SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1996 Commission file number 0-8915
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(Exact name of registrant as specified in its charter)
Illinois 36-2875192
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . 9
PART II OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 11
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 4,710,597 2,826,515
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,347,268 4,294,143
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . 175,668 454,591
Restricted construction loan proceeds . . . . . . . . . . . . . . . . 428,667 2,783,191
Escrow deposits and other assets. . . . . . . . . . . . . . . . . . . 409,144 273,086
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 10,071,344 10,631,526
------------ -----------
Investment property, at cost:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,179,147 2,179,147
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . 31,800,438 31,071,865
------------ -----------
33,979,585 33,251,012
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . 17,599,891 17,370,504
------------ -----------
Total investment property, net of accumulated depreciation. . . 16,379,694 15,880,508
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,327,208 1,363,945
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . 818,996 810,110
Venture partner's deficit in venture. . . . . . . . . . . . . . . . . . -- 37,279
------------ -----------
$ 28,597,242 28,723,368
============ ===========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . $ 1,429,239 1,396,898
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,363,147 1,302,198
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 195,995 198,578
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 2,988,381 2,897,674
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 48,824 61,249
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . 24,163,168 24,532,836
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 27,200,373 27,491,759
Venture partner's subordinated equity in venture. . . . . . . . . . . . 182,225 105,529
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (720,393) (723,934)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (279,075) (279,075)
------------ -----------
(998,468) (1,002,009)
------------ -----------
Limited partners (18,005 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 16,269,038 16,269,038
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 13,184,970 13,099,947
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (27,240,896) (27,240,896)
------------ -----------
2,213,112 2,128,089
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . . . 1,214,644 1,126,080
------------ -----------
$ 28,597,242 28,723,368
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------- -----------
<S> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,876,364 1,696,456
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,076 33,241
----------- ----------
1,981,440 1,729,697
----------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . . . . . . . . . . 595,582 521,657
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229,387 159,225
Property operating expenses . . . . . . . . . . . . . . . . . . . . . 863,945 873,735
Professional services . . . . . . . . . . . . . . . . . . . . . . . . 23,228 47,920
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . 44,773 37,157
General and administrative. . . . . . . . . . . . . . . . . . . . . . 21,983 15,919
----------- ----------
1,778,899 1,655,613
----------- ----------
Operating earnings (losses). . . . . . . . . . . . . . . . . . . 202,542 74,084
Venture partner's share of venture's operations . . . . . . . . . . . . (113,975) (68,568)
----------- ----------
Net operating earnings (losses) before extraordinary item. . . . 88,567 5,516
Extraordinary item:
Prepayment penalty and deferred mortgage expense on
refinanced long-term debt, net of venture partner's
share of $391,010 . . . . . . . . . . . . . . . . . . . . . . . . . -- (391,010)
----------- ----------
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . $ 88,567 (385,494)
=========== ==========
Net earnings (loss) per limited partnership interest:
Net operating earnings (loss). . . . . . . . . . . . . . . . $ 4.72 2.48
Extraordinary item . . . . . . . . . . . . . . . . . . . . . -- (23.03)
----------- ----------
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . $ 4.72 (20.55)
=========== ==========
Cash distributions per limited partnership interest. . . . . . . $ -- --
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,567 (385,494)
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229,387 159,225
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 44,773 37,157
Venture partner's share of venture's operations . . . . . . . . . . . . 113,975 68,568
Extraordinary item, net of venture partner's share of $391,010. . . . . -- 391,010
Changes in:
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . 278,923 140,948
Escrow deposits and other assets. . . . . . . . . . . . . . . . . . . . (136,058) 374,780
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . (8,886) (12,038)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,948 82,568
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,583) 97,029
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . -- 133,254
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (12,425) (8,966)
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . 656,621 1,078,041
------------ -----------
Cash flows from investing activities:
Restricted construction loan proceeds . . . . . . . . . . . . . . . . . . 2,354,524 --
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53,126) --
Net sales and maturities (purchases) of short-term investments. . . . . . -- (1,502,590)
Additions to investment property. . . . . . . . . . . . . . . . . . . . . (728,573) (260,070)
Payments of deferred expenses . . . . . . . . . . . . . . . . . . . . . . (8,036) (244,805)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . 1,564,789 (2,007,465)
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (337,328) (14,348,824)
Initial proceeds received from refinanced long-term debt. . . . . . . . . -- 19,000,000
Prepayment penalty on long-term debt. . . . . . . . . . . . . . . . . . . -- (708,234)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . (337,328) 3,942,942
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . 1,884,082 3,013,518
Cash and cash equivalents, beginning of year. . . . . . . . . . . 2,826,515 2,047,492
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 4,710,597 5,061,010
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 598,165 424,628
============ ===========
Non-cash extraordinary item . . . . . . . . . . . . . . . . . . . . . . . $ -- 73,786
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1995 which are
included in the Partnership's 1995 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
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. 121 was adopted by the
Partnership on January 1, 1996.
Certain reclassifications have been made to the 1995 Financial
Statements in order to conform with the 1996 presentation.
TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of March 31,
1996 and for the three months ended March 31, 1996 and 1995 are as follows:
Unpaid at
March 31,
1996 1995 1996
------ ------ -------------
Reimbursement (at cost) for
out-of-pocket expenses. . . $4,991 8,748 --
====== ====== =====
OAKRIDGE VENTURE
During 1996, the venture substantially completed the renovation and
remodel of the mall. As a result, approximately $2,300,000 of excess
proceeds from the refinancing was released from escrow by the lender.
Remaining loan proceeds of $4,347,268 have been classified as restricted.
These proceeds will be utilized for capital expenditures, including the
replacement of the roof, and previously deferred maintenance at the mall.
The $1,700,000 Macy's remodeling project has been completed.
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1996 and for the three months ended March 31, 1996 and 1995.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investments.
Cash and cash equivalents of approximately $3,000,000 and restricted
cash of $4,775,935 are retained by Oakridge venture at March 31, 1996.
Such cash and restricted funds will be retained by the venture until
requirements for operating reserves, repairs and deferred maintenance
projects can be more accurately determined by the joint venture. Upon
determining necessary reserves to cover such projects, the venture will
distribute any remaining proceeds to the partners equally pursuant to the
terms of the Venture agreement. Accordingly, the ultimate source of future
liquidity of the partnership and distributions to partners is expected to
come from the sale of the remaining investment property.
After reviewing the remaining property and its competitive
marketplace, and considering the mall renovation which has been
substantially 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, the decrease in the
restricted construction loan proceeds (to be used for the mall expansion
and remodeling project) and the increase in buildings and improvements is
due to the completion of the mall expansion at the Oakridge investment
property during 1996.
The decrease in rents and other receivables at March 31, 1996 as
compared to December 31, 1995 is primarily due to the timing of receipt of
rent from tenants at the Oakridge investment property.
The increase in escrow deposits and other assets at March 31, 1996 as
compared to December 31, 1995 is primarily due to the payment of monthly
real estate tax deposits into an escrow account.
The increase in rental income and venture partner's share of venture's
operations for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995 is primarily due to a reversal of an over
accrual of overage rent at the Oakridge investment property recognized
during the three month period ending March 31, 1995.
The increase in interest income and mortgage and other interest
expense for the three months ended March 31, 1996 is primarily due to
refinancing of the mortgage debt and establishment of required escrow
accounts at the Oakridge investment property during 1995.
The increase in depreciation expense for the three months ended March
31, 1996 as compared to the three months ended March 31, 1995 is primarily
due to the capital additions incurred in 1995 and 1996 at the Oakridge Mall
investment property.
The extraordinary item, net of venture partner's share, is due to the
retirement of indebtedness related to the refinancing of the mortgage debt
at the Oakridge investment property in February, 1995.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate physical occupancy levels by quarter for the Partnership's
remaining investment property.
<CAPTION>
1995 1996
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Oakridge Mall
San Jose, California. . . 91% 91% 90% 88% 88%
</TABLE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 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 to Exhibit 3-A 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.
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 to Exhibit 3-B 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.
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).
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed for the quarter covered
by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: May 10, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,710,597
<SECURITIES> 0
<RECEIVABLES> 5,360,747
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,071,344
<PP&E> 33,979,585
<DEPRECIATION> 17,599,891
<TOTAL-ASSETS> 28,597,242
<CURRENT-LIABILITIES> 2,988,381
<BONDS> 24,163,168
<COMMON> 0
0
0
<OTHER-SE> 1,214,644
<TOTAL-LIABILITY-AND-EQUITY> 28,597,242
<SALES> 1,876,364
<TOTAL-REVENUES> 1,981,440
<CGS> 0
<TOTAL-COSTS> 2,419,692
<OTHER-EXPENSES> 45,211
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 595,582
<INCOME-PRETAX> 202,542
<INCOME-TAX> 0
<INCOME-CONTINUING> 88,567
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,567
<EPS-PRIMARY> 4.72
<EPS-DILUTED> 4.72
</TABLE>
