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, 1997 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
<PAGE>
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. . . . . . . 10
PART II OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 13
<PAGE>
<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, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 3,808,007 3,840,380
Rents and other receivables . . . . . . . . . . . . . . . . . . . . 491,304 141,089
Escrow deposits and other assets. . . . . . . . . . . . . . . . . . 374,569 251,541
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 4,673,880 4,233,010
------------ -----------
Investment property held for sale or disposition. . . . . . . . . . . 15,850,638 15,741,875
------------ -----------
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,212,970 1,247,802
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . 945,631 891,801
Venture partner's deficit in venture. . . . . . . . . . . . . . . . . 2,370,357 2,767,256
------------ -----------
$ 25,053,476 24,881,744
============ ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1997 1996
------------- -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 1,566,262 1,530,822
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 1,036,520 870,137
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 185,050 187,881
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 2,787,832 2,588,840
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 61,208 50,862
Long-term debt, less current portion. . . . . . . . . . . . . . . . . 22,596,906 23,002,015
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 25,445,946 25,641,717
Venture partner's subordinated equity in venture. . . . . . . . . . . 105,529 105,529
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . (682,986) (697,686)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (676,244) (676,244)
------------ -----------
(1,358,230) (1,372,930)
------------ -----------
Limited partners (18,005 interests):
Capital contributions, net of offering costs. . . . . . . . . . . 16,269,038 16,269,038
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . 14,082,714 13,729,911
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (29,491,521) (29,491,521)
------------ -----------
860,231 507,428
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . . (497,999) (865,502)
------------ -----------
$ 25,053,476 24,881,744
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,382,645 2,075,035
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,640 105,076
----------- ----------
2,449,285 2,180,111
----------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . . . . . . . . . . . . 560,494 595,582
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 229,387
Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . 1,004,294 863,945
Professional services . . . . . . . . . . . . . . . . . . . . . . . . . . 24,059 23,228
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . 61,322 44,773
General and administrative. . . . . . . . . . . . . . . . . . . . . . . . 34,714 21,983
----------- ----------
1,684,883 1,778,898
----------- ----------
Operating earnings (loss). . . . . . . . . . . . . . . . . . . . . . 764,402 401,213
Venture partner's share of venture's operations . . . . . . . . . . . . . . (396,899) (213,310)
----------- ----------
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . $ 367,503 187,903
=========== ==========
Net earnings (loss) per limited
partnership interest . . . . . . . . . . . . . . . . . . . . . . . $ 19.59 10.02
=========== ==========
Cash distributions per limited
partnership interest . . . . . . . . . . . . . . . . . . . . . . . $ -- --
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 367,503 187,903
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 229,387
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 61,322 44,773
Venture partner's share of venture's operations . . . . . . . . . . . . 396,899 213,310
Changes in:
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . (350,215) 80,252
Escrow deposits and other assets. . . . . . . . . . . . . . . . . . . . (123,028) (136,058)
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . (53,830) (8,886)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,383 60,948
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,831) (2,583)
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 10,346 (12,425)
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . 472,549 656,621
------------ -----------
Cash flows from investing activities:
Restricted construction loan proceeds . . . . . . . . . . . . . . . . . . -- 2,354,524
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (53,126)
Additions to investment property. . . . . . . . . . . . . . . . . . . . . (108,763) (728,573)
Payments of deferred expenses . . . . . . . . . . . . . . . . . . . . . . (26,490) (8,036)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . (135,253) 1,564,789
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (369,669) (337,328)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . (369,669) (337,328)
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . (32,373) 1,884,082
Cash and cash equivalents, beginning of year. . . . . . . . . . . 3,840,380 2,826,515
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 3,808,007 4,710,597
============ ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996
------------ -----------
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 563,325 598,165
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1996 which are
included in the Partnership's 1996 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.
Certain amounts in the 1996 Financial Statements have been
reclassified in order to conform with the 1997 presentation.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell such property and active marketing activity has commenced or is
expected to commence in the near term. In accordance with SFAS 121, any
properties identified as "held for sale or disposition" are no longer
depreciated. As of December 31, 1996, the Partnership has committed to a
plan to sell the Oakridge Mall investment property. Accordingly, this
property has been classified as held for sale or disposition in the
accompanying consolidated financial statements. The results of operations,
net of venture partner's share, for the property was $396,899 and $213,310,
respectively, for the three months ended March 31, 1997 and 1996.
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,
1997 and for the three months ended March 31, 1997 and 1996 are as follows:
Unpaid at
March 31,
1997 1996 1997
------ ------ -------------
Reimbursement (at cost) for
out-of-pocket expenses. . . $ -- 4,991 --
====== ====== ====
OAKRIDGE VENTURE
Occupancy at the property is 91% at March 31, 1997. In 1997 and 1998,
expiration of tenant leases will be approximately 8% and 11%, respectively.
There is no assurance that the expiring tenants can be retained.
<PAGE>
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. The Oakridge Venture 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. As of the date of this report, the venture intends to exercise
its first option to extend the loan's maturity date to February 2001.
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,
1997 and for the three months ended March 31, 1997 and 1996.
<PAGE>
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.
At March 31, 1997, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $3,980,000. Such funds will be
utilized for working capital requirements and distributions to partners.
The sources of capital (in addition to the cash and cash equivalents) 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.
After reviewing the remaining property and its competitive
marketplace, and considering the Oakridge mall renovation which was
completed in 1996, the General Partners of the Partnership expect to be
able to liquidate the remaining asset as quickly as practicable.
Accordingly, Oakridge Mall, the Partnership's remaining investment
property, has been considered held for sale or disposition as of December
31, 1996. Therefore, the property will no longer be subject to continued
depreciation. 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 rents and other receivables at March 31, 1997 as
compared to December 31, 1996 is primarily due to the timing of tenant
rental receipts at the Oakridge investment property.
The increase in escrow deposits and other assets at March 31, 1997 as
compared to December 31, 1996 is primarily due to the payment of monthly
real estate tax deposits into an escrow account.
The increase in accounts payable at March 31, 1997 as compared to
December 31, 1996 is primarily due to the timing of payments of operating
expenses, mainly real estate taxes, at the Oakridge investment property.
The increase in rental income for the three months ended March 31,
1997 as compared to the three months ended March 31, 1996 is primarily due
to increases in occupancy and tenant expense reimbursements as a result of
the completion in 1996 of the mall expansion and remodeling project at
Oakridge.
The decrease in interest income for the three months ended March 31,
1997 as compared to the three months ended March 31, 1996 is primarily due
to a decrease in the amount of cash available for short-term investments as
a result of Oakridge venture distributions made to its partners and the
subsequent distribution by the Partnership to its Partners during 1996.
The decrease in depreciation expense for the three months ended March
31, 1997 as compared to the three months ended March 31, 1996 is due to the
Oakridge investment property being classified as held for sale as of
December 31, 1996 and therefore is no longer subject to continued
depreciation.
The increase in property operating expenses for the three months ended
March 31, 1997 as compared to the three months ended March 31, 1996 is
primarily due to increased occupancy at the Oakridge investment property.
<PAGE>
The increase in venture partner's share of venture operations for the
three months ended March 31, 1997 as compared to the three months ended
March 31, 1996 as well as the decrease in venture partner's deficit in
venture at March 31, 1997 as compared to December 31, 1996 is primarily due
to the increase in rental income and decrease in depreciation expense,
partially offset by the increase in property operating expenses, as
discussed above.
<PAGE>
<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>
1996 1997
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Oakridge Mall
San Jose, California. . . 88% 88% 88% 92% 91%
</TABLE>
<PAGE>
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.
3-C. Acknowledgement of rights and duties of the General
Partners of the Partnership between AGPP Associates, L.P. (a successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 is hereby incorporated herein by reference to
Exhibit 3-C to the Partnership's Report for September 30, 1996 on Form 10-Q
(File No. 0-8915) dated November 8, 1996.
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.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
<PAGE>
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 9, 1997
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 9, 1997
<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, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,808,007
<SECURITIES> 0
<RECEIVABLES> 865,873
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,673,880
<PP&E> 15,850,638
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,053,476
<CURRENT-LIABILITIES> 2,787,832
<BONDS> 22,596,906
<COMMON> 0
0
0
<OTHER-SE> (497,999)
<TOTAL-LIABILITY-AND-EQUITY>25,053,476
<SALES> 2,382,645
<TOTAL-REVENUES> 2,449,285
<CGS> 0
<TOTAL-COSTS> 1,065,616
<OTHER-EXPENSES> 58,773
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 560,494
<INCOME-PRETAX> 764,402
<INCOME-TAX> 0
<INCOME-CONTINUING> 367,503
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 367,503
<EPS-PRIMARY> 19.59
<EPS-DILUTED> 19.59
</TABLE>
