas, Texas. . . . 260 units 10-1-77 6-27-83 fee ownership of land and
improvements (e)
5. Bellfort II
Apartments
Houston, Texas . . . 180 units 7-15-77 3-29-85 fee ownership of land and
improvements (through joint
venture partnership)
6. Spice Island
Apartments
Houston, Texas . . . 256 units 9-16-77 5-31-84 fee ownership of land and
improvements
7. Bush River Mall
Columbia,
South Carolina . . . 108,000 7-15-77 12-15-83 fee ownership of land and
sq.ft. improvements
g.l.a.
8. Oakridge Mall
San Jose,
California . . . . . 335,000 10-15-77 22% fee ownership of improve-

sq.ft. ments and ground leasehold
g.l.a. interest in land (through
joint venture partnership)
(b)(c)(d)(i)
9. Windridge Apartments
Dallas, Texas . . . 232 units 12-29-77 10-1-89 fee ownership of land and
improvements (through joint
venture partnership) (f)

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (H) SIZE PURCHASE CAPITAL PERCENTAGE (A) TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ---------------------- ---------------------

10. Shadowridge of
San Antonio
Apartments
San Antonio, Texas. 252 units 12-29-77 8-29-83 fee ownership of land and
improvements
11. North Chase
Apartments
Houston, Texas. . . 294 units 4-7-78 2-5-91 fee ownership of land and
improvements (through joint
venture partnerships)
(c)(g)
12. Wakefield
Apartments
Marietta, Georgia . 312 units 7-31-78 12-20-82 fee ownership of land and
improvements

<FN>

- ---------------

(a) The computation of this percentage for the property held at December
31, 1995 does not include amounts invested from sources other than the
original net proceeds of the public offering as described above and in Item
7.

(b) Reference is made to Note 4 filed with this annual report for the
current outstanding principal balance and a description of the long-term
mortgage indebtedness secured by the Partnership's real property
investment.

(c) Reference is made to Note 3 filed with this annual report for a
description of the joint venture partnership through which the Partnership
has made this real property investment.

(d) Reference is made to Note 7(b) filed with this annual report for a
description of the leasehold interest, under a ground lease, in the land on
which the improvements in this real property investment are situated.

(e) This property has been sold. Reference is made to Note 6 filed with
this annual report for a description of the sale of this real property
investment.

(f) This property was sold in 1985, reacquired in 1987 and resold in
1989.

(g) This property was disposed in February 1991. Reference is made to
Note 3(c) filed with this annual report for a description of additional
information related to this transaction.

(h) Reference is made to Item 8 - Schedule III filed with this annual
report for further information concerning real estate taxes and
depreciation.

(i) Reference is made to Item 6 - Selected Financial Data for additional
operating and lease expiration data concerning this investment property.

</TABLE>

The Partnership's remaining real property investment is subject to
competition from similar types of properties (including, in certain areas,
properties owned or advised by affiliates of the General Partners) in the
vicinity in which it is located. Such competition is generally for the
retention of existing tenants. Reference is made to Item 7 below for a
discussion of competitive conditions and future renovation and capital
improvement plans of the Partnership and its remaining investment property.

Approximate occupancy levels for the property are set forth in the table in
Item 2 below to which reference is hereby made. The Partnership maintains
the suitability and competitiveness of its property in its market primarily
on the basis of effective rents, tenant allowances and service provided to
tenants. In the opinion of the Corporate General Partner of the
Partnership, the remaining investment property held at December 31, 1995 is
adequately insured. Although there is earthquake insurance coverage for a
portion of the value of the Partnership's investment property, the
Corporate General Partner does not believe that such coverage for the
entire replacement cost of the investment property is available on economic
terms.

Reference is made to Note 7(a) for a schedule of minimum lease
payments to be received in each of the next five years, and in the
aggregate thereafter, under leases in effect at the Partnership's property
as of December 31, 1995.

The Partnership has no employees.

The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.

ITEM 2. PROPERTIES

The Partnership owns directly or through joint venture partnerships
the properties or interests in the properties referred to under Item 1
above to which reference is hereby made for a description of said
properties.

The following is a listing of principal businesses or occupations
carried on in and approximate occupancy physical levels by quarter during
fiscal years 1995 and 1994 for the Partnership's remaining investment
property owned during 1995:

<TABLE>
<CAPTION>
1994 1995
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Oakridge Mall
San Jose, California . . Retail 88% 92% 92% 93% 91% 91% 90% 88%

- ----------
<FN>

Reference is made to Item 6, Item 7 and Note 7 for further information regarding property occupancy,
competitive conditions and tenant leases at the Partnership's remaining investment property.

</TABLE>

ITEM 3. LEGAL PROCEEDINGS

The Partnership is not presently subject to any material pending legal
proceedings.

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

There were no matters submitted to a vote of security holders during
fiscal years 1994 and 1995.

PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTEREST
AND RELATED SECURITY HOLDER MATTERS

As of December 31, 1995, there were 1,761 record holders of Interests
of the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request,
the Corporate General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspects of the transaction, will be subject to negotiation by the
investor. There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Corporate General
Partner. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests. No transfer
will be effective until the first day of the next succeeding calendar
quarter after the requisite transfer form satisfactory to the Corporate
General Partner has been received by the Corporate General Partner. The
transferee consequently will not be entitled to receive any cash
distributions or any allocable share of profits or losses for tax purposes
until such succeeding calendar quarter. Profits or losses from operations
of the Partnership for a calendar year in which a transfer occurs will be
allocated between the transferor and the transferee based upon the number
of quarterly periods in which each was recognized as the holder of
Interests, without regard to the results of Partnership's operations during
particular quarterly periods and without regard to whether cash
distributions were made to the transferor or transferee. Profits or losses
arising from the sale or other disposition of Partnership properties will
be allocated to the recognized holder of the Interests as of the last day
of the quarter in which the Partnership recognized such profits or losses.
Cash distributions to a holder of Interests arising from the sale or other
disposition of Partnership properties will be distributed to the recognized
holder of the Interests as of the last day of the quarterly period with
respect to which distribution is made.

Reference is made to Item 6 below for a discussion of cash
distributions made to the Limited Partners.

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA

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

YEARS ENDED DECEMBER 31, 1995, 1994, 1993, 1992 AND 1991
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

Total income . . . . . . . $ 8,438,395 7,996,717 8,179,492 8,623,739 8,967,801
============ ============ =========== ============ ===========

Operating earnings . . . . $ 1,924,183 2,041,133 1,714,576 1,549,300 1,722,376
Venture partners' share
of ventures' operations . (969,830) (1,037,724) (988,465) (997,323) (900,351)
------------ ------------ ----------- ------------ ------------
Net operating earnings . . 954,353 1,003,409 726,111 551,977 822,025
Gain on sale of invest-
ment properties . . . . . -- -- 2,667,071 398,984 4,043,790
Extraordinary item, net
of venture partner's
share . . . . . . . . . . (391,010) -- -- -- --
------------ ------------ ----------- ------------ ------------
Net earnings . . . . . . . $ 563,343 1,003,409 3,393,182 950,961 4,865,815
============ ============ =========== ============ ===========
Net earnings per
Interest (b):
Net operating
earnings. . . . . . . $ 50.88 53.50 38.72 29.43 43.83
Gain on sale of invest-
ment properties . . . -- -- 146.65 21.94 222.35
Extraordinary item, net
of venture partner's
share . . . . . . . . (21.50) -- -- -- --
------------ ------------ ----------- ------------ ------------
Net earnings . . . . . $ 29.38 53.50 185.37 51.37 266.18
============ ============ =========== ============ ===========
Total assets . . . . . . . $ 28,723,368 16,393,988 15,729,136 22,264,626 26,884,205
Long-term debt . . . . . . $ 24,532,836 13,741,800 14,245,434 17,967,836 18,441,743
Cash distributions per
Interest (c). . . . . . . $ -- 5.00 20.00 20.00 20.00
============ ============ =========== ============ ===========

<FN>
- -------------

(a) The above summary of financial data should be read in
conjunction with the consolidated financial statements and the related
notes appearing elsewhere in this annual report.

(b) The net earnings (loss) per Interest is based upon the number
of Interests outstanding at the end of each period (18,005).

(c) Cash distributions from the Partnership are generally not equal
to Partnership income (loss) for financial reporting or Federal income tax
purposes. Each Partner's taxable income (or loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of
the Partnership, without regard to the cash generated or distributed by the
Partnership. Accordingly, cash distributions to the Limited Partners since
the inception of the Partnership have not resulted in taxable income to
such Limited Partners and have therefore represented a return of capital.

</TABLE>

<TABLE>

SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1995

Property
- --------

Oakridge Mall a) The gross leasable area ("GLA") occupancy
rate and average base rent per square foot
as of December 31 for each of the last
five years were as follows:

GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>

1991 . . . . . . 97% 14.83
1992 . . . . . . 97% 15.33
1993 . . . . . . 96% 16.01
1994 . . . . . . 93% 17.07
1995 . . . . . . 88% 18.04
<FN>
(1) Average base rent per square foot is based on GLA occupied
as of December 31 of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option(s)
------------------- ----------- --------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>

Oakridge Lanes II 48,500 $145,000 8/2003 N/A
(Entertainment)

Michaels 23,332 303,312 7/1999 N/A
(Variety)

Oakridge 6 Theatre 15,346 67,066 12/1998 N/A
(Entertainment)

Walgreens 15,268 49,620 12/1997 N/A
(Drug)
</TABLE>

<TABLE>
<CAPTION>
c) The following table sets forth certain
information with respect to the expiration
of leases for the next ten years at the
Oakridge Mall:

Annualized Percent of
Number of Approx. Total Base Rent Total 1995
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>

1996 8 11,720 116,972 2%
1997 10 28,530 524,076 10%
1998 12 36,985 516,574 10%
1999 11 44,092 803,654 15%
2000 7 12,437 436,147 8%
2001 5 13,588 387,984 7%
2002 3 7,395 204,390 4%
2003 10 69,047 587,160 11%
2004 10 22,754 612,298 12%
2005 5 7,182 263,974 5%
<FN>

(1) Excludes leases that expire in 1995 for which
renewal leases or leases with replacement tenants
have been executed as of March 25, 1996.

</TABLE>

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

LIQUIDITY AND CAPITAL RESOURCES

On October 17, 1977, the Partnership commenced an offering of
$18,000,000 pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933. All Interests were subscribed and issued between
October 17, 1977 and March 31, 1978, pursuant to the public offering from
which the Partnership received gross proceeds of $18,000,000.

After deducting selling expenses and other offering costs, the
Partnership had approximately $16,270,000 with which to make investments in
income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments and for working capital reserves. A portion of such proceeds
were utilized to acquire the properties described in Item 1 above.

At December 31, 1995, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $2,827,000. Such funds will
be utilized for working capital requirements. In addition, restricted
funds of approximately $4,294,000 representing net proceeds received in
February 1995 from the refinancing of the Oakridge Shopping Mall will be
used to fund capital additions, including the replacement of the roof, and
previously deferred maintenance at the mall. The Partnership and its
consolidated venture have currently budgeted approximately $752,000 in 1996
for tenant improvements and other capital expenditures at the Oakridge
investment property. The Partnership's share of such items in 1996 is
currently budgeted to be approximately $376,000. In addition, the Oakridge
Shopping Mall is currently undergoing a major remodeling and expansion
which is scheduled to be complete in early 1996. Capital expenditures
related to the expansion and remodeling (approximately $5,138,000 incurred
in 1995) and anticipated tenant improvement and other leasing costs
associated with the mall expansion (approximately $351,000 incurred in
1995) are being funded by a separate $8,000,000 construction holdback from
the February 1995 refinancing as described below. The balance of the
holdback is expected to be used in 1996 to complete the expansion and
remodeling and for leasing costs. 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. However,
additional partner fundings related to the expansion and remodeling are not
expected to be required. Actual amounts expended in 1996 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 and roof replacement at the Oakridge
investment property, the Partnership has suspended distributions to the
partners effective with the first quarter of 1994. The sources of capital
(in addition to the cash and cash equivalents 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 Oakridge and from its sale and/or refinancing. In such
regard, reference is made to the Partnership's property specific
discussions below and also to the Partnership's disclosure of property
lease expirations in Item 6. The Partnership's and its Venture's mortgage
obligation and its replacement financing secured by the Oakridge investment
property is non-recourse and is secured by the investment property. The
Partnership and its Venture are not personally liable for the payment of
the mortgage indebtedness.

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.

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, the construction
holdback discussed below, closing costs and a prepayment penalty of
approximately $708,000 on the original mortgage loan). These proceeds will
be utilized for capital expenditures and previously deferred maintenance at
the mall. The lender held back $8,000,000 of the loan proceeds for the
construction of an expansion and remodeling of the mall which commenced in
April 1995 and which has been substantially completed as of the date of
this report. The venture has drawn down approximately $5,217,000 from the
holdback as of December 31, 1995 and an additional $2,663,000 as of the
date of this report. Due to the foregoing, 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 terms provide an option to the venture for two 3-year
extensions. The interest rate on these extensions would be adjusted for
each 3-year period based on the then current three-year U.S. Treasury rates
and would continue to be amortized based on the original 12-year schedule.
At the time of application, 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.

In October 1995, Macy's began an approximately $1.7 million remodeling
project which includes new flooring and other amenities. Phase I of the
project was completed in 1995 and Phase II is scheduled to be completed in
mid 1996.

Due to recent developments, including the opening of Sears in the former
Nordstrom store and commencement of Macy's renovation work (both in October
1995), the Partnership and its joint venture partner have decided not to
continue to pursue extensions of the operating covenants in the REA until
such time, if ever, that negotiations for such extensions are deemed to be
in the best interest of Oakridge.

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 the availability of
satisfactory outside sources of capital may be limited given the
portfolio's current debt levels. 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. After
reviewing the remaining property and its competitive marketplace, and
considering the mall renovation to be completed in early 1996, the General
Partners of the Partnership expect to be able to liquidate the remaining
asset as quickly as practicable. The affairs of the Partnership are
expected to be wound up no later than 1999 (sooner if the property is sold
in the nearer term), barring unforeseen economic developments.

RESULTS OF OPERATIONS

The increase in cash and cash equivalents at December 31, 1995 as
compared to December 31, 1994 is primarily due to the retention of funds by
the venture for roof replacement budgeted in 1996 at the Oakridge Shopping
Mall.

The increase in restricted funds (to be used for capital improvements
and previously deferred maintenance projects), restricted construction loan
proceeds (to be used for the mall expansion and remodeling project),
deferred expenses, current portion of long-term debt, long-term debt and
accrued interest at December 31, 1995 as compared to December 31, 1994 and
the increase in interest income and mortgage and other interest expense for
the year ended December 31, 1995 as compared to the year ended December 31,
1994 is primarily due to refinancing of the mortgage debt at the Oakridge
investment property in February, 1995. Reference is made to Note 3(b).

The decrease in short-term investments at December 31, 1995 as
compared to December 31, 1994 is primarily due to the classification of the
Partnership's investments in U.S. Government obligations as cash
equivalents at December 31, 1995. Reference is made to Note 1.

The increase in rents and other receivables at December 31, 1995 as
compared to December 31, 1994 is primarily due to the timing of receipt of
rent from tenants at the Oakridge investment property.

The decrease in escrow deposits and other assets at December 31, 1995
as compared to December 31, 1994 is primarily due to the receipt of the
refundable deposit in February, 1995 in the amount of $540,000 related to
the refinancing of the mortgage debt at the Oakridge investment property.
Reference is made to Note 3(b).

The increase in buildings and improvements at December 31, 1995 as
compared to December 31, 1994 is primarily due to capital additions related
to the expansion and remodeling project at the Oakridge investment property
as more fully discussed above.

The decrease in venture partner's deficit in venture at December 31,
1995 as compared to December 31, 1994 is due to the venture partner's share
of 1995 net income at the Oakridge investment property.

The decrease in rental income and property operating expenses for the
year ended December 31, 1995 as compared to the year ended December 31,
1994 is primarily due to reduced average occupancy at the Oakridge
investment property. Reference is made to Item 2.

The decrease in interest income and mortgage and other interest for
1994 as compared to 1993 is primarily due to the Partnership receiving a
payoff of the purchase price wrap-around mortgage note relating to the
Walnut Bend Apartments investment property in December 1993 (Note 6). Also
contributing to the decrease in interest income was the lower average
balance in short-term investments in 1994, partially offset by higher
yields received on those investments.

The increase in depreciation expense for the year ended December 31,
1995 as compared to the year ended December 31, 1994 is primarily due to
the capital additions incurred in 1994 and 1995 at the Oakridge Mall
investment property. The decrease in depreciation expense for 1994 as
compared to 1993 is primarily due to certain tenant improvements becoming
fully depreciated at the Oakridge Mall investment property.

The decrease in management fees to corporate general partner for the
year ended December 31, 1995 as compared to the year ended December 31,
1994 and 1994 as compared to 1993 is primarily due to the temporary
suspension of operating distributions to partners effective the first
quarter of 1994 as discussed above, a portion of which is its management
fee to the Corporate General Partner.

The decrease in general and administrative expense for the year ended
December 31, 1995 as compared to the year ended December 31, 1994 are
primarily due to refunds received by the Partnership in 1995 from the
General Partner and its affiliates for certain 1993 general and
administrative reimbursements which were paid by the Partnership in 1994.
Reference is made to Note 8.

The decrease in venture partner's share of venture's operations for
the year ended December 31, 1995 as compared to the year ended December 31,
1994 and 1993 is primarily due to increased mortgage interest expense
related to the February 1995 refinancing, partially offset by higher
interest income due to receipt of approximately $4,300,000 in net proceeds
from the refinancing. Reference is made to Note 3(b).

The extraordinary item, net of venture partner's share, in the amount
of $391,010 for the year ended December 31, 1995 (which includes the
Partnership's share of a prepayment penalty of approximately $708,000) is
due to refinancing of the mortgage debt at the Oakridge investment property
in February, 1995. Reference is made to Note 3(b).

The gain on sale of investment properties in 1993 in the amount of
$2,667,071 is due to the pay-off in December 1993 of the Walnut Bend
Apartments wrap-around mortgage note (Note 6).

INFLATION

Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.

Inflation is not expected to significantly impact future operations
due to the expected liquidation of the Partnership by 1999. However, to
the extent that inflation in future periods would have an adverse impact on
property operating expenses, the effect would generally be offset by
amounts recovered from tenants as many of the long-term leases at the
Partnership's commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes. Therefore, there should be little effect on
operating earnings if the property remains substantially occupied. In
addition, substantially all of the leases at the Partnership's shopping
center investment contain provisions which entitle the Partnership to
participate in gross receipts of tenants above fixed minimum amounts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

INDEX

Independent Auditors' Report

Consolidated Balance Sheets, December 31, 1995 and 1994

Consolidated Statements of Operations, years ended December 31,
1995, 1994 and 1993

Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1995, 1994 and 1993

Consolidated Statements of Cash Flows, years ended December 31,
1995, 1994 and 1993

Notes to Consolidated Financial Statements

SCHEDULE

Consolidated Real Estate and Accumulated Depreciation . . . .III

SCHEDULES NOT FILED:

All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or related notes.

INDEPENDENT AUDITORS' REPORT

The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII:

We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - VII (a limited partnership) and consolidated
ventures as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - VII and consolidated ventures at
December 31, 1995 and 1994, and the results of their operations and their
cash flows for each of the years in the three-year period ended December
31, 1995, in conformity with generally accepted accounting principles.
Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information set
forth therein.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 25, 1996

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

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1995 AND 1994

ASSETS
------
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . $ 2,826,515 2,047,492
Restricted funds (note 3(b)) . . . . . . . . . . . . . . . . . . . . . 4,294,143 --
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . -- 122,949
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . 454,591 397,575
Restricted construction loan proceeds (note 3(b)). . . . . . . . . . . 2,783,191 --
Escrow and other assets. . . . . . . . . . . . . . . . . . . . . . . . 273,086 968,312
------------ -----------

Total current assets . . . . . . . . . . . . . . . . . . . . . 10,631,526 3,536,328
------------ -----------

Investment properties, at cost (notes 2 and 3) - Schedule III:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,179,147 2,179,147
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . 31,071,865 25,021,609
------------ -----------

33,251,012 27,200,756
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . 17,370,504 16,700,459
------------ -----------

Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . . . . 15,880,508 10,500,297

Deferred expenses (note 1) . . . . . . . . . . . . . . . . . . . . . . . 1,363,945 932,899
Accrued rents receivable (note 1). . . . . . . . . . . . . . . . . . . . 810,110 808,365
Venture partner's deficit in venture (note 3). . . . . . . . . . . . . . 37,279 616,099
------------ -----------

$ 28,723,368 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)
-----------------------------------------------------
1995 1994
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . . . . $ 1,396,898 503,634
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,302,198 1,306,228
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,578 108,954
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . 2,897,674 1,918,816

Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . 61,249 65,106
Long-term debt, less current portion (note 4). . . . . . . . . . . . . . 24,532,836 13,741,800
------------ -----------

Commitments and contingencies (notes 3, 4 and 7)

Total liabilities. . . . . . . . . . . . . . . . . . . . . . . 27,491,759 15,725,722

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

Partners' capital accounts (deficits) (note 5):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . (723,934) (758,198)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (279,075) (279,075)
------------ -----------
(1,002,009) (1,036,273)
------------ -----------
Limited partners (18,005 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 16,269,038 16,269,038
Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . 13,099,947 12,570,868
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (27,240,896) (27,240,896)
------------ -----------
2,128,089 1,599,010
------------ -----------
Total partners' capital accounts (deficits). . . . . . . . . . 1,126,080 562,737
------------ -----------

$ 28,723,368 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

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . $ 7,761,913 7,848,706 7,855,515
Interest income. . . . . . . . . . . . . . . . . . . 676,482 148,011 323,977
------------ ------------ ------------
8,438,395 7,996,717 8,179,492
------------ ------------ ------------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . 2,179,802 1,658,208 2,039,965
Depreciation . . . . . . . . . . . . . . . . . . . . 670,045 572,159 637,571
Property operating expenses. . . . . . . . . . . . . 3,372,401 3,402,004 3,449,006
Professional services. . . . . . . . . . . . . . . . 77,594 69,075 100,155
Management fees to corporate
general partner. . . . . . . . . . . . . . . . . . -- 4,078 16,310
Amortization of deferred expenses. . . . . . . . . . 169,682 179,153 152,013
General and administrative . . . . . . . . . . . . . 44,688 70,907 69,896
------------ ------------ ------------
6,514,212 5,955,584 6,464,916
------------ ------------ ------------
Operating earnings . . . . . . . . . . . . . 1,924,183 2,041,133 1,714,576
Venture partners' share of ventures'
operations (note 3(b)) . . . . . . . . . . . . . . . (969,830) (1,037,724) (988,465)
------------ ------------ ------------
Net operating earnings . . . . . . . . . . . . 954,353 1,003,409 726,111
Gain on sale of investment properties (note 6) . . . . -- -- 2,667,071
------------ ------------ ------------
Net earnings before extraordinary item . . . . 954,353 1,003,409 3,393,182

Extraordinary item, net of venture partner's
share of $391,010 (note 3(b)). . . . . . . . . . . . (391,010) -- --
------------ ------------ ------------

Net earnings . . . . . . . . . . . . . . . . . $ 563,343 1,003,409 3,393,182
============ ============ ============

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

1995 1994 1993
------------ ------------ ------------
Net earnings per limited partnership
interest (note 1):
Net operating earnings . . . . . . . . . . $ 50.88 53.50 38.72
Gain on sale of investment properties. . . -- -- 146.65
Extraordinary item, net of venture
partner's share. . . . . . . . . . . . . (21.50) -- --
------------ ------------ ------------
Net earnings per limited
partnership interest. . . . . . . . . $ 29.38 53.50 185.37
============ ============ ============

<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 PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (18,005 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficits) at
December 31,
1992. . . . . . $1,000 (854,049) (260,320) (1,113,369) 16,269,038 8,270,128 (26,790,771) (2,251,605)

Net earnings . . -- 55,715 -- 55,715 -- 3,337,467 -- 3,337,467
Cash distribu-
tions ($20
per limited
partnership
interest) . . . -- -- (15,004) (15,004) -- -- (360,100) (360,100)
------ -------- -------- ---------- ---------- ---------- ----------- ---------

Balance
(deficit) at
December 31,
1993. . . . . . 1,000 (798,334) (275,324) (1,072,658) 16,269,038 11,607,595 (27,150,871) 725,762

Net earnings . . -- 40,136 -- 40,136 -- 963,273 -- 963,273
Cash distribu-
tions ($5
per limited
partnership
interest) . . . -- -- (3,751) (3,751) -- -- (90,025) (90,025)
------ -------- -------- ---------- ---------- ---------- ----------- ---------

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

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED

GENERAL PARTNERS LIMITED PARTNERS (18,005 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
Balance
(deficit) at
December 31,
1994. . . . . . 1,000 (758,198) (279,075) (1,036,273) 16,269,038 12,570,868 (27,240,896) 1,599,010

Net earnings . . -- 34,264 -- 34,264 -- 529,079 -- 529,079
Cash distribu-
tions ($0
per limited
partnership
interest) . . . -- -- -- -- -- -- -- --
------ -------- -------- ---------- ---------- ---------- ----------- ---------
Balance
(deficit) at
December 31,
1995. . . . . .$1,000 (723,934) (279,075) (1,002,009) 16,269,038 13,099,947 (27,240,896) 2,128,089
====== ======== ======== ========== ========== ========== =========== =========

<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

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . $ 563,343 1,003,409 3,393,182
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . 670,045 572,159 637,571
Amortization of deferred expenses. . . . . . . . . 169,682 179,153 152,013
Venture partner's share of venture's
operations . . . . . . . . . . . . . . . . . . . 969,830 1,037,724 988,465
Gain on sale of investment properties. . . . . . . -- -- (2,667,071)
Extraordinary item, net of venture partner's
share of $391,010. . . . . . . . . . . . . . . . 391,010 -- --
Changes in:
Rents and other receivables. . . . . . . . . . . . . (57,016) (38,140) 450,858
Escrow deposits and other assets . . . . . . . . . . 695,226 (726,959) 270,858
Accrued rents receivable . . . . . . . . . . . . . . (1,745) (76,478) (80,790)
Accounts payable . . . . . . . . . . . . . . . . . . (4,030) 234,852 (764,525)
Accrued interest . . . . . . . . . . . . . . . . . . 171,665 (3,515) (48,692)
Other current liabilities. . . . . . . . . . . . . . -- -- (53,697)
Tenant security deposits . . . . . . . . . . . . . . (3,857) (16,489) 731
----------- ----------- -----------
Net cash provided by operating
activities . . . . . . . . . . . . . . . . 3,564,153 2,165,716 2,278,903
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases)
of short-term investments. . . . . . . . . . . . . 122,949 2,561,154 (2,089,262)
Principal payments on mortgage notes
receivable . . . . . . . . . . . . . . . . . . . . -- -- 54,438
Proceeds from pay-off of wrap-around
mortgage note. . . . . . . . . . . . . . . . . . . -- -- 5,000,000
Additions to investment properties (note 2). . . . . (6,050,256) (3,956,063) (67,078)
Payment of deferred expenses . . . . . . . . . . . . (756,555) (267,430) (275,044)
Property disposition fees. . . . . . . . . . . . . . -- -- (86,888)
----------- ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . (6,683,862) (1,662,339) 2,536,166
----------- ----------- -----------

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . (15,315,700) (459,629) (3,736,562)
Venture partner's contributions to venture . . . . . -- 837,500 --
Distributions to venture partners. . . . . . . . . . -- -- (760,000)
Initial proceeds received on refinanced
long-term debt (note 3(b)) . . . . . . . . . . . . 19,000,000 -- --
Payments received from refinanced long-term
debt holdback (note 3(b)). . . . . . . . . . . . . 5,216,809 -- --
Restricted funds . . . . . . . . . . . . . . . . . . (4,294,143) -- --
Prepayment penalty on long-term debt (note 3(b)) . . (708,234) -- --
Distributions to limited partners. . . . . . . . . . -- (90,025) (360,100)
Distributions to general partners. . . . . . . . . . -- (3,751) (15,004)
----------- ----------- -----------
Net cash provided by (used in)
financing activities . . . . . . . . . . . 3,898,732 284,095 (4,871,666)
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . 779,023 787,472 (56,597)
Cash and cash equivalents,
beginning of year. . . . . . . . . . . . . 2,047,492 1,260,020 1,316,617
----------- ----------- -----------
Cash and cash equivalents, end of year . . . $ 2,826,515 2,047,492 1,260,020
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest, net
of amounts capitalized of $179,853 in 1995 . . . . $ 2,008,137 1,661,723 2,088,657
=========== =========== ===========
Non-cash investing and financing activities:
Gain on sale in investment property (note 6):
Cash proceeds from pay-off of wrap-around
mortgage note. . . . . . . . . . . . . . . . . $ -- -- 5,000,000
Reductions of other assets and liabilities . . . -- -- 118
Reduction in deferred gain . . . . . . . . . . . -- -- 4,863,817
Reduction of deferred expenses . . . . . . . . . -- -- (4,218)
Reduction of wrap-around mortgage note
receivable, net of discount. . . . . . . . . . -- -- (7,192,646)
----------- ----------- -----------
Gain on sale of investment property. . . . . $ -- -- 2,667,071
=========== =========== ===========
Non-cash extraordinary item (note 3(b)). . . . . . $ 73,786 -- --
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

(1) OPERATIONS AND BASIS OF ACCOUNTING

The Partnership holds (through a joint venture) an equity investment
in a shopping center in San Jose, California. Business activities consist
of rentals to a wide variety of retail companies, and the ultimate sale or
disposition of such real estate. The Partnership currently expects to
conduct an orderly liquidation of its remaining investment and wind up its
affairs not later than December 31, 1999.

The accompanying consolidated financial statements include the
accounts of the Partnership and its ventures, Oakridge Associates
("Oakridge") and Greenspoint Associates ("Greenspoint"). Reference is made
to note 3. The effect of all transactions between the Partnership and the
ventures have been eliminated in the consolidated financial statements.

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 where applicable to reflect
the Partnership's accounts in accordance with generally accepted accounting
principles ("GAAP") and to include the accounts of the ventures as
described above. Such GAAP and consolidation adjustments are not recorded
on the records of the Partnership. The net effect of these items for the
years ended December 31, 1995 and 1994 is summarized as follows:

<TABLE>
<CAPTION>
1995 1994
-------------------------------------------------------------
TAX BASIS
GAAP BASIS (Unaudited) GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . $28,723,368 1,098,816 16,393,988 355,115
Partners' capital accounts
(deficit) (note 5):
General partners . . . . . . . . (1,002,009) (1,017,100) (1,036,273) (1,046,728)
Limited partners . . . . . . . . 2,128,089 1,852,649 1,599,010 1,141,566
Net earnings
(note 5):
General partners . . . . . . . . 34,264 29,628 40,136 39,152
Limited partners . . . . . . . . 529,079 711,083 963,273 939,650
Net earnings per
limited partnership
interest. . . . . . . . . . . . . . 29.38 39.49 53.50 52.19
=========== ========== =========== ===========

</TABLE>

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

The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

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 ($1,843,594 and $1,832,040 at December
31, 1995 and 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.

Deferred expenses consist primarily of commitment fees incurred in
connection with the acquisition and financing of the properties along with
lease commissions paid on certain of the Partnership's operating
properties. Deferred loan fees and leasing fees are amortized using the
straight-line method over the terms stipulated in the related agreements.

Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
rental income for the full period of occupancy on a straight-line basis.

Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires all
entities to disclose the SFAS 107 value of all financial assets and
liabilities for which it is practicable to estimate. Value is defined in
the Statement as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes the carrying amount of its
financial instruments classified as current assets and liabilities
(excluding current portion of long-term debt) approximates SFAS 107 value
due to the relatively short maturity of these instruments. There is no
quoted market value available for any of the Partnership's other
instruments. The debt, with a carrying balance of $25,929,734, has been
calculated to have an SFAS 107 value of $25,950,291 by discounting the
scheduled loan payments to maturity. Due to restrictions on
transferability and prepayment and the inability to obtain comparable
financing due to current levels of debt or other property specific
competitive conditions, the Partnership would be unable to refinance these
properties to obtain such calculated debt amounts reported. (See note 4.)
The Partnership has no other significant financial instruments.

No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the Partners rather than the
Partnership. However, in certain instances, the Partnership has been or
may be required under applicable law to remit directly to the tax
authorities amounts representing withholding from distributions paid to
Partners.

(2) INVESTMENT PROPERTIES

The Partnership has acquired, either directly or through joint
ventures (note 3), eight apartment complexes and four shopping centers.
All of the properties have been sold or disposed of, except one shopping
center (note 6). The remaining investment property owned at December 31,
1995 is operating. The cost of the remaining investment property
represents the total cost to the Partnership and its venture, plus
miscellaneous acquisition costs.

Depreciation on the operating properties has been provided over the
estimated useful lives of the various components as follows:

YEARS
-----
Buildings and improvements (new)--
straight-line or 150% declining-balance . . . . . . . 5-30
Buildings and improvements (used)--
125% declining-balance or
straight-line . . . . . . . . . . . . . . . . . . . . 5-30
====

The investment property is pledged as security for the long-term debt,
for which there is no recourse to the Partnership (note 4).

Maintenance and repair expenses are charged to operations as incurred.

Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives.

During March 1995, Statement of Financial Accounting Standards No. 121
("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued. SFAS 121, when effective,
will require that the Partnership record an impairment loss on its long-
lived asset to be held and used whenever its carrying value cannot be fully
recovered through estimated undiscounted future cash flows from operations
and sale. The amount of the impairment loss to be recognized would be the
difference between the long-lived asset's carrying value and the asset's
estimated fair value. Any long-lived asset identified as "to be disposed
of" would no longer be depreciated. Adjustments for impairment loss would
be made in each period as necessary to report this asset at the lower of
carrying value and fair value less costs to sell. In certain situations,
such estimated fair value could be less than the existing non-recourse debt
which is secured by the property. There would be no assurance that any
estimated fair value of this asset would ultimately be obtained by the
Partnership in any future sale or disposition transaction.

Under the current impairment policy, provisions for value impairment
are recorded with respect to investment properties whenever the estimated
future cash flows from a property's operations and projected sale are less
than the property's net carrying value. The amount of any such impairment
loss recognized by the Partnership is limited to the excess, if any, of the
property's carrying value over the outstanding balance of the property's
non-recourse indebtedness. An impairment loss under SFAS 121 would be
determined without regard to the nature or the balance of such non-recourse
indebtedness. Upon the disposition of a property with the related
extinguishment of the long-term debt for which an impairment loss has been
recognized under SFAS 121, the Partnership would recognize, at a minimum, a
net gain (comprised of gain on extinguishment of debt and gain or loss on
sale or disposition of property) for financial reporting purposes to the
extent of any excess of the then outstanding balance of the property's non-
recourse indebtedness over the then carrying value of the property,
including the effect of any reduction for impairment loss under SFAS 121.

The Partnership will adopt SFAS 121 as required in the first quarter
of 1996. Based upon the Partnership's current assessment of the impact of
adopting SFAS 121, it is not anticipated that a provision for value
impairment would be required for the property owned by the Partnership and
its consolidated venture. In addition, upon the disposition of an impaired
property, the Partnership would generally recognize more net gain for
financial reporting purposes under SFAS 121 than it would have under the
Partnership's current impairment policy, without regard to the amount, if
any, of cash proceeds received by the Partnership in connection with the
disposition. Although implementation of this new accounting statement
could significantly impact the Partnership's reported earnings, there would
be no impact on cash flows. Further, any such impairment loss would not be
recognized for Federal income tax purposes.

(3) VENTURE AGREEMENTS

The terms of the venture agreements are summarized as follows:

(a) General

The Partnership at December 31, 1995 is a party to one operating joint
venture agreement. Pursuant to such agreement, the Partnership made
initial capital contributions of $3,352,642 (before legal and other
acquisition costs and its share of operating deficits as discussed below).
In general, the joint venture partner, who was the seller of the property
investment being acquired made no cash contributions to the venture, but
their retention of an interest in the property, through the joint venture,
was taken into account in determining the purchase price of the
Partnership's interest (which is determined by arm's-length negotiations).
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 Partnership has acquired, through the one remaining venture, one
regional shopping mall. The joint venture partner (who was primarily
responsible for constructing the property) was to contribute any excess of
cost over the aggregate amount available from Partnership contributions and
financing and, to the extent such funds exceeded the aggregate costs, was
to retain such excesses. The venture property has been financed under the
long-term debt arrangements as described in note 4.

(b) Oakridge Venture

The Partnership is a general partner in the Oakridge Associates Ltd.
venture with the seller of the property.

Pursuant to the venture agreement, beginning January 1, 1983, any net
cash flow is to be and has been distributed equally to the Partnership and
the seller. The Partnership has a preferred position (related to the
Partnership's cash investment in the venture) with respect to distributions
of sale or refinancing proceeds from the venture.

Venture operating profits and losses are allocated to the venture
partners generally in proportion to their distributions of net cash
receipts. In 1995, 1994 and 1993, profits and losses were allocated 50% to
the Partnership and 50% to the venture partner. An affiliate of the
venture partner manages the property pursuant to an agreement which
provides for a management fee calculated at a percentage of certain types
of income.

In October 1990, the Partnership and its Oakridge venture partner
finalized negotiations with the lessors to amend the ground lease at the
Oakridge Mall by adding a "purchase option" provision. The price for
obtaining the purchase option was $2,000,000, of which $1,250,000 was paid
in March 1991 upon execution of the appropriate documents with subsequent
payments of $375,000 (plus interest at 10%) in March 1992 and in March
1993. The Partnership and its venture partner funded their respective 50%
shares of these costs from the cash flow of the property. The option
(which may be exercised five years after the death of both lessors)
provides for the price of the land to be determined by a formula related to
ground rent paid during the most recent few years of the lease, and is
payable in addition to the cost of the purchase option discussed above.

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. At the time of application, Oakridge was required to make a
refundable deposit of $540,000 and to pay a non-refundable $135,000 loan
commitment fee. The Partnership and its venture partner made contributions
to Oakridge to fund their respective 50% shares of these costs. 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 (after payoff of the existing loan
including a prepayment penalty of approximately $708,000 and closing
costs). These proceeds included the return of the refundable deposit of
$540,000. Such refinancing resulted in an extraordinary item of $782,020
(including deferred mortgage costs and accrued interest), of which the
Partnership's share is $391,010. These proceeds will be utilized for
capital expenditures, including the replacement of the roof, and previously
deferred maintenance at the mall and are classified as restricted funds in
the accompanying consolidated balance sheet at December 31, 1995. The
lender held back $8,000,000 of the loan proceeds for the construction of an
expansion and remodeling of the mall which commenced in April 1995 and
which has been substantially completed as of the date of this report. The
venture has drawn down approximately $5,217,000 from the holdback as of
December 31, 1995 (the balance of the lender holdback is classified as
restricted construction loan proceeds in the consolidated balance sheet at
December 31, 1995) and an additional $2,663,000 as of the date of this
report. Due to the foregoing, there will be no distribution of proceeds
from this refinancing. The refinanced mortgage loan bears interest at
9.19% per annum and requires monthly payments of principal and interest of
$310,165 until maturity in February 1998. In addition, Oakridge has the
option to extend the loan for two 3-year periods. 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 (note 4).

Nordstrom (which owned its own store) left the center in March 1995.
Nordstrom has assigned, transferred and conveyed its interest in its land,
building and Reciprocal Easement Agreement ("REA") to Sears Roebuck and Co.
which opened its new store on October 28, 1995. The Nordstrom closing and
Sears Roebuck and Co. opening did not have a significant adverse impact on
the operations of the mall. The property's other anchor tenants,
Montgomery Ward and R.H. Macy, are also subject to the REA. The REA
requirement for each anchor tenant to operate a department store under it's
specific name expired in August 1993 and in addition, the REA requirement
for each anchor tenant to operate a department store under any name expires
in August 1998. Due to recent developments, including the opening of Sears
in the former Nordstrom store and commencement of Macy's renovation work
(both in October 1995), the Partnership and its joint venture partner have
decided not to continue to pursue extensions of the operating covenants in
the REA until such time, if ever, that negotiations for such extensions are
deemed to be in the best interest of Oakridge.

The Partnership was a general partner in the Greenspoint Associates
venture with the sellers of the property.

In January 1993, the Partnership reached an out-of-court settlement
with American Pacific Properties Incorporated who had filed a lawsuit
against the Partnership, JMB Realty Corporation, Greenspoint Associates and
others for breach of contract, misrepresentation, fraud and unfair
deceptive trade practices relating to negotiations for the sale of the
North Chase Apartments. The Plaintiff, as a former potential purchaser,
had been seeking (among other things) approximately $2.8 million in
compensatory damages, punitive damages and attorneys' fees. In exchange
for Partnership payments totalling $300,000, the Partnership received from
the plaintiff a full release from the lawsuit.

(4) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995 and
1994:
1995 1994
----------- -----------
9.178% mortgage note; secured
by the Oakridge Mall shopping
center in San Jose, California;
balance payable in monthly
installments of $149,187
(including interest); refinanced
in February, 1995 by the
loan described immediately
below (a) . . . . . . . . . . . . . $ -- 14,245,434

9.19% mortgage note; secured
by the Oakridge Mall Shopping
Center in San Jose, California;
balance payable in monthly
installments of $310,165
(including interest) until
maturity in February 1998
(note 3(b)) . . . . . . . . . . . . 25,929,734 --

Less current portion of
long-term debt . . . . . . . 1,396,898 503,634
----------- -----------

Total long-term debt. . . . . . $24,532,836 13,741,800
=========== ===========

(a) This mortgage note also provided for additional annual interest
($0 in 1995, $327,594 in 1994 and $308,106 in 1993) based on a percentage
of the amount that certain types of rental income from the property exceed
specified base amounts.

(b) Five year maturities of long-term debt are summarized as follows:

1996. . . . . . . . . . . $ 1,396,898
1997. . . . . . . . . . . 1,530,821
1998. . . . . . . . . . . 23,002,015
1999. . . . . . . . . . . --
2000. . . . . . . . . . . --
===========

(5) PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale or
refinancing of investment properties will be allocated to the General
Partners in an amount equal to the greater of any cash distributions of the
proceeds of any such sale or refinancing (as described below) or 1% of the
profits from the sale or refinancing. Losses from the sale or refinancing
of investment properties will be allocated 1% to the General Partners. The
remaining sale or refinancing profits and losses will be allocated to the
Limited Partners.

An amendment to the Partnership Agreement, effective January 1, 1991,
generally provides that notwithstanding any allocation contained in the
Agreement, if at any time profits are realized by the Partnership, any
current or anticipated event that would cause the deficit balance in
absolute amount in the Capital Account of the General Partners to be
greater than their share of the Partnership's indebtedness (as defined)
after such event, then the allocation of profits to the General Partners
shall be increased to the extent necessary to cause the deficit balance in
the Capital Account of the General Partners to be no less than their
respective shares of the Partnership's indebtedness after such event. In
general, the effect of this amendment is to allow the deferral of the
recognition of taxable gain to the Limited Partners.

The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the
Partnership 6% of the selling price, and that the remaining proceeds (net
after expenses and retained working capital) be distributed 85% to the
Limited Partners and 15% to the General Partners. However, the Limited
Partners shall receive 100% of such net sale proceeds until the Limited
Partners (i) have received cash distributions of sale or refinancing
proceeds in an amount equal to the Limited Partners' aggregate initial
capital investment in the Partnership and (ii) have received cumulative
cash distributions from the Partnership's operations which, when combined
with sale or refinancing proceeds previously distributed, equal a 6% annual
return on the Limited Partners' average capital investment for each year
(their initial capital investment as reduced by sale or refinancing
proceeds previously distributed) commencing with the third fiscal quarter
of 1978. The Limited Partners have received cash distributions that
satisfied the requirements in (i) and (ii) above.

(6) WALNUT BEND APARTMENT COMPLEX

During 1983, the Partnership sold the land and related improvements of
the Walnut Bend Apartment complex for $10,157,500. The sales price
consisted of $100,000 in cash and a $10,057,500 purchase price wrap-around
mortgage note secured by the property.

Due to continuing operating difficulties encountered by the buyer, and
the weak rental market in Texas, the Partnership determined that it was
unlikely that the Partnership would collect all past due or future payments
under the mortgage note, and agreed to a pay-off of the note at a
substantial discount. On December 13, 1993, the Partnership received
approximately $5,000,000 of which approximately $3,300,000 was used to pay-
off the underlying mortgage note. The Partnership received net proceeds of
approximately $1,700,000 which represented a discounted pay-off in full
satisfaction of the wrap-around mortgage note as discussed above.

For financial reporting purposes, the sale was being accounted for by
the installment method whereby the gain on sale of $5,877,457 (net of a
$1,400,000 discount on the mortgage note receivable) was recognized as
collections of principal were received. Gain recognized in 1993 (due to
the discounted payoff) aggregated $2,667,071. No reserve for
collectibility had been established due to the deferred gain (resulting
from the sale) exceeding the net equity in the wrap-around mortgage note
receivable. For financial reporting purposes, interest income had been
recognized when received.

(7) LEASES

(a) As Property Lessor

At December 31, 1995, the Partnership and its consolidated venture's
principal asset is one shopping center. The Partnership has determined
that all leases relating to this property are properly classified as
operating leases; therefore, rental income is reported when earned and the
cost of the property, excluding cost of land, is depreciated over its
estimated useful life. Leases with shopping center tenants range from one
to thirty years and provide for fixed minimum rent and partial
reimbursement of operating costs. In addition, leases with shopping center
tenants provide for additional rent based upon percentages of tenants'
sales volumes. A substantial portion of the ability of retail tenants to
honor their leases is dependent upon the retail economic sector.

Minimum lease payments including amounts representing executory costs
(e.g.,taxes, maintenance, insurance) and any related profit in excess of
specific reimbursements, to be received in the future under the above
operating lease agreements relating to the shopping center, are as follows:

1996. . . . . . . . . . $ 5,111,352
1997. . . . . . . . . . 4,926,970
1998. . . . . . . . . . 4,643,154
1999. . . . . . . . . . 3,999,145
2000. . . . . . . . . . 3,314,996
Thereafter. . . . . . . 10,335,741
-----------
Total . . . . . . . $32,331,358
===========

Additional contingent rent (based on sales by property tenants)
included in rental income was as follows:

1993. . . . . . . . . . $395,703
1994. . . . . . . . . . 504,931
1995. . . . . . . . . . 115,566
========

(b) As Property Lessee

The following lease agreement has been determined to be an operating
lease.

The Oakridge venture owns a net leasehold interest in the land
underlying the San Jose, California shopping center expiring August 31,
2008, subject to renewal for twelve five-year periods. The lease provides
for an annual base rent of $203,357. The lease provides that the venture
pays real estate taxes applicable to the leased land and the improvements
situated thereon. The lease also provides for additional annual percentage
rent based upon the operations of the shopping center. In October 1990,
the Partnership and the joint venture partner finalized negotiations with
the lessor to amend the ground lease at Oakridge Mall by adding a "purchase
option" provision. See note 3(b).

Minimum rental expense for 1995, 1994 and 1993 under the above
operating lease was $203,357 in each year. Additional rental expense under
the above operating lease was $696,896, $764,627 and $692,629 for 1995,
1994 and 1993, respectively.

Future minimum rental commitments under the lease are as follows:

1996. . . . . . . . . . $ 203,357
1997. . . . . . . . . . 203,357
1998. . . . . . . . . . 203,357
1999. . . . . . . . . . 203,357
2000. . . . . . . . . . 203,357
Thereafter. . . . . . . 1,559,070
----------
$2,575,855
==========

<TABLE>

(8) TRANSACTIONS WITH AFFILIATES

Fees, commissions and other expenses required to be paid by the Partnership to the General Partners and their
affiliates as of December 31, 1995 and for the years ended December 31, 1995, 1994 and 1993 are as follows:

UNPAID AT
DECEMBER 31,
1995 1994 1993 1995
------- ------ -------- --------------
<S> <C> <C> <C> <C>
Management fees to corporate
general partner . . . . . . . . . . . . $ -- 4,078 16,310 --
Reimbursement (at cost) for
out-of-pocket expenses. . . . . . . . . 10,445 11,820 12,359 3,763
------- ------ -------- -----

$10,445 15,898 28,669 3,763
======= ====== ======== =====

</TABLE>

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. The
General Partners, therefore, are entitled to participate in sale and
refinancing proceeds to the extent of their previously deferred disposition
fees earned on the properties sold to date. All such fees, which total
$940,488, were paid as of December 31, 1995.

Effective October 1, 1995, the Corporate General Partner of the
Partnership engaged independent third parties to perform certain
administrative services for the Partnership which were previously performed
by, and partially reimbursed to, affiliates of the General Partners.

<TABLE>

SCHEDULE III

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

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

GROSS AMOUNT AT WHICH CARRIED
INITIAL COST TO AT CLOSE OF PERIOD (B)
PARTNERSHIP (A) --------------------------------------------------------
------------------------- COSTS
LAND AND BUILDINGS CAPITALIZED LAND AND BUILDINGS
LEASEHOLD AND SUBSEQUENT LEASEHOLD AND
ENCUMBRANCE INTERESTS IMPROVEMENTS TO ACQUISITION INTERESTS IMPROVEMENTS TOTAL (C)
----------- ----------- ------------ --------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING
CENTER:
San Jose, (E)
California $25,929,734 (E) 17,952,393 15,298,619 2,179,147 31,071,865 33,251,012
=========== ======= ========== ========== ========== ========== ==========

</TABLE>

<TABLE> SCHEDULE III - CONTINUED

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

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(D) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING
CENTER:
San Jose,
California . . . . . . . . . . . . 17,370,504 1978 10-15-77 5-35 years 537,421
========== =======
<FN>
- ------------------

Notes:
(A) The initial cost represents the original purchase price of the properties.
(B) The aggregate cost of real estate owned at December 31, 1995 for Federal income tax purposes
is $33,270,474.
</TABLE>

<TABLE> SCHEDULE III - CONTINUED

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

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

Balance at beginning of period . . . $ 27,200,756 23,244,693 23,177,615
Additions during period. . . . . . . 6,050,256 3,956,063 67,078
------------ ----------- -----------
Balance at end of period . . . . . . $ 33,251,012 27,200,756 23,244,693
============ =========== ===========

(D) Reconciliation of accumulated depreciation:

Balance at beginning of period . . . $ 16,700,459 16,128,300 15,490,729
Provision for current period . . . . 670,045 572,159 637,571
------------ ----------- ----------
Balance at end of period . . . . . . $ 17,370,504 16,700,459 16,128,300
============ =========== ==========

(E) Property operated under ground lease; see Note 7(b).

</TABLE>

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

There were no changes of or disagreements with accountants during
fiscal year 1995 and 1994.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation, substantially all of the
outstanding stock of which is owned, directly or indirectly, by certain of
its officers and directors and members of their families. JMB as the
Corporate General Partner has responsibility for all aspects of the
Partnership's operations, subject to the requirement that sales of real
property must be approved by the Associate General Partner of the
Partnership, AGPP Associates, L.P. Effective December 31, 1995, AGPP
Associates, L.P. acquired all of the partnership interests in Realty
Associates - VII, L.P., the Associate General Partner, and elected to
continue the business of Realty Associates - VII, L.P. AGPP Associates,
L.P., an Illinois limited partnership with JMB as its sole general partner,
continues as the Associate General Partner. The Associate General Partner
shall be directed by a majority in interest of its limited partners (who
are generally officers, directors and affiliates of JMB or its affiliates)
as to whether to provide its approval of any sale of real property (or any
interest therein) of the Partnership. The Partnership is subject to
certain conflicts of interest arising out of its relationships with the
General Partners and their affiliates as well as the fact that the General
Partners and their affiliates are engaged in a range of real estate
activities. Certain services have been and may in the future be provided
to the Partnership or its investment properties by affiliates of the
General Partners, including property management services and insurance
brokerage services. In general, such services are to be provided on terms
no less favorable to the Partnership than could be obtained from
independent third parties and are otherwise subject to conditions and
restrictions contained in the Partnership Agreement. The Partnership
Agreement permits the General Partners and their affiliates to provide
services to, and otherwise deal and do business with, persons who may be
engaged in transactions with the Partnership, and permits the Partnership
to borrow from, purchase goods and services from, and otherwise to do
business with, persons doing business with the General Partners or their
affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.

The names, positions held and length of service therein of each
director, and the executive officer and certain other officers of the
Corporate General Partner are as follows:

SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91

There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 5, 1996. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 5,
1996. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.

JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-IX ("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X
("Carlyle-X"), Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"),
Carlyle Real Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real
Estate Limited Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate
Limited Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited
Partnership-XV ("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI
("Carlyle-XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-
XVII"), JMB Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage
Partners, Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income Properties-
IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income
Properties, Ltd.-VI ("JMB Income-VI"), JMB Income Properties, Ltd.-VII
("JMB Income-VII"), JMB Income Properties, Ltd.-IX ("JMB Income-IX"), JMB
Income Properties, Ltd.-X ("JMB Income-X"), JMB Income Properties, Ltd.-XI
("JMB Income-XI"), JMB Income Properties, Ltd.-XII ("JMB Income-XII") and
JMB Income Properties, Ltd.-XIII ("JMB Income-XIII). JMB is also the sole
general partner of the associate general partner of most of the foregoing
partnerships. Most of the foregoing directors and officers are also
officers and/or directors of various affiliated companies of JMB including
Income Growth Managers, Inc. (the corporate general partner of IDS/JMB
Balanced Income Growth, LTD. ("IDS/BIG")), Arvida/JMB Managers, Inc. (the
general partner of Arvida/JMB Partners, L.P.) ("Arvida") and Arvida/JMB
Managers-II, Inc. (the general partner of Arvida/JMB Partners, L.P.-II
("Arvida-II")). Most of such directors and officers are also partners of
certain partnerships which are associate general partners in the following
real estate limited partnerships: Carlyle-IX, Carlyle-X, Carlyle-XI,
Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-
XVII, JMB Income-VI, JMB Income-VII, JMB Income-IX, JMB Income-X, JMB
Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage Partners, Mortgage
Partners-II, Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income
Plus, Carlyle Income Plus-II and IDS/BIG.

The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:

Judd D. Malkin (age 58) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a Certified Public
Accountant.

Neil G. Bluhm (age 58) is an individual general partner of JMB Income-
IV and JMB Income-V. Mr. Bluhm has been associated with JMB since August
1970. Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.

Burton E. Glazov (age 57) has been associated with JMB since June 1971
and served as an Executive Vice President of JMB until December 1990. He
is a member of the Bar of the State of Illinois and a Certified Public
Accountant.

Stuart C. Nathan (age 54) has been associated with JMB since July
1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.

A. Lee Sacks (age 62) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December 1972.

John G. Schreiber (age 49) has been associated with JMB since December
1970 and served as an Executive Vice President of JMB until December 1990.
Mr. Schreiber is a director of Urban Shopping Centers, Inc., an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is also a director of a
number of investment companies advised or managed by T. Rowe Price
Associates and its affiliates. Mr. Schreiber is President of Schreiber
Investments, Inc., a company which is engaged in the real estate investing
business. He is also a senior advisor and partner of Blackstone Real
Estate Partners, an affiliate of the Blackstone Group, L.P. Since 1994,
Mr. Schreiber has also served as a Trustee of Amli Residential Property
Trust, a publicly-traded real estate investment trust that invests in
multi-family properties. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.

H. Rigel Barber (age 46) has been associated with JMB since March
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.

Glenn E. Emig (age 48) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters Degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.

Gary Nickele (age 43) has been associated with JMB since February
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.

Gailen J. Hull (age 47) has been associated with JMB since March 1982.

He holds a Masters degree in Business Administration from Northern Illinois
University and is a Certified Public Accountant.

Howard Kogen (age 60) has been associated with JMB since March 1973.
He is a Certified Public Accountant.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Limited Partners, and a
share of profits or losses. Reference is also made to Notes 5 and 8 filed
with this annual report for a description of such distributions and
allocations. In 1995, 1994 and 1993, the General Partners received
distributions of $0, $3,751 and $15,004, respectively, and a management fee
of $0, $4,078 and $16,310, respectively. The General Partners received a
share of Partnership earnings for tax purposes aggregating $29,628 in 1995.

JMB Realty Corporation ("JMB"), the Corporate General Partner, has
earned fees aggregating $940,488 in connection with the sales of the Place
II Apartments located in Phoenix, Arizona, the Wakefield Apartments located
in Marietta, Georgia, the Walnut Bend Apartments located in Dallas, Texas,
the Shadowridge of San Antonio Apartments located San Antonio, Texas, the
Bush River Mall Shopping Center located in Columbia, South Carolina, the
Spice Island Apartments located in Houston, Texas, the Bellfort II
Apartments located in Houston, Texas and the Windridge Apartments located
in Dallas, Texas.

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. The
General Partners, therefore, are entitled to participate in sale and
refinancing proceeds to the extent of their previously deferred disposition
fees earned on the properties sold to date which total $940,488, all of
which were paid as of December 31, 1995.

The General Partners of the Partnership may be reimbursed for their
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's real property investments. In 1995, the
Corporate General Partner of the Partnership was reimbursed for such out-
of-pocket expenses in the amount of $10,445 (all of which were paid as of
December 31, 1995).

The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership.
The relationship of the Corporate General Partner to its affiliates is set
forth above in Item 10 and Exhibit 21 hereto.

<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) The following group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.

NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests Liquidity Fund 1,307.75 Interests indirectly 7.26%
Investment Corporation (as investment manager or,
1900 Powell Street, through affiliated entities,
Suite 730 general partner of 5 separate
Emeryville, California investment funds)
94608
</TABLE>
<TABLE>
<CAPTION>
(b) The Corporate General Partner, its officers and directors and the Associate General Partner own the
following Interests of the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C>
Limited Partnership
Interests JMB Realty Corporation 5 Interests directly Less than 1%
Limited Partnership
Interests Corporate General Partner, 15 Interests directly (1) Less than 1%
its officers and
directors and the
Associate General
Partner as a group
<FN>
(1) Includes 10 Interests owned by officers or their relatives for which each officer has investment and
voting power as to such Interests so owned.

No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.

(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.

</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.

PART IV

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

(a) The following documents are filed as part of this report:

(1) Financial Statements (See Index to Financial Statements
filed with this annual report).

(2) Exhibits

3-A.* The Prospectus of the Partnership dated October 17,
1977, as supplemented on December 5, 1977, January 16, 1978 and March 28,
1978, as filed with the Commission pursuant to Rules 424(b) and 424(c), is
hereby incorporated herein by reference. Copies of pages 5-12, 85-87, 93,
A-6 to A-7 and A-9 to A-14 are incorporated herein by reference.

3-B.* Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, and which agreement
is hereby incorporated herein by reference.

4-A. 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 is hereby incorporated herein by reference to the Partnership's
Report for March 31, 1995 on Form 10-Q (File No. 0-8915) dated May 11,
1995).

4-B. 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 is hereby incorporated herein by reference to the Partnership's
Report for March 31, 1995 on Form 10-Q (File No. 0-8915) dated May 11,
1995).

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. Closing statement dated February 15, 1995 relating
to the refinancing by Oakridge Associates, Ltd. which owns Oakridge Mall in
San Jose, California is hereby incorporated herein by reference to the
Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-8915)
dated May 11, 1995).

21. List of Subsidiaries.

24. Powers of Attorney

27. Financial Data Schedule
- ----------

* Previously filed as Exhibit 3-A and 3-B, respectively, to the
Partnership's Report for December 31, 1993 on Form 10-K of the Securities
Exchange Act of 1934 (File No. 0-8915) filed on March 25, 1994 and hereby
incorporated herein by reference.

No annual report or proxy material for the fiscal year 1995 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII

By: JMB Realty Corporation
Corporate General Partner

GAILEN J. HULL
By Gailen J. Hull
Senior Vice President
Date: March 25, 1996

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

By: JMB Realty Corporation
Corporate General Partner

JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 25, 1996

NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1996

H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1996

GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1996

GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1996

A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 25, 1996

STUART C. NATHAN*
By: Stuart C. Nathan,
Executive Vice President and Director
Date: March 25, 1996

*By: GAILEN J. HULL, Pursuant to a Power of Attorney

GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1996

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII

EXHIBIT INDEX

DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------- ----

3-A. Pages 5-12, 85-87, 93, A-6
to A-7 and A-9 to A-14 of
the Prospectus of the
Partnership dated October 17,
1977 Yes

3-B. Amended and Restated Agreement
of Limited Partnership Yes

4-A. Secured Promissory Note #1
secured by Oakridge Mall
in San Jose, California Yes

4-B. Secured Promissory Note #2
secured by Oakridge Mall
in San Jose, California Yes

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 Yes

10-B. Closing statement relating to the
refinancing by Oakridge Associates,
Ltd. of Oakridge Mall located in
San Jose, California Yes

21. List of Subsidiaries No

24. Powers of Attorney No

27. Financial Data Schedule No

EXHIBIT 21

LIST OF SUBSIDIARIES

The Partnership is a partner of Oakridge Associates, a general
partnership which holds title to the Oakridge Mall in San Jose, California.

The developer of the property is a partner in the joint venture.
Reference is made to Note 3 filed with this annual report for a description
of the terms of such joint venture partnership. The Partnership's interest
in the joint venture and the results of its operation are included in the
Consolidated Financial Statements of the Partnership filed with this annual
report.

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - VII, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1995, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 5th day of February, 1996.

H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer

GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer

The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1995,
and any and all amendments thereto, the 5th day of February, 1996.

GARY NICKELE
-----------------------
Gary Nickele

GAILEN J. HULL
-----------------------
Gailen J. Hull

DENNIS M. QUINN
-----------------------
Dennis M. Quinn

EXHIBIT 24

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 5th day of February, 1996.

NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm

JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin

A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks

STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
A. Lee Sacks

GARY NICKELE
-----------------------
Gary Nickele

GAILEN J. HULL
-----------------------
Gailen J. Hull

DENNIS M. QUINN
-----------------------
Dennis M. Quinn

<ARTICLE> 5

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

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995

<CASH> 2,826,515
<SECURITIES> 0
<RECEIVABLES> 7,805,011
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,631,526
<PP&E> 33,251,012
<DEPRECIATION> 17,370,504
<TOTAL-ASSETS> 28,723,368
<CURRENT-LIABILITIES> 2,897,674
<BONDS> 24,532,836
<COMMON> 0
0
0
<OTHER-SE> 1,126,080
<TOTAL-LIABILITY-AND-EQUITY> 28,723,368
<SALES> 7,761,913
<TOTAL-REVENUES> 8,438,395
<CGS> 0
<TOTAL-COSTS> 4,212,128
<OTHER-EXPENSES> 122,282
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,179,802
<INCOME-PRETAX> 1,924,183
<INCOME-TAX> 0
<INCOME-CONTINUING> 954,353
<DISCONTINUED> 0
<EXTRAORDINARY> (391,010)
<CHANGES> 0
<NET-INCOME> 563,343
<EPS-PRIMARY> 29.38
<EPS-DILUTED> 29.38

</TABLE>