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 September 30, 1994 Commission file number 0-9726
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(Exact name of registrant as specified in its charter)
Illinois 36-3057941
(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 . . . . . . . . . . . 17
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . 21
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 22
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . $ 898,294 975,562
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . 14,224,582 17,286,680
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528,634 373,806
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593,484 208,363
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,244,994 18,844,411
------------ ------------
Investment properties, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,513,649 4,513,649
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,391,295 36,950,753
------------ ------------
41,904,944 41,464,402
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,484,144 19,580,695
------------ ------------
Total investment properties, net of accumulated depreciation. . . . . . . . . . 21,420,800 21,883,707
------------ ------------
Investment in unconsolidated ventures, at equity (note 1). . . . . . . . . . . . . . . 2,948,502 3,056,454
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735,426 591,053
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327,129 391,349
Venture partners' deficits in ventures . . . . . . . . . . . . . . . . . . . . . . . . 562,306 562,379
------------ ------------
$ 42,239,157 45,329,353
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
----------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (note 3) . . . . . . . . . . . . . . . . . . . . . $ 12,705,821 12,651,424
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418,990 695,899
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,935,368 2,369,967
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,209,846 859,566
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,270,025 16,576,856
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,583 122,687
Investment in unconsolidated ventures, at equity (note 1). . . . . . . . . . . . . . . 4,290,550 3,408,985
Long-term debt, less current portion (note 3). . . . . . . . . . . . . . . . . . . . . 16,246,294 16,530,351
------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,923,452 36,638,879
Venture partners' subordinated equity in ventures. . . . . . . . . . . . . . . . . . . 5,203,900 5,280,977
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,571,571) (4,550,420)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (922,444) (903,693)
------------ ------------
(5,493,015) (5,453,113)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . 90,049,709 90,049,709
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,360,546) (28,852,914)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (56,084,343) (52,334,185)
------------ ------------
4,604,820 8,862,610
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . . . . . . . . . . (888,195) 3,409,497
------------ ------------
Commitments and contingencies (notes 2, 3 and 4)
$ 42,239,157 45,329,353
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . $ 1,937,640 2,131,128 6,276,939 7,137,298
Interest income. . . . . . . . . . . . . . . . . . 193,589 199,033 472,314 546,744
----------- ---------- ---------- ----------
2,131,229 2,330,161 6,749,253 7,684,042
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . 764,529 1,069,684 2,306,341 3,652,171
Depreciation . . . . . . . . . . . . . . . . . . . 309,736 465,985 903,449 1,509,327
Property operating expenses. . . . . . . . . . . . 967,328 1,206,195 2,938,698 3,983,779
Professional services. . . . . . . . . . . . . . . 18,557 2,589 283,835 270,323
Amortization of deferred expenses. . . . . . . . . 53,104 64,485 146,601 206,075
Management fees to corporate
general partner. . . . . . . . . . . . . . . . . 10,418 10,418 31,252 31,252
General and administrative . . . . . . . . . . . . 49,912 60,976 132,440 221,523
----------- ---------- ---------- ----------
2,173,584 2,880,332 6,742,616 9,874,450
----------- ---------- ---------- ----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
Operating earnings (loss). . . . . . . . . . (42,355) (550,171) 6,637 (2,190,408)
Partnership's share of operations of
unconsolidated ventures. . . . . . . . . . . . . . (256,462) (152,622) (589,017) (314,788)
Venture partners' share of ventures'
operations . . . . . . . . . . . . . . . . . . . . 27,988 199,573 53,597 581,875
------------ ---------- ---------- ----------
Net operating loss . . . . . . . . . . . . . (270,829) (503,220) (528,783) (1,923,321)
Gain or disposition on sale of
investment properties, net of
venture partner's share of $2,048,668
in 1993 (notes 3(d) and 4(a)). . . . . . . . . . . -- 4,643,220 -- 6,714,137
------------ ---------- ---------- ----------
Net earnings (loss). . . . . . . . . . . . . $ (270,829) 4,140,000 (528,783) 4,790,816
============ ========== ========== ==========
Net earnings (loss) per
limited partnership
interest:
Net operating loss. . . . . . . . . . . . $ (2.60) (4.83) (5.08) (18.46)
Gain on sale or disposi-
tion of investment
properties, net of ven-
ture partner's share of
$2,048,668 in 1993
(notes 3(d) and 4(a)) . . . . . . . . . -- 45.97 -- 66.47
------------ ---------- ---------- ----------
$ (2.60) 41.14 (5.08) 48.01
============ ========== ========== ==========
Cash distributions per
limited partnership
interest . . . . . . . . . . . . . . . . . $ 1.50 1.50 37.50 13.50
============ ========== ========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (528,783) 4,790,816
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 903,449 1,509,327
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . 146,601 206,075
Long-term debt - deferred accrued interest . . . . . . . . . . . . . . . . . . . . -- 420,883
Partnership's share of operations of unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589,017 314,788
Venture partners' share of ventures' operations and
gain on sale (note 3(d)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53,597) 1,466,793
Total gain on sale or disposition of investment
properties (notes 3(d) and 4(a)) . . . . . . . . . . . . . . . . . . . . . . . . -- (8,762,805)
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . (154,828) 125,731
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (385,121) (180,920)
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,220 (54,755)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (276,909) (119,317)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565,401 312,102
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,280 234,923
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,104) (67,657)
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . 1,213,626 195,984
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments . . . . . . . . . . . 3,062,098 (316,973)
Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . . . . (440,542) (438,342)
Cash proceeds from sale of investment property,
net of selling expenses (note 4(a)). . . . . . . . . . . . . . . . . . . . . . . . -- 1,021,908
Partnership's contributions to unconsolidated
venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (16,422)
Partnership's distributions from unconsolidated
venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,500 353,633
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . (290,974) (44,111)
------------ -----------
Net cash provided by investing activities. . . . . . . . . . . . . . . . . . . 2,731,082 559,693
------------ -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (229,660) (242,268)
Venture partner's contributions to venture . . . . . . . . . . . . . . . . . . . . . 20,593 90,499
Distributions to venture partners. . . . . . . . . . . . . . . . . . . . . . . . . . (44,000) (44,000)
Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . . . . (3,750,158) (1,350,068)
Distributions to general partners. . . . . . . . . . . . . . . . . . . . . . . . . . (18,751) (18,751)
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . . (4,021,976) (1,564,588)
------------ -----------
Net decrease in cash and cash
equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,268 808,911
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . $ 1,740,940 2,851,340
============ ===========
Non-cash investing and financing activities:
Disposition of investment property (note 3(d)):
Balance due on long-term debt cancelled. . . . . . . . . . . . . . . . . . . . . . $ -- 18,556,048
Balance due on long-term debt-deferred accrued
interest cancelled. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,151,206
Accrued interest expense on accelerated
long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 2,774,579
Reduction of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . -- (279,694)
Reduction of investment properties . . . . . . . . . . . . . . . . . . . . . . . . -- (15,510,251)
------------ -----------
Non-cash gain recognized due to lender
realizing upon security . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 6,691,888
============ ===========
Sale of investment property (note 4(a)):
Total sales proceeds, net of selling expenses. . . . . . . . . . . . . . . . . . . $ -- 5,518,892
Principal balance due on mortgage payable. . . . . . . . . . . . . . . . . . . . . -- (4,057,012)
Reduction of accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . -- (439,972)
------------ -----------
Cash proceeds from sale of investment property,
net of selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 1,021,908
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1993 which are
included in the Partnership's 1993 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and its ventures (note 2), Holly Pond
Associates ("Holly Pond"), Garret Mountain Office Center Associates I
("Garret Mountain"), Victoria Apartments Partnership ("Victoria"), Energy
Plaza Associates ("Energy Plaza") (note 3(d)) and Greenway Associates
("Greenway"). The effect of all transactions between the Partnership and
the ventures has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interests in Carlyle Seattle Associates ("Carlyle Seattle"), Carlyle
Frontier Associates ("Carlyle/Frontier") (sold in 1993, note 4(b)) and
Greenway Tower Joint Venture ("Greenway Tower"). Accordingly, the
accompanying consolidated financial statements do not include the accounts
of Carlyle Seattle and Carlyle Seattle's venture, Wright-Carlyle Seattle
("First Interstate"), Carlyle/Frontier and Carlyle/Frontier's venture,
Frontier Mall Associates or Greenway's venture, Greenway Tower.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to present the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of the ventures as described
above. Such adjustments are not recorded on the records of the
Partnership. The net effect of these items is summarized as follows for
the nine months ended September 30:
1994 1993
----------------------- -----------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net earnings
(loss). . . . . . $(528,783) (821,135) 4,790,816 4,560,045
Net earnings
(loss) per
limited
partnership
interest. . . . . $ (5.08) (7.88) 48.01 45.86
========= ======== ========= =========
The net earnings (loss) per limited partnership interest ("Interest")
is based upon the Interests outstanding at the end of each period. Deficit
capital accounts will result, through certain duration of the Partnership,
in the recognition of net gain for financial reporting and federal income
tax purposes.
Certain amounts in the 1993 consolidated financial statements have
been reclassified to conform to 1994 presentation.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies cash 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 classification specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
U.S. government obligations at cost, which approximates market. For the
purpose of these statements, the Partnership's policy is to consider all
such amounts held with original maturities of three months or less (none at
September 30, 1994 and December 31, 1993, respectively) as cash equivalents
with any remaining amounts (generally with maturities of one year or less)
reflected as short-term investments being held to maturity.
Due to the uncertainty of the Partnership's ability to recover the net
carrying value of the Garret Mountain office building through future
operations or sale, the Partnership made a provision for value impairment
on such investment property of $785,084. Such provision at December 31,
1993 was recorded to reduce the net carrying value of the investment
property to the outstanding balance of the related non-recourse debt (note
3(f)). Also, as a result of the deteriorated economic condition of the
West Paterson, New Jersey real estate market and the uncertainty of the
venture recovering its deficit capital account from future operations and
ultimate sale of the property, the Partnership made a provision for
unrealizable venture partner deficit capital of $1,102,925. Such provision
was recorded as of June 30, 1992 to eliminate the venture partners' deficit
capital account.
(2) VENTURE AGREEMENTS
(a) General
The Partnership, at September 30, 1994, is a party to six operating
joint venture agreements. In general, the venture partners, who were
either the sellers (or their affiliates) of the property investments
acquired, or parties who contributed an interest in the property being
developed, made no cash contributions to the ventures. 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 was determined by arm's-length negotiations. Under certain
circumstances, either pursuant to the venture agreements or due to the
Partnership's obligations as a general partner, the Partnership may be
required to make additional cash contributions to the ventures.
The Partnership generally has a cumulative preferred interest in net
cash receipts (as defined) from the properties. Such preferential interest
relates to a negotiated rate of return on contributions made by the
Partnership. After the Partnership receives its preferential return, the
Partnership's venture partner is generally entitled to a non-cumulative
return on its interest in the venture; net cash receipts are generally
shared in a ratio relating to the various ownership interests of the
Partnership and its venture partners. For the nine months ended September
30, 1994 and 1993, two of the ventures' properties produced net cash
receipts.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's venture partner(s) in an investment might become unable or
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
unwilling to fulfill its (their) financial or other obligations, or that
such venture partner(s) may have economic or business interests or goals
that are inconsistent with those of the Partnership.
(b) Carlyle Seattle
During 1982, the Partnership acquired, through a joint venture ("First
Interstate") between a joint venture ("Carlyle Seattle") described below
and the developer, a fee ownership of improvements and a leasehold interest
in an office building in Seattle, Washington. Carlyle Seattle is a joint
venture between the Partnership and Carlyle Real Estate Limited
Partnership-XII ("Carlyle-XII"), a partnership sponsored by the Corporate
General Partner of the Partnership. Under the terms of the First
Interstate venture agreement, Carlyle Seattle made initial cash
contributions aggregating $30,000,000.
The terms of the Carlyle Seattle venture agreement provide that the
Partnership will make 26.7% of all of the capital contributions required.
The initial required contribution by the Partnership to the Carlyle Seattle
venture was $10,125,000. The Carlyle Seattle venture agreement further
provides that all of the venture's share of the First Interstate joint
venture's annual cash flow, sale or refinancing proceeds, operating profits
and losses and tax items will be allocated 26.7% to the Partnership and
73.3% to the affiliated partner.
Carlyle Seattle will generally be entitled to receive a preferred
distribution (on a cumulative basis) of annual cash flow equal to 8% of its
capital contributions to the First Interstate venture. Cash flow in excess
of this preferred distribution will be distributable to the First
Interstate venture partner up to the next $400,000 and any remaining annual
cash flow will be distributable 50% to Carlyle Seattle and 50% to the First
Interstate venture partner. Operating deficits, if any, will be shared 50%
by Carlyle Seattle and 50% by the First Interstate joint venture partner.
Operating profits or losses of the First Interstate venture generally are
allocated in the same ratio as the allocation of annual cash flow, however,
the venture partner will be allocated not less than 25% of such profits and
losses. As of December 31, 1993, $20,049,000 of cumulative preferred
distributions due to Carlyle Seattle were unpaid.
The First Interstate venture agreement provides that upon sale of the
property, Carlyle Seattle will be entitled to receive the first $39,000,000
of net sale proceeds plus an amount equal to any deficiencies (on a
cumulative basis) in distributions of Carlyle Seattle's preferred return of
annual cash flow. The First Interstate joint venture partner will be
entitled to receive the next $5,000,000 and any remaining proceeds will be
distributable 50% to Carlyle Seattle and 50% to the First Interstate joint
venture partner.
The office building is managed by an affiliate of the First Interstate
joint venture partner for a fee computed at 2% of base and percentage
rents.
In May, 1994, Carlyle Seattle executed an agreement which issues an
option to sell its entire interest in the First Interstate joint venture to
the unaffiliated venture partner. The agreement provides for the purchase
of 49.95% of Carlyle Seattle's interest by October 17, 1994 (for which
Carlyle Seattle received a non-refundable deposit of $500,000 on June 30,
1994 and which was subsequently extended until December 22, 1994 with the
receipt of an additional $500,000 on September 22, 1994) with an option for
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
the unaffiliated venture partner to purchase the remaining of 50.05% of
Carlyle Seattle's interest between one year and two years after the initial
sale closing. Carlyle Seattle would receive by closing, (from the
unaffiliated joint venture partner) $20,000,000 in cash (less non-
refundable deposits as described above) for 49.95% of its interest as
explained above, $5,000,000 in cash and an additional $15,000,000 in cash
in the form of a loan to Carlyle Seattle for the option of the unaffiliated
venture partner to purchase the remaining 50.05% of Carlyle Seattle's
interest in the First Interstate joint venture. The $15,000,000 loan to
Carlyle Seattle (bearing interest at a rate of 9% per annum with accrued
interest and unpaid principal due on January 1, 1997) is secured by Carlyle
Seattle's remaining 50.05% interest. The exercise price for the remaining
50.50% interest is $21,350,000 if purchased one year from the initial
closing, up to $22,850,000 at the termination of the option period. The
exercise price would be satisfied by applying the $5,000,000 option
purchase price paid at the initial closing, and the balance of the unpaid
principal and accrued interest on the $15,000,000 Carlyle Seattle loan.
There can be no assurance that such sale will occur or such option will be
exercised.
(c) Victoria
Subsequent to the end of the quarter, the Victoria venture entered
into a contract for sale of the Silvermine Apartments, located in Victoria,
Texas, with an unaffiliated prospective buyer. There can be no assurances
that a sale will be finalized as the contract can be terminated at buyer's
discretion through the period ending November 12, 1994. Should such sale
occur according to the current terms, the Partnership would recognize a
gain for financial reporting and Federal income tax purposes.
(3) DEBT MODIFICATIONS/REFINANCINGS
(a) General
As described below, the Partnership is seeking or has received
mortgage note modifications on certain properties which expire on various
dates commencing December, 1995. Upon expiration of such modifications
should the Partnership be unable to secure new or additional modifications
to the loans, based upon current and anticipated future market conditions
and other considerations relating to the properties and the Partnership's
portfolio, the Partnership may decide not to commit any significant
additional amounts to these properties. This would result in the
Partnership no longer having an ownership interest in such properties and
may result in gain for financial reporting and federal income tax purposes
without any net distributable proceeds. Such decisions would be made on a
property-by-property basis.
(b) Double Tree Apartments
Effective June 1, 1987, the wrap-around mortgage note secured by
Double Tree Apartments located in El Paso, Texas was modified, and this
modification was further extended in 1990 to mature in 1992. In September,
1992, the underlying mortgage note holder agreed to extend the maturity
date by one year to April 1, 1993, with monthly installments of principal
and interest in the amount of $43,532 based on a 10.5%, 15-year
amortization retroactive to April 1, 1992. An agreement to extend the
wrap-around mortgage note maturity by one year to April 1, 1993 was also
obtained and was retroactive to April 1, 1992. In addition, beginning
April 1, 1992, the Partnership had been required to remit monthly
installments of principal in the amount of $4,482 to the wrap-around
mortgage note holder. The Partnership had initiated discussions with the
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
note holders to extend further the terms of the loans and, in addition, the
Partnership had been pursuing other financing alternatives. The
Partnership continued to pay debt service in accordance with the previously
modified terms until the property was sold in March, 1993 (see note 4(a)).
(c) Holly Pond Office Center
The Holly Pond venture ceased making debt service payments, effective
August 1, 1990, on the long-term, non-recourse mortgage note secured by
Holly Pond Office Center located in Stamford, Connecticut and sought a
modification of the note terms. In November, 1991, the lender posted the
property for acceleration of the mortgage and commenced proceedings to
obtain title to the property. In conjunction with the lender's actions, it
came to the venture's attention that there are traces of petroleum-based
contaminant on a small portion of the property. The venture's initial
environmental investigation indicated that, although the contamination is
currently on the property, the cause of the problem was most likely a
result of certain activities of the owner of a neighboring land parcel.
The Partnership has notified the owner of the neighboring land parcel
regarding its responsibility for the clean-up of the contaminant. As a
result, the lender has temporarily suspended its efforts to obtain title to
the property pending the results of the venture's investigation. Although
the Partnership believes the owner of the neighboring parcel will
ultimately bear financial responsibility for the clean-up, the Partnership
has accrued $36,000 for potential future costs related to the clean-up.
Such accrual is reflected in accounts payable in the accompanying
consolidated balance sheets at September 30, 1994 and December 31, 1993.
Because the venture has been unable to secure debt service relief, the
Partnership has decided, based upon current and anticipated future market
conditions and other considerations relating to the property and the
Partnership's portfolio, not to commit any additional amounts to the
property. This will result in the Partnership no longer having an
ownership interest in the property and, at that time, the Partnership will
recognize a gain for financial reporting and federal income tax purposes
without any corresponding distributable proceeds. Therefore, the loan has
been classified at September 30, 1994 and December 31, 1993 as a current
liability in the accompanying consolidated financial statements.
(d) Union Plaza Office Building
On August 31, 1993, the lender concluded proceedings to realize upon
its security and took title to the property as described below.
Effective October 1, 1988, the long-term mortgage secured by the Union
Plaza office building in Oklahoma City, Oklahoma was modified. The
maturity date of the note was changed from December 1, 1993 to December 1,
1998, when the outstanding principal balance and any unpaid interest was
scheduled to be due. The modification reduced the interest accrual rate
from 13-1/2% to 6% through September 30, 1990, then increasing periodically
to 8.5% through September 30, 1993. The monthly installments of $217,629
were reduced to $52,721 commencing November, 1988, and were to increase
periodically to $125,028 through October 31, 1993. Thereafter, the accrual
rate and the pay rate would be a specified market rate plus 3% adjusted
annually. The Energy Plaza venture had agreed to deposit all "excess cash
flow", as defined, into a savings account with the lender to pay deferred
interest. As of August 31, 1993 (the title transfer date), no such excess
cash flow had been deposited.
The Energy Plaza venture approached the mortgage lender in an effort
to negotiate further debt service relief. Effective November 1, 1991, the
debt service payment increased and the venture began making cash flow debt
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
service payments. The Partnership decided, based upon current market
conditions and other considerations relating to the property and the
Partnership's portfolio, not to commit any significant additional amounts
to this property. On May 27, 1993, the lender posted the property for
acceleration of the mortgage and all accrued interest. The lender
subsequently commenced proceedings to realize upon its mortgage security
and appointed a receiver to take over management of the property upon
foreclosure. On August 31, 1993, the lender concluded such proceedings and
took title to the property. Since the Partnership had received, through
the date of disposition, losses and distributions from the property in the
aggregate in excess of its original cash investment in the property, the
Partnership recognized a gain for financial reporting purposes of
$4,643,220 (net of the venture partner's share of $2,048,668) in 1993. In
addition, the Partnership recognized a gain in 1993 of $2,921,252 (net of
the venture partner's share of $9,011,723) for federal income tax purposes,
with no corresponding distributable proceeds. The venture remitted
approximately $854,000 of cash flow debt service payments in 1993.
(e) Greenway
In October, 1992, the Greenway Tower venture refinanced the first and
second mortgage notes with a new first mortgage note of $9,000,000. The
initial advance of the note was $5,750,000 and allows for additional
advances of up to $3,250,000 for approved tenant improvements, leasing
commissions, interest advances, capital improvements and, under certain
circumstances, borrower equity repayments. As of September 30, 1994, the
balance of the note is $7,462,132 and $1,537,868 is available for future
advances. Such replacement financing matures October 31, 1999 and requires
monthly installments of interest equal to the "Contract Index Rate",
computed as 3.75% per annum in excess of the lender's composite commercial
paper rate, (approximately 8.34% and 6.94% at September 30, 1994 and
December 31, 1993, respectively). To the extent such rate exceeds 9% in
year one, 9.5% in year two, 10% in years three and four and 10.5% in years
five through seven ("Applicable Base Percentage Rate"), the venture may
defer the difference for a given month provided that the total interest
deferred does not exceed 10% of the existing loan balance. Any deferred
interest is due when and to the extent that in any one month the Contract
Index Rate is less than the Applicable Base Percentage Rate along with the
existing principal balance upon maturity of the loan. In addition, the
lender participates in 50% of the net cash flow from the property as well
as in 50% of any net proceeds resulting from the sale of the property. As
of September 30, 1994, no such excess cash flow or sale proceeds
participation has been paid or accrued by Greenway. In order to secure the
replacement financing, the venture was required to make a capital
contribution of $635,574 ($286,008 of which was paid by the Partnership),
however, portions of this contribution may be refunded to the venture as
discussed above. In 1993, the Partnership received a partial refund
(approximately $104,000) of its original contribution. The remaining
portion of the contribution (approximately $182,000) is expected to be
refunded to the Partnership in 1995.
(f) Garret Mountain Office Center
The Garret Mountain venture has approached the mortgage lender in an
effort to negotiate debt service relief on the 12-5/8% first mortgage note
secured by the Garret Mountain Office Center in West Paterson, New Jersey.
Effective November 1, 1993, the venture began making cash flow debt service
payments. The venture will continue to remit cash flow from the property
to the lender, however, such amount is expected to be less than the terms
of the current mortgage loan. As of September 30, 1994, there is $230,335
of interest and $71,424 of principal in arrears on the first mortgage note.
The venture has reached an agreement in principle with the mortgage lender
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
to modify the first mortgage note. The modified terms provide for a
reduced interest pay rate (9-1/6%) and an extended maturity date (August 1,
1999). The difference between the contract rate and the pay rate ("the
Shortfall") shall itself accrue interest at the contract rate. The
Shortfall and related interest shall become due only upon the event of a
default of the modified terms of the mortgage note. If the venture is
unable to finalize this modification, the Partnership may decide, based
upon current market conditions and other considerations relating to the
property and the Partnership's portfolio, not to commit any significant
additional amounts to the property. This would result in the Partnership
no longer having an ownership interest in the property. As a result, the
Partnership recorded a provision for value impairment of $785,084 in the
accompanying consolidated financial statements. Such provision, made as of
December 31, 1993, was recorded to reduce the net carrying value of the
investment property to the then outstanding balance of the related non-
recourse debt. The loan has been classified at September 30, 1994 and
December 31, 1993 as a current liability in the accompanying consolidated
balance sheets.
In October, 1989, the venture obtained a short-term (one year) second
mortgage in the amount of $1,000,000 secured by the Garret Mountain Office
Center located in West Paterson, New Jersey. The second mortgage was
subsequently extended to September 1, 1991, August 1, 1992, August 1, 1993
and July 31, 1996. The second mortgage balance as of September 30, 1994 is
$696,914. The second mortgage is payable in monthly installments of
interest at the rate of 8% along with monthly payments of principal of
$1,000 through April 30, 1994 and $6,000 thereafter until maturity and is
classified as long-term debt, less current portion as of September 30, 1994
and December 31, 1993 in the accompanying consolidated balance sheets.
The Partnership has commenced negotiations with the venture partner in
the Garret Mountain venture regarding a sale of the Partnership's interest
in the venture which would result in nominal proceeds. There can be no
assurances that any such sale will occur. Should such sale occur according
to the current terms, the Partnership would recognize a gain for financial
reporting and Federal income tax purposes.
(4) SALE OF INVESTMENT PROPERTIES
(a) Double Tree Apartments
On March 18, 1993, the Partnership sold the land, building, related
improvements and personal property of the Double Tree Apartments located in
El Paso, Texas. The sale price of the land, building, related improvements
and personal property was $5,550,000 (before selling costs and prorations),
all of which was paid in cash at closing. A portion of the cash proceeds
was utilized to retire the first mortgage note with an outstanding balance
including principal and deferred interest of $4,496,984. As a result of
the sale, the Partnership recognized a gain in 1993 of $2,070,917 for
financial reporting purposes and $4,026,621 for federal income tax
purposes. Pursuant to the sale, the Partnership received net sale proceeds
of approximately $1,022,000 (after retirement of the existing first
mortgage note, payment of loan fees and certain other costs).
(b) Carlyle/Frontier
Effective October 31, 1993, the Partnership and an affiliate (Carlyle
Real Estate Limited Partnership - IX, a partnership sponsored by the
General Partners) sold through Carlyle/Frontier their interests in Frontier
Mall Associates, L.P., representing a total of a 70% interest in the
Frontier Mall property, to the Partnership's unaffiliated joint venture
partner.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
The sale price of the Partnership's 35% interest in Frontier Mall was
$7,825,030, of which $4,325,030 represented the Partnership's 35% portion
of the first mortgage note and $3,500,000 represented sale proceeds (before
costs of sale and prorations). Approximately $3,300,000 was received in
cash on November 3, 1993. As a result of the sale, the Partnership
recognized a gain of $3,652,935 for financial reporting purposes and
$5,825,970 for federal income tax purposes.
(5) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of September
30, 1994 and for the nine months ended September 30, 1994 and 1993 were as
follows:
Unpaid at
September 30,
1994 1993 1994
------- ------- -------------
Property management
and leasing fees. . . . . . . . . $126,690 172,454 7,260
Management fees to
corporate general
partner . . . . . . . . . . . . . 31,252 31,252 --
Insurance commissions. . . . . . . 10,083 29,217 --
Reimbursement (at
cost) for out-of-
pocket expenses . . . . . . . . . 11 11,492 --
-------- ------- -----
$168,136 244,415 7,260
======== ======= =====
The Corporate General Partner and its affiliates are entitled to reim-
bursement for salaries and direct expenses of officers and employees of the
Corporate General Partner and its affiliates relating to the administration
of the Partnership and operation of Partnership properties. For 1993 and
for the nine months ended September 30, 1994, such costs were $84,426 and
$56,829, respectively, all of which have been paid as of September 30,
1994. Any amounts currently payable to the General Partners and their
affiliates do not bear interest and are expected to be paid in future
periods.
(6) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
Summary income statement information for Greenway Tower and Carlyle
Seattle (note 1) for the nine months ended September 30, 1994 and 1993
follows:
1994 1993
----------- ----------
Total income. . . . . . . . . . . . $16,287,459 16,814,428
=========== ==========
Operating loss. . . . . . . . . . . $ 2,642,213 1,526,716
=========== ==========
Partnership's share
of loss . . . . . . . . . . . . . $ 491,860 329,250
=========== ==========
(7) 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 September 30,
1994 and for the three and nine months ended September 30, 1994 and 1993.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.
At September 30, 1994, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $898,000. Such funds and
short-term investments of approximately $14,225,000 are available for
capital improvements, distributions to partners and working capital
requirements. The Partnership and its consolidated ventures have currently
budgeted approximately $660,000 for tenant improvements and other capital
expenditures in 1994. The Partnership's share of such items and its share
of such similar items for its unconsolidated ventures is currently budgeted
to be approximately $1,048,000 in 1994. Actual amounts expended in 1994
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.
Many of the Partnership's investment properties currently operate in
overbuilt markets which are characterized by lower than normal occupancies
and/or reduced rent levels. Such competitive conditions have resulted in
the operating deficits at certain of the Partnership's investment
properties.
As described more fully in Notes 2 and 3, the Partnership is
negotiating or has received mortgage loan modifications on certain of its
properties. The existing modifications received will begin to expire at
various dates beginning in December, 1995. There can be no assurance that
the Partnership will be able to secure the modifications for which it is
negotiating, or that upon the expiration of the existing modifications the
Partnership will be able to secure further modifications to these loans.
Commencing in December, 1995, certain of the mortgage loans securing the
properties will begin to mature. At maturity, there can be no assurance
that the Partnership will be able to obtain replacement financing. If the
Partnership does not seek or is unable to secure new or additional
modifications or extensions to the loans, based upon current and expected
future market conditions, the Partnership would likely decide not to commit
any significant additional amounts to any of the properties which are
incurring, or in the future do incur, operating deficits. This would
result in the Partnership no longer having an ownership interest in such
properties. Such decisions would be made on a property-by-property basis
and could result in gain for financial reporting and federal income tax
purposes to the Partnership with no corresponding distributable proceeds.
During October 1994, the Victoria venture entered into a contract for
the sale of the Silvermine Apartments, located in Victoria, Texas, with an
unaffiliated prospective buyer. There can be no assurances that a sale
will be finalized as the contract can be terminated at buyer's discretion
through the period ending November 12, 1994. Should such sale occur
according to the current terms, the Partnership would recognize a gain for
financial reporting and Federal income tax purposes.
Regarding the First Interstate Center, although new construction in
the Seattle office market has virtually ceased, the overall office market
remains very competitive due to a significant amount of vacancy and
sublease space on the market. In May, 1989, an initiative was passed in
Seattle to limit future development of downtown office space. Over time,
this initiative (which is effective for ten years) may have a favorable
impact on the Seattle office market. Although the occupancy (97% at
September 30, 1994) at First Interstate Center has not been adversely
affected to date by the competitive office market, effective rental rates
have decreased as a result. Due to the competitive market conditions and
the significant amounts of expiring square footage over the next several
years, the property will reserve a portion of its cash flow in order to
cover the re-leasing costs required. In May, 1994, Carlyle Seattle
executed an agreement which issues an option to sell its entire interest in
the First Interstate joint venture to the unaffiliated venture partner.
The agreement provides for the purchase of 49.95% of Carlyle Seattle's
interest by October 17, 1994 (for which Carlyle Seattle received a non-
refundable deposit of $500,000 on June 30, 1994 and which was subsequently
extended until December 22, 1994 with the receipt of an additional $500,000
on September 22, 1994) with an option for the unaffiliated venture partner
to purchase the remaining 50.05% of Carlyle Seattle's interest between one
year and two years after the initial sale closing. Carlyle Seattle would
receive, by closing, (from the unaffiliated joint venture partner)
$20,000,000 in cash (less non-refundable deposits as described above) for
49.95% of its interest as explained above, $5,000,000 in cash and an
additional $15,000,000 in cash in the form of a loan to Carlyle Seattle for
the option of the unaffiliated venture partner to purchase the remaining
50.05% of Carlyle Seattle's interest in the First Interstate joint venture.
The $15,000,000 loan to Carlyle Seattle (bearing interest at a rate of 9%
per annum with accrued interest and unpaid principal due on January 1,
1997) is secured by Carlyle Seattle's remaining 50.05% interest. The
exercise price for the remaining 50.50% interest is $21,350,000 if
purchased one year from the initial closing, up to $22,850,000 at the
termination of the option period. The exercise price would be satisfied by
applying the $5,000,000 option purchase price paid at the initial closing,
and the balance of the unpaid principal and accrued interest on the
$15,000,000 Carlyle Seattle loan. There can be no assurance that such sale
will occur or such option will be exercised.
The Garret Mountain venture has approached the mortgage lender in an
effort to negotiate debt service relief on the 12-5/8% first mortgage note
secured by the Garret Mountain Office Center in West Paterson, New Jersey.
Effective November 1, 1993, the venture began making cash flow debt service
payments. The venture will continue to remit cash flow from the property
to the lender, however, such amount is expected to be less than the terms
of the current mortgage loan. The venture has reached an agreement in
principle with the mortgage lender to modify the first mortgage note. The
modified terms provide for a reduced interest pay rate (9-1/6%) and an
extended maturity date (August 1, 1999). The difference between the
contract rate and the pay rate ("the Shortfall") shall itself accrue
interest at the contract rate. The Shortfall and related interest shall
become due only upon the event of a default of the modified terms of the
mortgage note. If the venture is unable to finalize this modification, the
Partnership may decide, based upon current market conditions and other
considerations relating to the property and the Partnership's portfolio,
not to commit any significant additional amounts to the property. This
would result in the Partnership no longer having an ownership interest in
the property. As a result, the Partnership recorded a provision for value
impairment of $785,084 in the accompanying consolidated financial
statements. Such provision, made as of December 31, 1993, is recorded to
reduce the net carrying value of the investment property to the outstanding
balance of the related non-recourse debt. The loan has been classified at
September 30, 1994 and December 31, 1993 as a current liability in the
accompanying consolidated balance sheets. The second mortgage loan secured
by both the Garret Mountain Office Center and the venture was extended to
July 31, 1996 in October, 1993. Reference is made to Note 3(f).
The Partnership has commenced negotiations with the venture partner in
the Garret Mountain venture regarding a sale of the Partnership's interest
in the venture which would result in nominal proceeds. There can be no
assurances that any such sale will occur. Should such sale occur according
to the current terms, the Partnership would recognize a gain for financial
reporting and Federal income tax purposes.
In August, 1990, the Holly Pond venture suspended debt service
payments at the Holly Pond Office Building. In addition, the Partnership
has accrued $36,000 for potential future environmental clean-up costs at
the Holly Pond property. Reference is made to Note 3(c).
The sources of capital for such items described above and for both
short-term and long-term future liquidity and distributions are expected to
be through net cash generated by the operations of the investment
properties and through the sale and refinancing of such investments. As
described above, the Partnership has executed sales agreements for its
interests in the Victoria and the Carlyle Seattle ventures, is negotiating
the sale of its interest in the Garret Mountain venture and intends to
relinquish its interest in the Garret Mountain venture and intends to
relinquish its interest in the Holly Pond venture. The Partnership does
not consider these investments long-term sources of cash.
The Partnership is undertaking a feasibility study to determine a
financially competitive expansion of Sunrise Mall (which potentially would
be funded from the Partnership's working capital and net cash generated
from operations) to accommodate certain retail tenants who have indicated
an interest in possibly opening stores at the mall. The Greenway Towers
Office Building (90% occupied at September 30, 1994) is incurring capital
improvement and operating deficits. These deficits are being funded from
its mortgage loan which allows funding for tenant improvements, leasing
commissions, interest advances and capital improvements. As of September
30, 1994, $1,537,868 remains available for future advances. Reference is
made to Note 3(e).
The Partnership's and its ventures' mortgage obligations are all non-
recourse except for the second mortgage secured by both the Garret Mountain
Office Center and the venture. Therefore, the Partnership and its ventures
are not obligated to pay mortgage indebtedness on the non-recourse
obligations unless the related property produces sufficient net cash flow
from operations or sale. There are certain risks associated with the
Partnership's investments made through joint ventures including the
possibility that the Partnership's joint venture partner(s) in an
investment might become unable or unwilling to fulfill its (their)
financial or other obligations, or that such joint venture partner(s) may
have economic or business interests or goals that are inconsistent with
those of the Partnership.
Though the economy has recently shown signs of improvement and
financing is generally becoming more available for certain types of higher-
quality properties in healthy markets, real estate lenders are typically
requiring a lower loan-to-value ratio for mortgage financing than in the
past. This has made it difficult for owners to refinance real estate
assets at their current debt levels unless the value of the underlying
property has appreciated significantly. As a consequence, and due to the
weakness of some of the local real estate markets in which the
Partnership's properties operate, the Partnership is taking steps to
preserve its working capital. Therefore, the Partnership is carefully
scrutinizing the appropriateness of any discretionary expenditures,
particularly in relation to the amount of working capital it has available.
By conserving working capital, the Partnership will be in a better position
to meet future needs of its properties without having to rely on external
financing sources.
Due to the factors discussed above and the general lack of buyers of
real estate today, it is likely that the Partnership may hold some of its
remaining investment properties longer than originally anticipated in order
to maximize the return to the Limited Partners. On November 3, 1993, the
Partnership received proceeds from the sale of the Partnership's interest
in the Frontier Mall Partnership as more fully described in Note 4(b). A
portion of such proceeds was distributed to the Limited Partners in
February, 1994. Although sale proceeds from the disposition of certain of
the Partnership's remaining assets are expected, in light of the current
severely depressed real estate markets, without a dramatic improvement in
market conditions, the Limited Partners will not receive a full return of
their original investment.
RESULTS OF OPERATIONS
The aggregate decrease in cash and cash equivalents and in short-term
investments as of September 30, 1994 as compared to December 31, 1993 is
primarily due to the Partnership's $3,456,423 distribution of Frontier Mall
sale proceeds made to the Limited Partners in February, 1994.
The increase in rents and other receivables as of September 30, 1994
as compared to December 31, 1993 is primarily due to the timing of the
receipt of the Partnership's share of the $500,000 non-refundable deposit
related to the sale of Carlyle Seattle's interest in the First Interstate
Center which was received September 22, 1994 by the Partnership's
affiliated venture partner but not yet distributed. Reference is made to
Note 2(b).
The increases in escrow deposits and accrued real estate taxes as of
September 30, 1994 as compared to December 31, 1993 is primarily due to
timing of real estate tax payments of certain investment properties.
The decrease in investment in unconsolidated ventures at equity as of
September 30, 1994 as compared to December 31, 1993 is due to losses and
distributions from the Carlyle Seattle venture in 1994.
The decrease in accounts payable as of September 30, 1994 as compared
to December 31, 1993 is primarily due to the timing of payment of operating
expenses of certain investment properties.
The increase in accrued interest as of September 30, 1994 as compared
to December 31, 1993 is primarily due to the continued suspension of debt
service payments on the long-term mortgage loan secured by the Holly Pond
Office Center. Reference is made to Note 3(c). The increase is also due
to interest accruals related to the debt secured by the Garret Mountain
Office Center as debt service has been limited to cash flow produced by the
property. Reference is made to Note 3(f).
The decreases in rental income, mortgage and other interest,
depreciation, property operating expenses and amortization of deferred
expenses for the nine months ended September 30, 1994 as compared to the
nine months ended September 30, 1993 are primarily due to the sale of
Double Tree Apartments in March, 1993. Reference is made to Note 4(a).
The decrease in rental income for the nine months ended September 30, 1994
as compared to 1993 is partially offset by the receipt of a lease
termination fee (approximately $360,000) at the Garrett Mountain Office
Center in May, 1994. The decreases in rental income, mortgage and other
interest, depreciation, property operating expenses and amortization of
deferred expenses for the three months ended September 30, 1994 as compared
to the three months ended September 30, 1993 is primarily due to the
lenders obtaining legal title to the Union Plaza office building in August
1993. Reference is made to Note 3(d).
The decrease in Partnership's share of operations of unconsolidated
ventures for the three and the nine months ended September 30, 1994 as
compared to the three and nine months ended September 30, 1993 is primarily
due to the sale of the Partnership's interest in Frontier Mall in October,
1993. Reference is made to Note 4(b). The decrease is also due to
decreased rental income at the First Interstate Center resulting from
decreased rental rates.
The decrease in venture partners' share of ventures' operations for
the three and nine months ended September 30, 1994 as compared to the three
and nine months ended September 30, 1993 is due primarily to the lenders
obtaining legal title to the Union Plaza office building in August, 1993.
Reference is made to Note 3(d). This decrease is partially offset by
increased expenses related to capital items which are being funded by the
mortgage note secured by Greenway Tower. Reference is made to Note 3(e).
The gain on sale or disposition of investment properties of $4,643,220
for the three months ended September 30, 1993 is due to the lenders
obtaining legal title to the Union Plaza office building in August 1993.
Additionally, the nine months ended September 30, 1993 includes a
$6,714,137 gain on sale of Double Tree Apartments in March, 1993.
Reference is made to Notes 3(d) and 4(a).
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment properties.
<CAPTION>
1993 1994
------------------------------- -------------------------------
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. Holly Pond Office Center
Stamford, Connecticut . . . . . . . . . . . . . . . . 63% 74% 74% 85% 85% 92% 90%
2. Sunrise Mall
Brownsville, Texas. . . . . . . . . . . . . . . . . . 89%(a) 89%(a) 89%(a) 89%(a) 86%(a) 85%(a) 85%(a)
3. Garret Mountain Office Center
West Paterson, New Jersey . . . . . . . . . . . . . . 99% 99% 99% 99% 99% 92% 94%
4. Silvermine Apartments
Victoria, Texas . . . . . . . . . . . . . . . . . . . 94% 97% 97% 99% 99% 100% 98%
5. Union Plaza Office Center
Oklahoma City, Oklahoma . . . . . . . . . . . . . . . 86% 80% N/A N/A N/A N/A N/A
6. Greenway Towers Office Building
Dallas, Texas . . . . . . . . . . . . . . . . . . . . 75% 70% 66% 80% 90% 89% 90%
7. Frontier Mall
Cheyenne, Wyoming . . . . . . . . . . . . . . . . . . 87% 89% 89% N/A N/A N/A N/A
8. First Interstate Center
Seattle, Washington . . . . . . . . . . . . . . . . . 96% 96% 97% 97% 97% 99% 97%
- - - - -------------
<FN>
(a) Occupancy including temporary tenants is: 95% at June 30, 1993, 96% at March 31, September 30 and December 31, 1993,
93% at March 31, 1994, 92% at June 30, 1994 and 94% at September 30, 1994.
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
4-A. Modification documents relating to the long-term mortgage note
secured by the Union Plaza Office Building are incorporated herein by
reference to the Partnership's report for December, 1992 on Form 10-K (File
No. 0-9726) dated March 19, 1993.
4-B. Long-term mortgage note documents relating to the note secured
by the Sunrise Mall located in Brownsville, Texas are incorporated herein
by reference to the Partnership's Registration Statement on Post-Effective
Amendment No. 2 dated November 24, 1980 to Form S-11 (File No. 0-66350).
4-C. Long-term mortgage note documents relating to the first
mortgage note secured by the Garret Mountain Office Center located in West
Paterson, New Jersey are incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 2
dated November 24, 1980 to Forms S-11 (File No. 0-66350).
4-D. Long-term mortgage note documents relating to the second
mortgage note secured by the Garret Mountain Office Center located in West
Paterson, New Jersey and by the Garret Mountain venture are incorporated
herein by reference to Exhibit 4-D to the Partnership's report for December
31, 1992 on Form 10-K (File No. 0-9726) dated March 19, 1993.
4-E. Modification documents relating to the long term second
mortgage note secured by the Garret Mountain Office Center located in West
Paterson, New Jersey are hereby incorporated herein by reference to Exhibit
4-E to the Partnership's report for December 31, 1992 on Form 10-K (File
No. 0-9726) dated March 19, 1993.
10-A. Acquisition documents relating to the purchase by the
Partnership of an interest in the Union Plaza Office Building located in
Oklahoma City, Oklahoma are incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 0-66350) dated May 29, 1980.
10-B. Acquisition documents relating to the purchase by the
Partnership of an interest in the Sunrise Mall located in Brownsville,
Texas are incorporated herein by reference to the Partnership's
Registration Statement on Post-Effective Amendment No. 2 dated November 24,
1980 to Form S-11 (File No. 0-66350).
10-C. Acquisition documents relating to the purchase by the
Partnership of an interest in the Garret Mountain Office Center located in
West Paterson, New Jersey are incorporated by reference herein to the
Partnership's Registration Statement on Post-Effective Amendment No. 2
dated November 24, 1980 to Form S-11 (File No. 0-66350).
10-D. The notice of sale by the Resolution Trust Corporation and
exhibits thereto relating to the lender realizing upon its security in the
Union Plaza Office Building in Oklahoma City, Oklahoma are hereby
incorporated herein by reference to the Partnership's report on Form 8-K
(File No. 0-9726), dated September 15, 1993.
10-E. Partnership interest purchase documents and exhibits thereto
relating to the sale of the Partnership's interest in Frontier Mall in
Cheyene, Wyoming are hereby incorporated herein by reference to the
Partnership's report on Form 8-K (File No. 0-9726), dated November 12,
1993.
10-F. Sale documents and exhibits thereto relating to the sale of the
Doubletree Apartments located in El Paso, Texas are hereby incorporated
herein by reference to the Partnership's report on Form 8-K (File No. 0-
9726) dated April 26, 1993.
10-G. Letter regarding sale/option and partnership amendment, dated
May 15, 1994, between Carlyle Seattle Associates and 999 Third Avenue, Ltd.
relating to the First Interstate Center in Seattle, Washington is hereby
incorporated herein by reference to the Partnership's report for June 30,
1994 on Form 10-Q (File No. 0-9726) dated August 12, 1994.
27. Financial Data Schedule
Although certain additional long-term debt instruments of the
Registrant have been excluded from Exhibit 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such agreements
to the Securities and Exchange Commission upon request.
(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 - X
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: November 10, 1994
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: November 10, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000314459
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - X
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 898,294
<SECURITIES> 14,224,582
<RECEIVABLES> 1,122,118
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,244,994
<PP&E> 41,904,944
<DEPRECIATION> 20,484,144
<TOTAL-ASSETS> 42,239,157
<CURRENT-LIABILITIES> (17,270,025)
<BONDS> (16,246,294)
<COMMON> 0
0
0
<OTHER-SE> 888,195
<TOTAL-LIABILITY-AND-EQUITY> (42,239,157)
<SALES> (6,276,939)
<TOTAL-REVENUES> (6,749,253)
<CGS> 0
<TOTAL-COSTS> 3,988,748
<OTHER-EXPENSES> 447,527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,306,341
<INCOME-PRETAX> (6,637)
<INCOME-TAX> 0
<INCOME-CONTINUING> 528,783
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 528,783
<EPS-PRIMARY> (5.08)
<EPS-DILUTED> 0
</TABLE>
