SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1993 Commission file number 0-10494
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(Exact name of registrant as specified in its charter)
Illinois 36-3102608
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- -------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K - X
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Not applicable.
Certain pages of the prospectus of the registrant dated May 8, 1981, as
supplemented July 27, 1981, October 9, 1981, November 5, 1981, December 10,
1981, February 19, 1982 and April 23, 1982, and filed pursuant to Rules 424(b)
and 424(c) under the Securities Act of 1933 are incorporated by reference in
Parts I and III of this Annual Report on Form 10-K.
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . 8
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . . . 8
PART II
Item 5. Market for the Partnership's Limited Partnership
Interests and Related Security Holder Matters . 8
Item 6. Selected Financial Data . . . . . . . . . . . . 9
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . 15
Item 8. Financial Statements and Supplementary Data . . 23
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . . . 57
PART III
Item 10. Directors and Executive Officers of the
Partnership . . . . . . . . . . . . . . . . . . 57
Item 11. Executive Compensation. . . . . . . . . . . . . 60
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . 61
Item 13. Certain Relationships and Related Transactions. 62
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . 62
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 64
i
PART I
ITEM 1. BUSINESS
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.
The registrant, Carlyle Real Estate Limited Partnership - XI (the
"Partnership"), is a limited partnership formed in 1981 and currently governed
by the Revised Uniform Limited Partnership Act of the State of Illinois to
invest in improved income-producing commercial and residential real property.
The Partnership sold $137,500,000 in Limited Partnership Interests (the
"Interests") to the public commencing on May 8, 1981 pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933
(Registration No. 2-70724). A total 137,500 Interests were sold to the public
at $1,000 per Interest. The offering closed on May 5, 1982. No Limited
Partner has made any additional capital contribution after such date. The
Limited Partners of the Partnership share in their portion of the benefits of
ownership of the Partnership's real property investments according to the
number of Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or through
joint venture partnership interests. The Partnership's real property
investments are located throughout the nation and it has no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding of
the Partnership's business taken as a whole. Pursuant to the Partnership
Agreement, the Partnership is required to terminate on or before December 31,
2031. Accordingly, the Partnership intends to hold the real properties it
acquires for investment purposes until such time as sale or other disposition
appears to be advantageous. Unless otherwise described, the Partnership
expects to hold its properties for long-term investment where, due to current
market conditions, it is impossible to forecast the expected holding period.
At sale of a particular property, the proceeds, if any, are generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties.
The Partnership has made the real property investments set forth in the
following table:
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1993,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
- ---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. River Hills Apartments
Arlington, Texas. . . . 476 units 4/14/81 11/26/84 fee ownership of land and
improvements
2. Wood Forest Glen Apartments
Houston, Texas. . . . . 336 units 4/15/81 4/2/92 fee ownership of land and
improvements (c)
3. Scotland Yard Apartments
-Phase I
Houston, Texas. . . . . 332 units 4/15/81 3% fee ownership of land and
improvements
4. Somerset Lake Apartments
Indianapolis, Indiana.. 360 units 6/1/81 11/10/88 fee ownership of land and
improvements
5. Pavillion Towers Office
Complex
Aurora, Colorado. . . . 280,000 sq.ft. 5/28/81 4/25/86 fee ownership of land and
n.r.a. improvements (through
joint venture partnership)
(c)
6. Bitter Creek Apartments
Grand Prairie, Texas. . 472 units 6/1/81 6/10/92 fee ownership of land and
improvements (through
joint venture partnership)(c)
7. Mall of Memphis
Memphis, Tennessee. . . 493,000 sq.ft. 8/3/81 15% fee ownership of land and
g.l.a. improvements (through joint
venture partnership)(d)(h)
8. 767 Third Avenue
Office Building
New York, New York. . . 273,000 sq.ft. 9/30/81 20% fee ownership of land and
n.r.a. improvements (through joint
venture partnership)(d)(h)
9. Riverfront Office Building
Cambridge,
Massachusetts . . . . . 332,000 sq.ft. 10/22/81 7% fee ownership of improve-
n.r.a. ments and ground leasehold
interest in land (through
joint venture partnership)
(d)(e)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1993,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
- ---------------------- ---------- -------- ---------------------- ---------------------
10. Fontaine Woods Apartments
Red Bank, Tennessee . . 262 units 12/1/81 12/31/84 fee ownership of land and
improvements (through joint
venture partnership)
11. El Dorado View Apartments
Webster, Texas. . . . . 244 units 7/31/81 2% fee ownership of land and
improvements
12. Gatehall Plaza Office
Building
Parsippany, New Jersey. 118,000 sq.ft. 3/11/82 10/31/91 fee ownership of improve-
n.r.a. ments and ground leasehold
interest in land (through
joint venture partnership)
(f)
13. 824 Market Street
Office Building
Wilmington, Delaware. . 195,220 sq.ft. 6/15/82 5% fee ownership of land and
n.r.a. improvements (through joint
venture partnership)(d)
14. Scotland Yard
Apartments-Phase II
Houston, Texas. . . . . 346 units 6/28/82 3% fee ownership of land and
improvements
15. South Point Apartments
Houston, Texas. . . . . 244 units 5/11/82 7/29/93 fee ownership of land and
improvements (c)
16. Meadowcrest Apartments
Dallas, Texas . . . . . 352 units 7/1/82 6/9/92 fee ownership of land and
improvements(c)
17. Coast Federal Office
Building
Pasadena, California. . 101,777 sq.ft. 9/6/82 11/21/86 fee ownership of land and
n.r.a. improvements
18. National City Center
Office Building
Cleveland, Ohio . . . . 786,400 sq.ft. 7/27/83 4% fee ownership of land and
n.r.a. improvements (through joint
venture partnership)(d)
19. Yerba Buena West Office
Building
San Francisco, California 267,687 sq.ft. 8/30/85 6/24/92 fee ownership of land and
n.r.a. improvements (through joint
venture partnership)(d)(i)
<FN>
- -----------------------
(a) The computation of this percentage for properties held at December 31,
1993 does not include amounts invested from sources other than the original
net proceeds of the public offering as described above and in Item 7.
(b) Reference is made to Note 4 for the current outstanding principal
balances and a description of the long-term mortgage indebtedness secured by
the Partnership's real property investments.
(c) This property has been sold. Reference is made to Note 7 for a
description of the sale of such real property investment.
(d) Reference is made to Note 3 for a description of the joint venture
partnership through which the Partnership has made this real property
investment.
(e) Reference is made to Note 8(b) for a description of the leasehold
interest, under a ground lease, in the land on which this real property
investment is situated.
(f) The lender realized upon its security and took title to the property.
Reference is made to Note 4(b).
(g) Reference is made to Item 8 - Schedules X and XI filed with this annual
report for further information concerning real estate taxes and depreciation.
(h) Reference is made to Item 6 - Selected Financial Data for additional
operating and lease expiration data concerning this investment property.
(i) Reference is made to Note 3(b(1)) regarding the disposition of this
investment property.
</TABLE>
The Partnership's real property investments are subject to competition
from similar types of properties (including, in certain areas, properties
owned or advised by affiliates of the General Partners) in the respective
vicinities in which they are located. Such competition is generally for the
retention of existing tenants. Additionally, the Partnership is in
competition for new tenants in markets where significant vacancies are
present. Reference is made to Item 7 below for a discussion of competitive
conditions and future renovation and capital improvement plans of the
Partnership and certain of its significant investment properties. Approximate
occupancy levels for the properties are set forth on a quarterly basis in the
table set forth in Item 2 below to which reference is hereby made. The
Partnership maintains the suitability and competitiveness of its properties in
its markets primarily on the basis of effective rents, tenant allowances and
service provided to tenants. In the opinion of the Corporate General Partner
of the Partnership, all of the investment properties held at December 31, 1993
are adequately insured.
On July 29, 1993, the Partnership sold the South Point Apartments located
in Houston, Texas to an unaffiliated third party. Such transaction was
described in the Partnership's Report on Form 8-K dated August 30, 1993, which
is hereby incorporated herein by reference. Reference is also made to Note
7(f) for a further description of such transaction.
Reference is made to Note 8(a) filed with this annual report for a
schedule of minimum lease payments to be received in cash over the next five
years, and in the aggregate thereafter, under leases in effect at the
Partnership's properties as of December 31, 1993.
The Partnership has approximately 24 full-time personnel performing on-
site duties at certain of the Partnership's properties, none of whom are
officers or directors of the Corporate General Partner of the Partnership.
The terms of transactions between the Partnership, the General Partners
and their affiliates are set forth in Item 11 below to which reference is
hereby made for a description of such terms and transactions.
ITEM 2. PROPERTIES
The Partnership owns directly or through joint venture partnerships the
properties or interests in the properties referred to under Item 1 above to
which reference is hereby made for a description of said properties.
The following is a listing of principal businesses or occupations carried
on in and approximate occupancy levels by quarter during fiscal years 1993 and
1992 for the Partnership's investment properties owned during 1993:
<TABLE>
<CAPTION>
1992 1993
-------------------------------- --------------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Scotland Yard Apartments-Phase II
Houston, Texas. . . . . . . . . . Residential 94% 96% 97% 95% 92% 93% 97% 95%
2. South Point Apartments
Houston, Texas. . . . . . . . . . Residential 98% 96% 92% 93% 95% 93% N/A N/A
3. 824 Market Street
Wilmington, Delaware (a). . . . . Banking 44% 42% 42% 42% 42% 46% 46% 49%
4. Mall of Memphis
Memphis, Tennessee. . . . . . . . Retail 83% 82% 83% 87% 88% 90% 90% 91%
5. Riverfront Office Building
Cambridge, Massachusetts (b). . . Insurance/Software 91% 96% 72% 67% 80% 73% 72% 85%
Development
6. Scotland Yard Apartments-Phase I
Houston, Texas. . . . . . . . . . Residential 93% 96% 97% 97% 94% 93% 98% 93%
7. El Dorado View Apartments
Houston, Texas. . . . . . . . . . Residential 95% 94% 97% 95% 95% 98% 91% 93%
8. 767 Third Ave. Office Building
New York, New York. . . . . . . . Foreign Representation 70% 76% 74% 67% 67% 78% 81% 83%
9. National City Center Office Building
Cleveland, Ohio . . . . . . . . . Banking 96% 96% 96% 96% 96% 96% 96% 96%
<FN>
- --------------------
Reference is made to Item 6, Item 7 and Note 8 for further information
regarding property occupancy, competitive conditions and tenant leases at the
Partnership's investment properties.
An "N/A" indicates that the property was sold or disposed or the
Partnership's interest in the property was sold or disposed and was not owned
by the Partnership at the end of the period.
(a) In January 1990, a major tenant began vacating its space; however, the
tenant is obligated to pay rent to the joint venture through the original
terms of their lease which expires at various dates beginning in December of
1990. Therefore, this property was leased to 73% at March 31, June 30,
September 30 and December 31, 1992, to 73% at March 31, 1993, to 77% at June
30, 1993, to 77% at September 30, 1993 and to 80% at December 31, 1993. The
lease term on the tenant's remaining occupied space at December 31, 1993
expires in April 1994.
(b) In July 1992, a major tenant vacated its space; however, the tenant was
obligated to pay rent to the joint venture through the original terms of its
lease which expired in April 1993.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any pending material legal proceedings,
other than ordinary litigation incidental to the business of the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during 1992
and 1993.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1993, there were 14,080 record holders of Interests of
the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request, the
Corporate General Partner may provide information relating to a prospective
transfer of Interests to an investor desiring to transfer his Interests. The
price to be paid for the Interests, as well as any economic aspects of the
transaction, will be subject to negotiation by the investor.
Reference is made to Item 6 below for a discussion of cash distributions
made to the Limited Partners.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1993, 1992, 1991, 1990 AND 1989
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1993 1992 1991 1990 1989
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . . . . . . . . . . $ 37,201,961 40,441,060 48,842,071 49,696,562 49,799,632
============ ============ ============ ============ ============
Operating loss . . . . . . . . . . . . . . $(11,510,063) (6,856,914) (6,310,403) (5,409,090) (4,658,126)
Partnership's share of operations of
unconsolidated ventures . . . . . . . . . (136,092) (762,164) (1,319,301) (2,242,349) (893,239)
Venture partners' share of ventures'
operations. . . . . . . . . . . . . . . . 3,679,780 2,339,587 1,148,561 579,207 120,207
------------ ------------ ------------ ------------ ------------
Net operating loss . . . . . . . . . . . . (7,966,375) (5,279,491) (6,481,143) (7,072,232) (5,431,158)
Gain on sale or disposition of
investment properties, net of
venture partner's share . . . . . . . . . 1,433,916 8,790,767 4,235,904 1,795,820 4,857
Extraordinary items, net of
venture partner's share . . . . . . . . . -- -- 143,082 2,999,824 --
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . . . . . . . . $ (6,532,459) 3,511,276 (2,102,157) (2,276,588) (5,426,301)
============ ============ ============ ============ ============
Net earnings (loss) per limited
partnership interest (b):
Net operating loss. . . . . . . . . . . $ (55.62) (36.86) (45.25) (49.37) (37.92)
Gain on sale or disposition
of investment properties, net
of venture partner's share . . . . . . 10.32 63.29 30.50 12.93 .03
Extraordinary items, net of
venture partner's share. . . . . . . . -- -- 1.00 20.94 --
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . . . . . . . . $ (45.30) 26.43 (13.75) (15.50) (37.89)
============ ============ ============ ============ ============
Total assets . . . . . . . . . . . . . . . $169,411,131 170,266,483 194,905,203 208,586,635 230,516,287
Long-term debt . . . . . . . . . . . . . . $106,140,597 104,843,567 107,084,925 165,802,015 173,458,934
Cash distributions per Interest (c). . . . $ -- -- 3.75 12.50 75.00
============ ============ ============ ============ ============
<FN>
- -------------
(a) The above selected financial data should be read in conjunction with
the consolidated financial statements and the related notes appearing
elsewhere in this annual report.
(b) The net earnings (loss) per Interest is based upon the number of
Interests outstanding at the end of each period (137,505).
(c) Cash distributions to the Limited Partners since the inception of the
Partnership have not resulted in taxable income to such Limited Partners and
have therefore represented a return of capital. Each Partner's taxable income
(loss) from the Partnership in each year is equal to his allocable share of
the taxable income (loss) of the Partnership, without regard to the cash
generated or distributed by the Partnership.
</TABLE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1993
<CAPTION>
Property
- --------
Mall of Memphis a) The GLA historical occupancy rate and average base rent per square foot
(excluding percentage rent) for the last five years were as follows:
Year Ending GLA Avg. Base Rent Per
December 31, Occupancy Rate (1) Square Foot (2)
------------ ----------------- ------------------
<S> <C> <C> <C> <C>
1989 . . . . . 92% $12.69
1990 . . . . . 91% 13.33
1991 . . . . . 84% 13.88
1992 . . . . . 87% 13.04
1993 . . . . . 91% 12.92
<FN>
(1) As of December 31 of each year.
(2) Average base rent per square foot is based on GLA occupied as of December 31 of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option
------------------- ----------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Dillards 130,266 $563,070 9/2012 --
(Department Store)
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of leases
for the next ten years at the Mall of Memphis:
Annualized Percent of
Number of Approx. Total Base Rent Total 1993
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases (1) Leases (1) Leases Expiring
------------ ------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1994 16 25,000 $598,151 10.3%
1995 8 13,000 268,804 4.6%
1996 26 71,000 1,039,522 17.9%
1997 11 33,000 519,196 9.0%
1998 7 13,000 270,522 4.7%
1999 12 17,000 472,816 8.2%
2000 12 31,000 678,991 11.7%
2001 12 37,000 656,844 11.3%
2002 7 14,000 402,707 6.9%
2003 11 30,000 660,636 11.4%
<FN>
(1) Excludes leases that expire in 1994 for which renewal leases or leases with replacement tenants have
been executed as of March 25, 1994.
</TABLE>
<TABLE>
<CAPTION>
Property
- --------
767 Third Avenue
Office Building a) The GLA historical occupancy rate and average base rent per square foot for the last five years
were as follows:
Year Ending GLA Avg. Base Rent Per
December 31, Occupancy Rate (1) Square Foot (2)
------------ ----------------- ------------------
<S> <C> <C> <C> <C>
1989 . . . . . 100% $49.67
1990 . . . . . 96% 53.41
1991 . . . . . 70% 69.70
1992 . . . . . 67% 47.95
1993 . . . . . 83% 40.26
<FN>
(1) As of December 31 of each year.
(2) Average base rent per square foot is based on GLA occupied as of December 31 of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option
------------------- ----------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
None - No single tenant
represents more than 10%
of the gross leasable
area of the property.
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of leases
for the next ten years at the 767 Third Avenue Office Building:
Annualized Percent of
Number of Approx. Total Base Rent Total 1993
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases (1) Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1994 13 24,000 $ 843,311 9.2%
1995 2 15,000 686,040 7.5%
1996 13 36,000 1,279,646 14.0%
1997 6 40,000 1,502,420 16.5%
1998 7 48,000 1,526,827 16.7%
1999 1 3,000 108,570 1.2%
2000 -- -- -- --
2001 1 4,000 140,000 1.5%
2002 4 23,000 936,179 10.3%
2003 1 7,000 219,200 2.4%
<FN>
(1) Excludes leases that expire in 1994 for which renewal leases or leases with
replacement tenants have been executed as of March 25, 1994.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On May 8, 1981, the Partnership commenced an offering of $125,000,000
(subject to increase by up to $12,500,000) in Limited Partnership Interests
("Interests") pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933. All Interests were subscribed and issued between May
8, 1981 and May 5, 1982 pursuant to the public offering from which the
Partnership received gross proceeds of $137,500,000.
After deducting selling expenses and other offering costs, the
Partnership had approximately $121,936,000 with which to make investments in
income-producing commercial and residential real property, to pay legal fees
and other costs (including acquisition fees) related to such investments and
to satisfy working capital requirements. Portions of the proceeds were
utilized to acquire the properties described in Item 1 above.
At December 31, 1993, the Partnership and its consolidated ventures had
cash and cash equivalents of approximately $2,313,000 and short-term
investments of approximately $2,288,000. Such funds are available for future
distributions to partners, and for working capital requirements including the
Partnership's portion of the anticipated net cash flow deficits at the 767
Third Avenue Office Building and the National City Center Office Building.
The Partnership and its consolidated ventures have currently budgeted in 1994
approximately $4,714,000 for tenant improvements and other capital
expenditures. The Partnership's share of such items and its share of such
similar items for its unconsolidated ventures in 1994 is currently budgeted to
be approximately $3,397,000. 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. Certain of the Partnership's investment properties
and properties in which the Partnership has a security interest currently
operate in overbuilt markets which are characterized by lower than normal
occupancies and/or reduced rent levels. Such competitive conditions will
contribute to the anticipated net cash flow deficits described above. The
sources of capital for such items and for future short-term and long-term
liquidity and distributions to partners are expected to be from net cash
generated by the Partnership's investment properties and through the sale of
such investments. The Partnership does not consider the mortgage notes
receivable arising from the previous sale of the Partnership's investment
property to be a source of future liquidity as collection of any past due or
future payments on the Partnership's notes is considered unlikely. Reference
is made to Note 7(a). The Partnership's and its Ventures' mortgage
obligations are all non-recourse. Therefore, the Partnership and its Ventures
are not obligated to pay mortgage indebtedness unless the related property
produces sufficient net cash flow from operations or sale.
The Partnership currently has adequate cash and cash equivalents to
maintain the operations of the Partnership. However, based upon estimated
operations of certain of the Partnership's investment properties, the
Partnership decided to suspend distributions to the Limited and General
Partners effective as of the second quarter of 1991. In addition, the
Partnership has deferred cash distributions and partnership management fees
related to the first quarter of 1991 as discussed in Note 9. These amounts,
which do not bear interest, are approximately $19,000 and are expected to be
paid in future periods.
As described more fully in Note 4(b), the Partnership is seeking or has
received mortgage loan modifications on certain of its properties. If the
Partnership is unable to secure new or additional modifications to the loans,
based upon current market conditions, the Partnership may not commit any
significant additional amounts to any of the properties which are incurring,
or in the future do incur, operating deficits or deficits to underlying
mortgage holders. This would result in the Partnership no longer having an
ownership (or security) interest in such properties. Such decisions will be
made on a property-by-property basis and may result in a gain to the
Partnership for financial reporting and Federal income tax purposes, with no
corresponding distributable proceeds.
The lender of the existing long-term mortgage notes secured by the
Scotland Yard-Phase I and II, South Point, and El Dorado View apartment
complexes required the establishment of an escrow account, initially of
approximately $980,000 in the aggregate, to be used towards the purchase of
major capital items at the apartment complexes. Additionally, the lender
required $150,000 of the proceeds from the sale of the South Point Apartments,
as more fully discussed in note 7(f), to be added to the escrow account. As
of December 31, 1993, the Partnership has been reimbursed from the escrow
account approximately $647,000 for capital improvements at the above-
referenced apartment complexes. Reference is made to Note 4(c).
Wood Forest Glen Apartments
During 1991, the Partnership continued to negotiate with the lender to
further modify the long-term mortgage note secured by the Wood Forest Glen
Apartments. During these negotiations, the Partnership continued to pay debt
service at the previously modified terms through December 1990 and, effective
January 1991, began to pay debt service on a cash flow basis. In December
1991, the Partnership was notified that the lender sold its mortgage note to a
third party. The Partnership pursued discussions with the new lender
concerning modifications to the mortgage loan and a possible sale of the
property. The Partnership was not successful in securing such modifications;
however, in April 1992, the Partnership sold its interest in the property to
the new lender for approximately $213,000 in excess of the existing mortgage
balance. As a result of the sale, the Partnership recognized a gain on sale
in 1992 of $6,470,625 and $7,058,574 for financial reporting and Federal
income tax purposes, respectively. Reference is made to Note 4(b).
Gatehall Plaza Office Building
During 1990, the Gatehall venture was informed by the mortgage lender
that it was unwilling to further modify the loan secured by the Gatehall Plaza
Office Building and in October 1991, the lender realized upon its security and
took title to the property resulting in the Partnership no longer having an
ownership interest in the property. The Partnership received no cash proceeds
from the transfer of ownership interest; it did, however, recognize a gain for
financial reporting and Federal income tax purposes during 1991 of $4,235,904
and $3,305,588, respectively. Reference is made to Note 4(b).
Bitter Creek Apartments
The original modification of the then existing long-term mortgage notes
secured by the Bitter Creek Apartments located in Grand Prairie, Texas expired
on June 15, 1991. The modifications provided for the deferral of interest
payments for the period December 15, 1986 through June 15, 1991. In addition,
principal payments were deferred for the period December 15, 1986 through
December 15, 1990. During February 1992, the Bitter Creek venture received an
additional modification to the long-term mortgage notes. The venture was
required to pay down approximately $436,000 of the principal balance of the
mortgage loan in exchange for the lender forgiving all deferred interest and
extending the term of the modification. The Partnership's share of the
required principal payment was approximately $58,000. The new modified
interest accrual and payment rate averaging 7% for the period June 15, 1991 to
June 9, 1992 was based upon the lender's prime rate. As the modification was
retroactive to June 15, 1991, the Partnership recognized a gain upon
forgiveness of indebtedness in 1991 aggregating $143,082 and $1,094,940 for
financial reporting and Federal income tax purposes, respectively. The
additional mortgage modification provided that payments of interest be paid
monthly and the principal balance and any accrued interest be due and payable
on December 15, 1992.
On June 9, 1992, the venture sold the land and related assets of the
Bitter Creek apartment complex for $10,250,000 in cash (before selling costs
and prorations). A major portion of the sales proceeds was utilized to retire
the related underlying mortgage note of approximately $9,064,000. The
Partnership and the venture partner received approximately $339,000 and
$681,000, respectively, from the sale of the property after deducting expenses
in connection with the sale and the mortgage loan retirement. The Partnership
recognized a gain in 1992 of $142,967 and $2,808,159 for financial reporting
and Federal income tax purposes, respectively. Reference is made to Note
7(e).
767 Third Avenue Office Building
During 1991 and 1992, approximately 67% of the leased space at the 767
Third Avenue Office Building expired (of which approximately 56% have been re-
leased as of December 1993). In addition, approximately 12,300 square feet of
space in the building is currently leased to various entities of the former
Yugoslavian government. Due to certain sanctions imposed by the United States
government, these tenants were ordered to vacate their premises in May, 1992.
The tenants have not paid rent since they vacated their space. The joint
venture is currently pursuing its legal remedies. The joint venture is
aggressively marketing the remaining vacant space. Vacancy rates in Midtown
Manhattan (the sub-market for this property) remain high and the increased
competition for tenants has resulted in lower effective rental rates. The
increased vacancy results from new office building development in the area
over the past few years and corporate consolidations. Over the next few
years, however, there is only a relatively small amount of new office building
space planned and most of the new development is planned for the west side of
Midtown. The adverse market conditions and the negative impact of effective
rental rates, while temporary, will likely continue over the next few years.
While this building is in a premier location, it will be adversely impacted by
the lower expected effective rental rates upon leasing and from releasing
costs. In order to reduce debt service payments during the tenant turnover
period, the 767 Third Avenue joint venture obtained from the existing lender,
in May 1992, a replacement mortgage loan bearing a substantially lower
interest rate than the original loan. In connection with the replacement
mortgage loan, 767 Third Avenue was required to fund $8,000,000 into an escrow
account to fund any future leasing costs and debt shortfalls resulting from
anticipated tenant turnover. At the inception of the escrow agreement, the
venture was allowed to reduce the required reserve contributions by
approximately $2,600,000 to reflect certain leasing costs that had already
been incurred. The Partnership's joint venture partner loaned $5,000,000 to
the joint venture in order to fund the net escrow reserve account. In June
1993, the Partnership purchased a 50% interest in the venture partner's loan
including the related accrued interest. Accordingly, the Partnership's 50%
interest in the principal portion of the loan ($2,500,000) is reflected as a
decrease in long-term debt, less current portion in the consolidated financial
statements at December 31, 1993. Reference is made to Note 4. Because the
reserve account has been depleted and the property is operating at a deficit,
the 767 Third Avenue venture intends to seek refinancing of the mortgage loan.
There can be no assurances that any refinancing can be obtained.
824 Market Street
Occupancy at the 824 Market Street Office building located in Wilmington,
Delaware is currently 49%; however, rent paying occupancy is 80% due to a
vacated major tenant that is obligated to pay rent on 60,500 square feet (31%
of net rentable area) pursuant to the terms of its lease which expires April
1994. The 824 Market Street venture is aggressively seeking replacement
tenants for the vacant space; however, competition has risen significantly due
to new office building development in the area over the last few years and the
contraction of tenants in the financial services industry, resulting in lower
effective rental rates. In order to reduce debt service payments during the
tenant turnover period, the venture had negotiated with the first mortgage
lender for a possible modification to the mortgage note. Such negotiations
have been unsuccessful and the lender has informed the venture of its intent
to realize upon its security in 1994. The 824 Market Street venture has
decided, based upon current and anticipated future market conditions, not to
commit any significant additional amounts to this property. This will result
in the Partnership no longer having an ownership interest in this property and
will result in a gain for financial reporting and federal income tax purposes
to the Partnership with no corresponding distributable proceeds. As of
December 31, 1993, the venture was eighteen months delinquent in making the
scheduled debt service payments of approximately $2,970,000 under the terms of
the note and, in connection with the negotiations, the venture has withheld
payments of contingent interest related to 1987 through 1989 aggregating
$134,525. Accordingly, for financial reporting purposes, the long-term
mortgage note of approximately $12,570,000 has been reflected as a current
liability in the accompanying consolidated financial statements at December
31, 1993 and December 31, 1992. At the first mortgage lender's request,
beginning March 1993, payments of approximately $78,000 on the second mortgage
loan have also been withheld. As a result, the second mortgage loan of
approximately $945,000 has also been reflected as a current liability in the
accompanying consolidated financial statements at December 31, 1993 and
December 31, 1992. The second mortgage lender has also been a tenant in the
building but vacated upon their lease expiration in January 1994. Commencing
April 1993, the tenant/second mortgage note holder has failed to remit the
rent payments due under the terms of their lease. The Partnership and the
first mortgage lender are currently evaluating their alternatives regarding
this matter with the tenant/second mortgage note holder.
Riverfront Office Building
On August 28, 1990, the Riverfront joint venture acquired additional
financing by way of a $5,800,000 fourth mortgage note in order to fund the
costs associated with leasing vacant space. To date, the joint venture has
received approximately $5,730,000 in proceeds. The balance of the proceeds, a
$70,000 engineering holdback, is payable to the joint venture upon completion
of certain structural repairs. Occupancy at the Riverfront Office Building
has increased to 85% at December 31, 1993, up from 67% at December 31, 1992.
1993 leasing activity, although at lower effective rental rates, partially
replaced a major tenant that vacated approximately 25% of the building in July
1992 due to a downsizing of its operations. The tenant met its obligation to
pay rent through the remaining terms of its leases which expired in April
1993. In addition, the property began operating at a deficit in 1992 and, as
a result, debt service payments since July 1992 were made on a delayed basis.
At December 31, 1993, the February through December 1993 debt service payments
totalling approximately $4,248,000 have not been made. Accordingly, the loan
balances of approximately $34,298,000 and $34,338,000 have been reflected as a
current liability in the consolidated financial statements at December 31,
1993 and 1992, respectively. In order to reduce debt service payments, the
joint venture has initiated discussions with the lender to negotiate possible
modifications to the mortgage notes. As of the date of this report the joint
venture has submitted approximately $360,000 to the lender as partial payment
of the amounts delinquent at December 31, 1993. There can be no assurances
that any modification will be obtained. If the joint venture is unable to
secure modifications to the mortgage notes, the joint venture would likely
decide, based upon current and anticipated future market conditions, not to
commit any significant additional amounts to this property. This would result
in the Partnership no longer having an ownership interest in this property and
would result in a gain for financial reporting and Federal income tax purposes
to the Partnership with no corresponding distributable proceeds.
Yerba Buena West Office Building
In June 1992, the joint venture transferred title to the property to the
lender in return for an opportunity to share in future sale or refinancing
proceeds above certain specified levels.
In connection with the San Francisco earthquake experienced on October
17, 1989, the Yerba Buena office building incurred some structural and
cosmetic damage which was repaired. Five tenants (occupying approximately 54%
of the building) vacated the building and withheld substantially all of their
rent (commencing at various times) since November 1989. The Partnership
concluded not to pursue legal recourse against said tenants based on, among
other things, the costs of pursuing its remedies, competing demands on the
Partnership's resources and the prospects of any material return to the
Partnership in light of the then recent events. Reference is made to Note
3(b(1)).
Based upon the conditions at the Yerba Buena West Office Building, the
venture had not made the debt service payments to the underlying lender,
commencing with the January 1990 payment. Accordingly, the venture received a
default notice from the underlying lender in late February 1990. The
Partnership and Affiliated Partners had decided, based upon an analysis of
current market conditions and the probability of large future cash deficits,
not to fund future venture cash deficits. The venture had been negotiating
with the underlying lender to obtain a loan modification to pay for expected
future cash deficits. The venture was unable to negotiate a loan modification
whereby the venture retained ownership of the property, and in June 1992, the
venture transferred title to the property to the lender in return for an
opportunity to share in future sale or refinancing proceeds above certain
specified levels. In order for the joint venture to share in such proceeds,
there must be a significant improvement in current market and property
operating conditions resulting in a significant increase in value of the
property. In addition, during a certain period of time, the venture will have
a right of first opportunity to purchase the property if the lender chooses to
sell. An affiliate of the Partnership's Corporate General Partner continues
to manage and lease the property for the lender. As a result of the transfer
of title to the lender as discussed above, the Partnership no longer has an
ownership interest in the property and recognized a gain in 1992 for financial
reporting and Federal income tax purposes of $1,614,369 and $964,406,
respectively, with no corresponding distributable proceeds. Reference is made
to Note 3(b(1)).
Mall of Memphis
Although occupancy had been increasing, in order for the Mall of Memphis
to maintain its competitive position in the marketplace, the Mall of Memphis
venture completed a mall renovation in 1991. The renovation costs had been
funded by the venture until additional financing was in place. The
Partnership contributed approximately $2,252,000 in addition to foregoing
their share of 1990 and a portion of the 1991 distributable cash flow from the
property to cover their portion of the renovation costs. In March 1993, the
venture finalized additional financing of a $9,625,000 ten year loan at a rate
of 10%, of which $7,600,000 was funded at closing. The Partnership's share of
the funding was $4,719,095 (net of closing costs). The Partnership deposited
$1,000,000 of its' share in an escrow account as security against any
currently undiscovered environmental issues. The venture may be entitled to
additional proceeds of $2,025,000 should it achieve certain occupancy levels
and debt coverage ratios. Reference is made to Note 4(b).
Meadowcrest Apartments
On June 30, 1992, the second mortgage note secured by the Meadowcrest
Apartments complex, located in Dallas, Texas, was scheduled to mature. In
October 1991, the Partnership entered into a contract with a prospective buyer
for the sale of the property. On June 9, 1992, the Partnership sold the land,
building and related improvements and personal property of the Meadowcrest
Apartment Complex for $9,575,000 in cash (before selling costs and
prorations). A portion of the sales proceeds was utilized to retire the
related underlying mortgage notes of approximately $8,445,000. The
Partnership received approximately $861,000 from the sale of the property
after deducting expenses in connection with the sale and the mortgage loan
retirement. As a result of the sale, the Partnership has recognized in 1992 a
gain of $562,806 and $5,255,084 for financial reporting and Federal income tax
purposes, respectively. Reference is made to Note 7(d).<PAGE>
South Point Apartments
In July 1993, the Partnership sold South Point Apartments to an
unaffiliated buyer for approximately $1,145,000 (before closing costs and
lender participation) in excess of the existing mortgage balance. As a result
of the sale, the Partnership recognized a gain on sale in 1993 of $1,433,916
and $3,512,797 for financial reporting and Federal income tax purposes,
respectively. Reference is made to Note 7(f).
General
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.
In response to the weakness of the economy and the limited amount of
available real estate financing in particular, 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
investment properties longer than originally anticipated in order to maximize
the return to the Limited Partners. Although sale proceeds from the
disposition 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
At December 31, 1993 and 1992, the Partnership owned eight and nine
operating properties, respectively. Reference is made to Notes 3 and 6 for a
description of agreements which the Partnership had entered into with sellers
or affiliates of sellers of the Partnership's properties for the operation and
management of such properties.
The increase in rents and other receivables at December 31, 1993 as
compared to December 31, 1992 is primarily due to an increase in unbilled
receivables related to 1993 at the Mall of Memphis.
The decrease in escrow deposits at December 31, 1993 as compared to
December 31, 1992 is primarily due to the use of the balance in the 767 Third
Avenue escrow account, as more fully described in Note 4(b). This decrease is
partially offset by a $1,000,000 escrow deposit of the Partnership's share of
the additional financing received in March, 1993 by the Mall of Memphis
venture, as more fully described in Note 4(b).
The decrease in prepaid expenses at December 31, 1993 as compared to
December 31, 1992 is primarily due to the timing of payment of real estate
taxes at the 767 Third Avenue Office Building.
The decrease in mortgage notes receivable at December 31, 1993 as
compared to December 31, 1992 is due to the establishment of a reserve at
September 30, 1993 due to the uncertainty of collection of the mortgage notes
receivable, as more fully discussed in Note 7(a).
The decrease in land and leasehold interest and in building and improve-
ments at December 31, 1993 as compared to December 31, 1992 is primarily due
to the sale of South Point Apartments, as more fully discussed in Note 7(f).
This decrease is partially offset by the capitalization of tenant leasehold
improvement costs at the 767 Third Avenue Office Building and the Riverfront
Office Building.
The increase in deferred expenses at December 31, 1993 as compared to
December 31, 1992 is primarily due to the capitalization of approximately
$1,832,000 of costs associated with leasing activities at the 767 Third Avenue
Office Building and the Riverfront Office Building which has resulted in
higher occupancies at December 31, 1993. Reference is made to Note 4(b).
The increase in the balance of accrued rents receivable at December 31,
1993 as compared to December 31, 1992 is primarily due to the Partnership
accruing rental income for certain major tenant leases at certain investment
properties over the full period of occupancy rather than as due per the terms
of their respective leases.
The increase in venture partners' deficit in venture at December 31, 1993
as compared to December 31, 1992 is primarily due to the distribution of
approximately $2,764,000 of financing proceeds to the Partnership's venture
partner in the Mall of Memphis venture (as more fully described in Note 4(b))
and the venture partners' share of 1993 operating deficits at the Mall of
Memphis and the Riverfront Office Building.
The decrease in accounts payable at December 31, 1993 as compared to
December 31, 1992 is primarily due to the timing of payment of operating
expenses at the Partnership's investment properties.
The increase in unearned rents at December 31, 1993 as compared to
December 31, 1992 is primarily due to the timing of receipt of rental income
at the Mall of Memphis.
The increase in accrued interest at December 31, 1993 as compared to
December 31, 1992 is primarily due to interest accruals associated with the
non-recourse mortgage loans secured by the 824 Market Street Office Building
and the Riverfront Office Building. The Partnership is delinquent in debt
service payments at these investment properties, as more fully described in
Note 4(b).
The increase in due to affiliates at December 31, 1993 as compared to
December 31, 1992 is primarily due to the timing of reimbursement to the
Corporate General Partner for certain costs relating to administration of the
Partnership.
The increase in the balance of long-term debt, less current portion at
December 31, 1993 as compared to December 31, 1992 is primarily due to the
receipt of an additional $7,600,000 in financing proceeds at the Mall of
Memphis, as more fully discussed in Note 4(b). This increase in partially
offset by the reduction of $4,455,000 in mortgage debt resulting from the sale
of South Point Apartments, as more fully discussed in Note 7(f) and the
Partnership's purchase of a 50% interest in the venture partner's loan to the
767 Third Avenue venture, as more fully discussed in Note 4(b).
The decrease in rental income and depreciation for 1993 as compared to
1992 is primarily due to the sale of South Point Apartments in July 1993. The
decreases in 1992 as compared to 1991 is primarily due to the sale of the Wood
Forest Glen Apartments in April 1992 and the sales of the Meadowcrest
Apartments and Bitter Creek Apartments in June 1992.
The decrease in interest income for 1993 and 1992 as compared to 1991 is
primarily due to the decreased average investment in interest bearing U.S.
Government obligations resulting from the Partnership's funding during 1991 of
its share of the Mall of Memphis renovation costs, as more fully discussed in
note 4(b).
The increase in mortgage and other interest expense for 1993 as compared
to 1992 is primarily due to interest related to the additional financing
secured by the Mall of Memphis as more fully discussed in Note 4(b). This
increase is partially offset by the sale of Wood Forest Glen Apartments in
April 1992, the sale of the Meadowcrest Apartments and the Bitter Creek
Apartments in June 1992 and the sale of South Point Apartments in July 1993.
The decrease in the 1992 as compared to 1991 is primarily due to the
refinancing in 1991 and sale in 1992 of certain investment properties, as more
fully discussed in Notes 4(b) and 7.
The increase in property operating expenses for 1993 as compared to 1992
is primarily due to the establishment of a $527,774 reserve at September 30,
1993 due to the uncertainty of collection of the mortgage notes receivable, as
more fully discussed in Note 7(a). The decrease for 1992 as compared to 1991
is primarily due to the sale of the Wood Forest Glen Apartments in April 1992
and the sales of the Meadowcrest Apartments and Bitter Creek Apartments in
June 1992.
The increase in amortization of deferred expenses for 1993 as compared to
1992 is primarily due to increased amortization relating to capitalized
leasing costs at the 767 Third Avenue Office Building and the Riverfront
Office Building, as more fully discussed in note 4(b).
The decrease in management fees to the corporate general partner for 1993
and 1992 as compared to 1991 is due to the suspension of distributions to the
Limited and General Partners effective as of the second quarter of 1991.
The decrease in the Partnership's share of loss from operations of
unconsolidated ventures for 1993 as compared to 1992 and 1991 is primarily due
to the transfer of title to the Yerba Buena West Office Building to the lender
in June 1992.
The gain from sale or disposition of investment properties for 1993
resulted from the sale of the South Point Apartments, 1992 resulted from the
sale of the Wood Forest Glen Apartments, the Meadowcrest Apartments and the
Bitter Creek Apartments and the disposition of the Partnership's interest in
the Yerba Buena West Office Building. The gain from disposition of investment
properties for 1991 resulted from the lenders realization upon its security in
the Gatehall Plaza Office Building.
The extraordinary item for 1991 resulted from the lender forgiving all
accrued deferred interest as part of the additional modification received on
the mortgage loans secured by the Bitter Creek Apartment Complex.
Inflation
Due to the decrease in the level of inflation in recent years, inflation
generally has not had a material effect on rental income or property operating
expenses.
To the extent that inflation in future periods does have an adverse
impact on property operating expenses, the effect will generally be offset by
amounts recovered from tenants as many of the long-term leases at the
Partnership's properties have escalation clauses covering increases in the
cost of operating and maintaining the properties as well as real estate taxes.
Therefore, there should be little effect on operating earnings if the
properties remain substantially occupied. In addition, certain of the leases
at the Partnership's shopping center investment contain provisions which
entitle the Partnership to participate in gross receipts of tenants above
fixed minimum amounts.
Future inflation may also cause capital appreciation of the Partnership's
investment properties over a period of time to the extent that rental rates
and replacement costs of properties increase.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1993 and 1992
Consolidated Statements of Operations, years ended December 31, 1993, 1992
and 1991
Consolidated Statements of Partners' Capital Accounts (Deficit),
years ended December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows, years ended December 31, 1993,
1992 and 1991
Notes to Consolidated Financial Statements
Schedule
--------
Supplementary Income Statement Information X
Consolidated Real Estate and Accumulated Depreciation XI
SCHEDULES NOT FILED:
All schedules other than those indicated in the index have been omitted
as the required information is inapplicable or the information is presented in
the financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI:
We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XI (a limited partnership) and consolidated
ventures as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility
of the General Partners of the Partnership. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by the General Partners of the Partnership, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Carlyle
Real Estate Limited Partnership - XI and consolidated ventures at December 31,
1993 and 1992, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1993, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK
Chicago, Illinois
March 25, 1994
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
ASSETS
------
<CAPTION>
1993 1992
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,312,541 3,411,939
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,288,265 1,868,599
Rents and other receivables (net of allowance for doubtful accounts of $1,284,059 and $766,890
at December 31, 1993 and 1992, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,230,844 1,589,182
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,510,402 2,651,083
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,636,340 2,024,561
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,978,392 11,545,364
------------ ------------
Mortgage notes receivable (net of allowance for uncollectibility of $527,774 at December 31, 1993,
note 7(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,067,695 2,595,469
Investment properties, at cost (notes 2, 3 and 4) - Schedule XI:
Land and leasehold interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,333,011 19,083,011
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193,684,179 194,130,350
------------ ------------
212,017,190 213,213,361
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,509,329 68,282,112
------------ ------------
Total investment properties, net of accumulated depreciation . . . . . . . . . . . . . . . . 139,507,861 144,931,249
Investment in unconsolidated ventures, at equity (note 1). . . . . . . . . . . . . . . . . . . . . . . 445,473 444,315
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,881,001 4,757,459
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,108,523 2,333,748
Venture partners' deficit in ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,422,186 3,658,879
------------ ------------
$169,411,131 170,266,483
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1993 1992
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,194,235 48,159,020
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,337,166 1,519,861
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741,524 388,014
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,712,498 3,514,503
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,437,411 1,616,395
Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,699 177,109
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,673,533 55,374,902
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,933 231,733
Long-term debt, less current portion (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,140,597 104,843,567
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,999,063 160,450,202
Deferred gain on sale of investment properties (note 7(a)) . . . . . . . . . . . . . . . . . . . . . . 2,067,695 2,067,695
Venture partners' subordinated equity in ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,677,585 7,549,339
Partners' capital accounts (deficit):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,004,318) (11,700,002)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,116,446) (1,116,446)
------------ ------------
(13,119,764) (12,815,448)
------------ ------------
Limited partners (137,505 interests):
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,935,233 121,935,233
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70,080,706) (63,852,563)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (45,067,975) (45,067,975)
------------ ------------
6,786,552 13,014,695
------------ ------------
Total partners' capital accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,333,212) 199,247
------------ ------------
Commitments and contingencies (notes 1, 2, 3, 4, 8, and 10)
$169,411,131 170,266,483
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,944,278 40,169,886 48,400,306
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257,683 271,174 441,765
----------- ----------- -----------
37,201,961 40,441,060 48,842,071
----------- ----------- -----------
Expenses (Schedule X):
Mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . . . . 19,191,672 18,101,601 20,910,125
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,750,315 6,963,918 7,835,833
Property operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 20,976,370 20,692,190 24,836,266
Professional services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360,581 375,718 316,079
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 1,198,944 863,188 926,790
Management fees to corporate general partner . . . . . . . . . . . . . . . . . -- -- 11,936
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . 234,142 301,359 315,445
----------- ----------- -----------
48,712,024 47,297,974 55,152,474
----------- ----------- -----------
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,510,063) (6,856,914) (6,310,403)
Partnership's share of operations of unconsolidated ventures (note 1). . . . . . (136,092) (762,164) (1,319,301)
Venture partners' share of ventures' operations (note 3) . . . . . . . . . . . . 3,679,780 2,339,587 1,148,561
----------- ----------- -----------
Net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . (7,966,375) (5,279,491) (6,481,143)
Gain from sale or disposition of investment properties, net of venture partner's
share of gain (loss) of $0 in 1993, $881,297 in 1992 and ($2,746,662) in 1991
(notes 4(b) and 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,433,916 8,790,767 4,235,904
----------- ----------- -----------
Net earnings (loss) before extraordinary items . . . . . . . . . . . . (6,532,459) 3,511,276 (2,245,239)
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1993 1992 1991
------------ ------------ ------------
Extraordinary items, net of venture partner's share of $143,082 in 1991
(notes 4(b) and 4(c)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 143,082
----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . $(6,532,459) 3,511,276 (2,102,157)
=========== =========== ===========
Net earnings (loss) per limited partnership interest (note 1):
Net operating loss . . . . . . . . . . . . . . . . . . . . . . . . $ (55.62) (36.86) (45.25)
Gain from sale or disposition of investment properties,
net of venture partner's share in 1992 and 1991. . . . . . . . . 10.32 63.29 30.50
Extraordinary items, net of venture partner's share. . . . . . . . -- -- 1.00
----------- ----------- -----------
$ (45.30) 26.43 (13.75)
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT)
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (137,505 INTERESTS)
------------------------------------------------------- -----------------------------------------------
CONTRI-
BUTIONS
NET OF
CONTRI- NET CASH OFFERING NET CASH
BUTIONS LOSS DISTRIBUTIONS TOTAL COSTS LOSS DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance (deficit)
December 31, 1990 . $1,000 (11,365,566) (1,102,123) (12,466,689) 121,935,233 (65,596,118) (44,552,331) 11,786,784
Net loss (note 5). . -- (211,164) -- (211,164) -- (1,890,993) -- (1,890,993)
Cash distributions
($3.75 per limited
partnership
interest) . . . . . -- -- (14,323) (14,323) -- -- (515,644) (515,644)
----- ----------- ------------ ------------ ----------- ----------- ------------ -----------
Balance (deficit)
December 31, 1991 . 1,000 (11,576,730) (1,116,446) (12,692,176) 121,935,233 (67,487,111) (45,067,975) 9,380,147
Net earnings (loss)
(note 5). . . . . . -- (123,272) -- (123,272) -- 3,634,548 -- 3,634,548
----- ----------- ------------ ------------ ----------- ----------- ------------ -----------
Balance (deficit)
December 31, 1992 . 1,000 (11,700,002) (1,116,446) (12,815,448) 121,935,233 (63,852,563) (45,067,975) 13,014,695
Net earnings (loss)
(note 5). . . . . . -- (304,316) -- (304,316) -- (6,228,143) -- (6,228,143)
----- ----------- ------------ ------------ ----------- ----------- ------------ -----------
Balance (deficit)
December 31, 1993 . $1,000 (12,004,318) (1,116,446) (13,119,764) 121,935,233 (70,080,706) (45,067,975) 6,786,552
====== =========== ============ ============ =========== =========== ============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(6,532,459) 3,511,276 (2,102,157)
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,750,315 6,963,918 7,835,833
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . 1,198,944 863,188 926,790
Reserve for mortgage notes receivable (note 7(a)). . . . . . . . . . . . . 527,774 -- --
Long-term debt - deferred accrued interest . . . . . . . . . . . . . . . . 1,061,103 286,636 1,691,856
Partnership's share of operations of unconsolidated ventures . . . . . . . 136,092 762,164 1,319,301
Venture partner's share of venture's operations, gain (loss) on sale and
extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,679,780) (1,458,290) (3,752,141)
Total gain on sale or disposition of investment properties . . . . . . . . (1,433,916) (9,672,064) (1,489,242)
Extraordinary items. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- (286,164)
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . (641,662) 175,831 757,527
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,140,681 (885,078) (521,302)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,221 254,349 (529,834)
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . (774,775) (431,556) (1,319,012)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (182,695) (376,626) 165,570
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353,510 (865,739) (77,976)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,197,995 1,448,669 100,075
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . (178,984) (329,832) 976,347
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . (46,800) (80,806) (66,476)
Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,590 9,791 54,807
----------- ----------- -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . 3,357,154 175,831 3,683,802
----------- ----------- -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1993 1992 1991
----------- ----------- -----------
Cash flows from investing activities:
Net sales (purchases) of short-term investments. . . . . . . . . . . . . . . . (419,666) 1,136,389 (3,004,988)
Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . (5,280,587) (4,116,368) (4,851,889)
Principal payments on mortgage notes receivable. . . . . . . . . . . . . . . . -- 60,000 60,000
Partnership's distributions from unconsolidated ventures . . . . . . . . . . . -- -- 71,248
Partnership's contributions to unconsolidated ventures . . . . . . . . . . . . (137,250) (49,268) --
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . (2,322,486) (1,705,586) (912,379)
Disposition closing costs. . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- (52,370)
Cash proceeds from sale of investment properties, net of selling expenses (note 7) 932,576 2,093,875 --
----------- ----------- -----------
Net cash used in investing activities. . . . . . . . . . . . . . . . . (7,227,413) (2,580,958) (8,690,378)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 7,600,000 5,000,000 450,000
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . (373,858) (516,100) (799,481)
Principal paydown on long-term debt (note 1) . . . . . . . . . . . . . . . . . -- (435,948) --
Purchase of interest in note payable (note 4(b)) . . . . . . . . . . . . . . . (2,500,000) -- --
Venture partners' contributions to ventures. . . . . . . . . . . . . . . . . . 1,038,350 332,708 677,850
Distributions to venture partners. . . . . . . . . . . . . . . . . . . . . . . (2,993,631) (711,241) (207,652)
Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . -- -- (515,644)
Distributions to general partners. . . . . . . . . . . . . . . . . . . . . . . -- -- (14,323)
----------- ----------- -----------
Net cash provided by (used in) financing activities. . . . . . . . . . 2,770,861 3,669,419 (409,250)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . $(1,099,398) 1,264,292 (5,415,826)
=========== =========== ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . $12,932,574 16,652,932 19,118,194
=========== =========== ===========
Non-cash investing and financing activities:
Sale of investment properties (note 7):
Total sales proceeds, net of selling expenses. . . . . . . . . . . . . . . $ 5,387,576 30,740,926 --
Principal balance due on mortgage payables . . . . . . . . . . . . . . . . 4,455,000 (28,647,051) --
----------- ----------- -----------
Cash proceeds from sale of investment properties, net of selling expenses $ 932,576 2,093,875 --
=========== =========== ===========
Disposition of ownership interest in Gatehall Plaza (note 4(b)):
Reduction of investment property, net of accumulated depreciation. . . . . $ -- -- (9,141,209)
Reduction of deferred expenses . . . . . . . . . . . . . . . . . . . . . . -- -- (173,035)
Balance due on mortgage payable. . . . . . . . . . . . . . . . . . . . . . -- -- 10,204,829
Reduction of accrued interest. . . . . . . . . . . . . . . . . . . . . . . -- -- 651,027
Total gain on disposition of investment property . . . . . . . . . . . . . -- -- (1,489,242)
----------- ----------- -----------
Disposition closing costs paid . . . . . . . . . . . . . . . . . . . $ -- -- 52,370
=========== =========== ===========
Forgiveness of indebtedness - Bitter Creek (note 4(b)):
Balance due on long-term debt - deferred accrued interest canceled . . . . $ -- -- 1,276,101
Increase in accrued interest . . . . . . . . . . . . . . . . . . . . . . . -- (989,937)
----------- ----------- -----------
Extraordinary gain recognized (including joint venture partner's share)
due to forgiveness of indebtedness secured by Bitter Creek . . . . . $ -- -- 286,164
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1992 AND 1991
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the accounts
of the Partnership and the following of its ventures (note 3): GP-1 Partners,
Ltd. ("Bitter Creek") (property sold in June 1992, see note 7(e)), Mall of
Memphis Associates ("Mall of Memphis"), 767 Third Avenue Associates ("767
Third Avenue"), Riverfront Office Park Joint Venture ("Riverfront"), Gatehall
Corporate Center-I Associates ("Gatehall") and Excelsior Associates, LP ("824
Market Street"). 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 interest in Carlyle/National City Associates ("Carlyle/Na-
tional City") and Carlyle Yerba Buena Limited Partnership ("Yerba Buena")
(property transferred to lender in June 1992, see note 3(b)(1)). Accordingly,
the accompanying consolidated financial statements do not include the accounts
of Carlyle/National City or Yerba Buena.
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to reflect the Partnership's
accounts in accordance with generally accepted accounting principles ("GAAP")
and to 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:
<TABLE> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
1993 1992
------------------------------ ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . . . . . . . . . . . . $169,411,131 28,764,473 170,266,483 23,568,797
Partners' capital accounts (deficit) (note 5):
General partners.. . . . . . . . . . . . . . . . . . . . (13,119,764) (12,423,085) (12,815,448) (12,566,424)
Limited partners.. . . . . . . . . . . . . . . . . . . . 6,786,552 (18,125,642) 13,014,695 (14,601,347)
Net earnings (loss) (note 5):
General partners.. . . . . . . . . . . . . . . . . . . . (304,316) 143,339 (123,272) 1,908,667
Limited partners.. . . . . . . . . . . . . . . . . . . . (6,228,143) (3,524,295) 3,634,548 6,248,657
Net earnings (loss) per limited partnership interest . . . (45.30) (25.63) 26.43 45.44
============ =========== =========== ============
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The net earnings (loss) per limited partnership interest is based upon
the Limited Partnership Interests outstanding at the end of each period
(137,505). Deficit capital accounts will result, through the duration of the
Partnership, in net gain for financial reporting and income tax purposes.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement. 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 purposes of these
statements, the Partnership's policy is to consider all such amounts held with
original maturities of three months or less (none at December 31, 1993 and
1992) as cash equivalents with any remaining amounts reflected as short-term
investments.
Deferred expenses consist primarily of leasing and financing fees
incurred in connection with the acquisition and operation of the properties.
Deferred leasing fees are amortized using the straight-line method over the
terms stipulated in the related agreements. Deferred financing fees are
amortized over the related commitment periods.
Although certain leases of the Partnership provide for tenant occupancy
during periods for which no rent is due, the Partnership accrues rental income
over the full period of occupancy on a straight-line basis.
Certain reclassifications have been made to the 1992 and 1991
consolidated financial statements to conform with the 1993 presentation.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires entities
with total assets exceeding $150 million at December 31, 1993 to disclose the
SFAS 107 value of all financial assets and liabilities for which it is
practicable to estimate. Value is defined in the Statement as the amount at
which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The Partnership
believes the carrying amount of its financial instruments classified as
current assets and liabilities (excluding current portion of long-term debt)
approximates SFAS 107 value due to the relatively short maturity of these
instruments. There is no quoted market value available for any of the
Partnership's other instruments. As the debt secured by the 824 Market Street
and Riverfront Office Building properties have been classified by the
Partnership as a current liability at December 31, 1993 as a result of
defaults (see note 4(b)) and because resolution of such defaults are
uncertain, the Partnership considers the disclosure of the SFAS 107 value of
such long-term debt to be impracticable. The remaining debt, with a carrying
balance of $106,521,982 has been calculated to have an SFAS 107 value of
$111,456,259 by discounting the scheduled loan payments to maturity. Due to
restrictions on transferability and prepayment and the inability to obtain
comparable financing due to previously modified debt terms or other property
specific competitive conditions, the Partnership would be unable to refinance
these properties to obtain such calculated debt amounts reported (see note 4).
The Partnership has no other significant financial instruments.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the Partnership.
However, in certain instances, the Partnership has been required under
applicable law to remit directly to the tax authorities amounts representing
withholding from distributions paid to partners.
(2) INVESTMENT PROPERTIES
(a) General
The Partnership acquired, either directly or through joint venture (note
3), ten apartment complexes, eight office buildings, and an enclosed shopping
mall. During 1984, the Partnership sold its Arlington, Texas and its Red
Bank, Tennessee apartment complexes. During 1986, the Partnership sold its
interest in Am-Car Real Estate Partnership-I joint venture ("AM-CAR"), which
had ownership interests in the Pavillion Towers office complex located in
Aurora, Colorado and the Coast Federal Office Building located in Pasadena,
California. During 1988, the Partnership (through Somerset Lake Associates)
sold its Indianapolis, Indiana apartment complex. During 1991, the
Partnership disposed of its interest in the Gatehall Plaza office building
located in Parsippany, New Jersey. During 1992, the Partnership sold its
interest in the Wood Forest Glen Apartments, the Meadowcrest Apartments and
the Bitter Creek Apartments. In addition, during 1992, the lender realized
upon its security and took title to the Yerba Buena West Office Building.
During 1993, the Partnership sold its interest in the South Point Apartments.
All of the properties owned at December 31, 1993 were operating. The cost of
the investment properties represents the total cost to the Partnership or its
ventures plus miscellaneous acquisition costs.
Depreciation on the operating properties has been provided over estimated
useful lives of 5 to 30 years using the straight-line method.
All investment properties are pledged as security for the long-term debt,
for which there is generally no recourse to the Partnership. The Partnership
continues to make payments on its existing mortgage indebtedness related to
its remaining investment properties, except as described in note 4 below.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated over
their estimated useful lives.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at December 31, 1993 is a party to five operating joint
venture agreements. Pursuant to such venture agreements, the Partnership made
initial capital contributions of approximately $57,071,000 before legal and
other acquisition costs and its share of operating deficits as discussed
below. In general, the Partnership's joint venture partners, who are either
the sellers (or their affiliates) of the property investments being acquired
or parties which have contributed an interest in the property being developed,
or were subsequently admitted to the ventures, make no cash contributions to
the ventures but their retention of an interest in the property, through the
joint venture, is taken into account in determining the purchase price of the
Partnership's interest, which is determined by arm's-length negotiations.
Under certain circumstances, either pursuant to the venture 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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership has acquired, through the above ventures, an enclosed
shopping mall and four office buildings. The joint venture partners (who were
primarily responsible for constructing the properties) contributed any excess
of cost over the aggregate amount available from Partnership contributions and
financing and, to the extent such funds exceeded the aggregate costs, were to
retain such excesses. The venture properties have been financed under various
long-term debt arrangements as described in note 4.
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 venture partner is
generally entitled to a non-cumulative return on its interest in the venture;
additional net cash receipts are generally shared in a ratio relating to the
various ownership interests of the Partnership and its venture partners.
During 1993, 1992 and 1991, one, one and three of the ventures, respectively,
produced net cash receipts available for distribution to the Partnership. The
Partnership has preferred positions (related to the Partnership's cash
investment in the ventures) with respect to distribution of sale or
refinancing proceeds from the ventures.
In general, operating profits and losses are shared in the same ratio as
net cash receipts; however, if there are no net cash receipts, profits or
losses are allocated to the partners based upon their respective economic
interests.
There are certain risks associated with the Partnership's investments
made through joint ventures, including the possibility that the Partnership's
joint venture partners in an investment might become unable or unwilling to
fulfill their financial or other obligations, or that such joint venture
partners may have economic or business interests or goals that are
inconsistent with those of the Partnership.
(b) Unconsolidated Ventures
(1) Yerba Buena
In August 1985, the partnership acquired, through the Carlyle Yerba Buena
Limited Partnership ("Yerba Buena"), an interest in an existing six-story
office building known as Yerba Buena West Office Building in San Francisco,
California. The Partners of Yerba Buena included Carlyle Real Estate Limited
Partnership-XII ("Carlyle-XII") and Carlyle Real Estate Limited Partnership-
XIV, two public partnerships sponsored by the Corporate General Partner of the
Partnership (the "Affiliated Partners") and four Limited Partners unaffiliated
with the Partnership or its general partners (the "Unaffiliated Partners").
The Partnership and the Affiliated Partners purchased an 80% interest in
the property from the sellers and simultaneously formed Yerba Buena with the
Unaffiliated Partners. The Partnership owned a 23.36% interest in the
property. The Partnership was generally entitled to 23.36% of Yerba Buena's
annual net cash flow, net sale or refinancing proceeds and profits or losses.
The Partnership's cash investment in connection with this property was
approximately $4,000,000.
In connection with the October 17, 1989 San Francisco earthquake, the
Yerba Buena office building incurred some structural and cosmetic damage which
was repaired shortly thereafter. In addition, five tenants (occupying
approximately 54% of the building), based upon concerns over the structural
integrity of the building, moved out of the building after the earthquake and
withheld all or portions of their rent commencing at various times since
November 1989. The Partnership concluded not to pursue legal recourse against
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
these tenants based on, among other things, the costs of pursuing its
remedies, demands on the Partnership's resources and the prospects of any
material return to the Partnership in light of the then recent events.
Based upon the conditions at Yerba Buena, the venture had not made the
debt service payments to the underlying lender commencing with the January
1990 payment. Accordingly, the joint venture received a default notice from
the underlying lender in late February 1990. The Partnership and Affiliated
Partners had decided, based upon an analyses of current market conditions and
the probability of large future cash deficits, not to fund future joint
venture cash deficits. The joint venture had been negotiating with the
underlying lender to obtain a loan modification to pay for expected future
cash deficits. The joint venture was unable to negotiate a loan modification
whereby the joint venture retained ownership of the property and in June 1992,
the joint venture transferred title of the property to the lender in return
for an opportunity to share in future sale or refinancing proceeds above
certain specified levels. In order for the joint venture to share in such
proceeds, there must be a significant improvement in current market and
property operating conditions resulting in a significant increase in value of
the property. In addition, during a certain period of time, the joint venture
will have a right of first opportunity to purchase the property if the lender
chooses to sell. An affiliate of the Partnership's Corporate General Partner
continues to manage and lease the property for the lender. As a result of the
transfer of title to the lender as discussed above, the Partnership no longer
has an ownership interest in the property and recognized in 1992 a gain for
financial reporting and Federal income tax purposes of $1,614,369 and
$964,406, respectively, with no corresponding distributable proceeds.
(2) Carlyle/National City
In July 1983, the Partnership acquired, through Carlyle/National City (a
joint venture with Carlyle-XII), an interest in an existing thirty-five story
office building in Cleveland, Ohio.
The Partnership made an initial contribution of $5,445,257 to
Carlyle/National City. The terms of the Carlyle/National City venture
agreement provide that the capital contributions, annual cash flow, net
proceeds from sale or refinancing and profit or loss will be allocated or
distributed 13.7255% to the Partnership. The Partnership's cash investment in
the property was $3,341,583 after distributions resulting from the increase in
the first mortgage loan.
The Partnership has reached an agreement in principle with the current
mortgage lender to refinance the existing mortgage which would be effective
February 1, 1994, with a reduced interest rate. The loan would be amortized
over 22 years with a balloon payment due in seven years. There can be no
assurances that any modification will be obtained.
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(4) LONG-TERM DEBT
(a) Long-term debt consisted of the following at December 31, 1993 and 1992:
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
9-1/2% mortgage note; secured by the Scotland Yard - Phase I apartment complex in Houston,
Texas; payable in monthly installments of interest only until January 1, 1999 when the
remaining balance is payable (see note 4(c)). . . . . . . . . . . . . . . . . . . . . . . . $ 9,300,000 9,300,000
10% first mortgage note; secured by the Mall of Memphis shopping center in Memphis, Tennessee;
payable in monthly installments of principal and interest of $279,823 through January 1, 2018;
additional interest payable equal to 20% of certain rents in excess of a specified level
(approximately $110,000, $89,000 and $88,000 for 1993, 1992 and 1991, respectively) . . . . 30,527,587 30,816,805
14-1/2% second mortgage note; secured by the Mall of Memphis shopping center in Memphis,
Tennessee; payable in monthly installments of principal and interest of $41,958 through
January 1, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,364,449 3,378,935
10% third mortgage note; secured by the Mall of Memphis shopping center in Memphis,
Tennessee; payable in monthly installments of principal and interest of $66,696 through
May 1, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,572,307 --
10% mortgage note; secured by the 767 Third Avenue office building in New York, New York;
payable in monthly installments of interest only until May 1, 1999 when the remaining
principal balance of $33,295,445 is payable; additional interest equal to 5% of certain
rents in excess of a specified level is payable (approximately $0, $0 and $130,000
in 1993, 1992 and 1991, respectively); modified, (see note 4(b)). . . . . . . . . . . . . . 37,986,531 37,986,531
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1993 1992
----------- -----------
Promissory note; bearing interest at a rate equal to the prime rate (approximately 6.0%
on December 31, 1993 and 1992) plus 2% payable in monthly installments of interest
only until May 1998 when the remaining balance is payable (see note 4(b)) . . . . . . . . . 2,500,000 5,000,000
14% first mortgage note; secured by the Riverfront office building in Cambridge, Massachusetts;
payable in monthly installments of principal and interest of $297,556 through September 1,
2018; additional interest payable equal to 25% of gross receipts in excess of a specified
level (no additional interest was due for 1993, 1992 and 1991) (see note 4(b)). . . . . . . 24,780,548 24,813,022
12-1/2% second mortgage note; secured by the Riverfront office building in Cambridge,
Massachusetts; payable in monthly installments of principal and interest of $12,693
through September 1, 2018 (see note 4(b)) . . . . . . . . . . . . . . . . . . . . . . . . . 1,167,936 1,169,970
11-3/4% third mortgage note; secured by the Riverfront office building in Cambridge,
Massachusetts; payable in monthly installments of principal and interest of
$26,964 through September 1, 2018 (see note 4(b)) . . . . . . . . . . . . . . . . . . . . . 2,615,507 2,620,742
10-1/4% fourth mortgage note; (total commitment $5,800,000) secured by the Riverfront
office building in Cambridge, Massachusetts; payable in monthly installments of interest
only of $48,978 through September 1995; thereafter, payable in monthly installments of
principal and interest of $52,007 through September 1, 2000 (see note 4(b)) . . . . . . . . 5,734,000 5,734,000
9-1/2% mortgage note; secured by the El Dorado View apartment complex in Webster, Texas;
payable in monthly installments of interest only until January 1, 1999 when the remaining
balance is payable (see note 4(c)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,695,000 4,695,000
9-1/2% mortgage note; secured by the Scotland Yard - Phase II apartment complex in
Houston, Texas; payable in monthly installments of interest only until January 1, 1999
when the remaining balance is payable (see note 4(c)) . . . . . . . . . . . . . . . . . . . 9,515,000 9,515,000
14-1/8% mortgage note secured by the 824 Market Street office building in Wilmington,
Delaware; payable in monthly installments of principal and interest of $165,005
through August 1, 2008; additional interest payable equal to 30% of certain rents in
excess of a specified level (no additional interest was due for 1993, 1992 and 1991)
(see note 4(b)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,570,184 12,570,184
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1993 1992
----------- -----------
Second mortgage; secured by the 824 Market Street office building in Wilmington,
Delaware; bearing interest (adjusted annually on January 1st) at a rate equal to the
prime rate (6% on January 1, 1994) plus 2% to be repaid in monthly installments
of principal and interest (as adjusted annually based on changes in the interest
rate) based on a 30 year amortization schedule until December 19, 1996 when the
remaining principal balance will be payable (see note 4(b)) . . . . . . . . . . . . . . . . 944,680 947,398
9-1/2% mortgage note; secured by the South Point apartment complex in Houston,
Texas; payable in monthly installments of interest only until January 1, 1999 when
the remaining balance was originally due but retired at sale in July 1993
(see notes 4(c) and 7(f)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 4,455,000
------------ -----------
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,273,729 153,002,587
Less current portion of long-term debt (see note 4(b)) . . . . . . . . . . . . . . 48,194,235 48,159,020
------------ -----------
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $105,079,494 104,843,567
============ ===========
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Five year maturities of long-term debt are as follows:
1994 . . . . . . . . . $48,194,235
1995 . . . . . . . . . 422,158
1996 . . . . . . . . . 467,336
1997 . . . . . . . . . 517,396
1998 . . . . . . . . . 572,871
===========
(b) Long-Term Debt Modifications and Refinancings
General
As described below, the Partnership is seeking or has received mortgage
note modifications on certain properties. Upon expiration of such
modifications, should the Partnership not seek or be unable to secure new or
additional modifications to the loans, based upon current and anticipated
future market conditions, the Partnership may not commit any significant
additional amounts to these properties. This would likely result in the
Partnership no longer having an ownership (or security interest) in such
properties. Such decisions will be made on a property-by-property basis and
could result in a gain for financial reporting and Federal income tax purposes
to the Partnership with no corresponding distributable proceeds.
Wood Forest Glen Apartments
The modification of the existing long-term mortgage note secured by the
Wood Forest Glen apartment complex located in Houston, Texas expired on June
30, 1990. The Partnership continued to negotiate for further modifications to
the mortgage loan but was unsuccessful. In December 1991, the Partnership was
notified that the lender sold its mortgage note to a third party. The
Partnership pursued discussions with the new lender concerning modifications
to the mortgage loan and a possible sale of the property. The Partnership was
not successful in securing such modifications; however, in April 1992, the
Partnership sold its interest in the property to the new lender for
approximately $213,000 in excess of the existing mortgage balance (see note
7(c)). As a result of the sale, the Partnership recognized in 1992 a gain on
sale of $6,470,625 and $7,058,574 for financial reporting and Federal income
tax purposes, respectively.
Bitter Creek Apartments
On June 10, 1992, the venture sold the property as more fully discussed
in note 7(e).
The original modification of the then existing long-term mortgage notes
(originally due December 15, 1995) secured by the Bitter Creek apartment
complex located in Grand Prairie, Texas expired on June 15, 1991. The
modifications provided for the deferral of interest payments for the period
December 15, 1986 through June 15, 1991. In addition, principal payments were
deferred for the period December 15, 1986 through December 15, 1990.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
During February 1992, the Bitter Creek venture received an additional
modification to the long-term mortgage notes. The venture was required to pay
down approximately $436,000 of the principal balance of the mortgage loan in
exchange for the lender forgiving all deferred interest and extending the term
of the modification. The Partnership's share of the required principal
payment was approximately $58,000. The new modified interest accrual and
payment rate (averaging 7% for the period June 15, 1991 to June 9, 1992) was
based upon the lender's prime rate. As the modification was retroactive to
June 15, 1991, the Partnership recognized a gain upon forgiveness of
indebtedness in 1991 aggregating $143,082 and $1,094,940 for financial
reporting and Federal income tax purposes, respectively. The additional
mortgage modification provided that payments of interest be paid monthly and
the principal balance and any accrued interest would be due and payable on
December 15, 1992.
Gatehall Plaza Office Building
The Gatehall venture had reached an agreement in principle with the
lender, effective September 1, 1988, to modify the terms of the mortgage note
which was secured by the Gatehall Plaza office building located in Parsippany,
New Jersey through August 31, 1990. The venture approached the lender to
negotiate additional modifications to the mortgage loan in order to further
reduce the debt service payments and extend the terms of the modification.
During such negotiations, the venture made partial payments of debt service of
approximately $1,016,000. During the year ended December 1990, the mortgage
lender informed the venture that they were unwilling to further modify the
loan and in October 1991, the lender realized upon its security and took title
to the property resulting in the Partnership no longer having an ownership
interest in the property. The Partnership received no cash proceeds from the
transfer of ownership interest; it did, however, recognize a gain for
financial reporting and Federal income tax purposes during 1991 of $4,235,904
and $3,305,588, respectively.
767 Third Avenue Office Building
During 1991 and 1992, the leases for approximately 67% of the space at
the 767 Third Avenue office building located in New York, New York expired (of
which approximately 56% have been re-leased as of December 1993). In order to
reduce debt service payments during the tenant turnover period, the 767 Third
Avenue venture obtained from the existing lender, in May 1992, a replacement
mortgage loan which matures in seven years and bears a substantially lower
interest rate (10%) than the original loan (12 3/8%). In connection with the
replacement mortgage loan, 767 Third Avenue was required to fund $8,000,000
into an escrow account for future leasing costs and debt service shortfalls
resulting from anticipated tenant turnover. At the inception of the escrow
agreement, the venture was allowed to reduce the required escrow contributions
by approximately $2,600,000 to reflect that certain leasing costs (described
above) had already been incurred. 767 Third Avenue had been reserving the
property's cash flow beginning with the second quarter of 1990; however, such
amounts were less than the net required reserve. The Partnership's venture
partner loaned $5,000,000 to the venture in order to fund the net escrow
reserve account. As of the date of this report, the reserve account has been
depleted and the venture (by way of partner contributions) is funding required
leasing costs and debt service shortfalls. The loan funded by the
Partnership's venture partner earns interest at an adjustable rate
(approximately 8% at December 31, 1993) and provides for repayment of
principal and interest out of the available cash flow from property operations
and sale or refinancing proceeds. In June 1993, the Partnership purchased a
50% interest in the venture partner's loan including the related accrued
interest. Accordingly, the Partnership's 50% interest in the principal
portion of the loan ($2,500,000) is reflected as a decrease in long-term debt,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
less current portion in the consolidated financial statements at December 31,
1993. In conjunction with the agreement with the venture partner to loan the
amounts necessary to fund the escrow account, because the Partnership did not
purchase its share of the $5,000,000 loan by December 31, 1992, the
Partnership's preferential return was removed from the calculation of the
allocation of sale or refinancing proceeds. Because the reserve account has
been depleted and the property is operating at a deficit, the 767 Third Avenue
venture intends to seek refinancing of the mortgage loan. There can be no
assurances that any refinancing can be obtained.
824 Market Street Office Building
Occupancy at the 824 Market Street office building located in Wilmington,
Delaware is currently 49%; however, rent paying occupancy is 80% due to a
vacated major tenant that is obligated to pay rent on 60,500 square feet (31%
of net rentable area) pursuant to the terms of its lease which expires April
1994. The 824 Market Street venture is aggressively seeking replacement
tenants for the vacant space; however, competition has risen significantly due
to new office building development in the area over the last few years and the
contraction of tenants in the financial services industry, resulting in lower
effective rental rates. In order to reduce debt service payments during the
tenant turnover period, the venture had negotiated with the first mortgage
lender for a possible modification to the mortgage note. Such negotiations
have been unsuccessful and the first mortgage lender has informed the venture
of its intent to realize upon its security in 1994. The 824 Market Street
venture has decided, based upon current and anticipated future market
conditions, not to commit any significant additional amounts to this property.
This will result in the Partnership no longer having an ownership interest in
this property and will result in a gain for financial reporting and federal
income tax purposes to the Partnership with no corresponding distributable
proceeds. As of December 31, 1993, the venture is eighteen months delinquent
in making the scheduled debt service payments of approximately $2,970,000
under the terms of the note and, in connection with the negotiations, the
venture has withheld payments of contingent interest related to 1987 through
1989 aggregating $134,525. Accordingly, for financial reporting purposes, the
long-term mortgage note of approximately $12,570,000 has been reflected as a
current liability in the accompanying consolidated financial statements at
December 31, 1993 and December 31, 1992. At the first mortgage lender's
request, beginning March 1993, payments of approximately $78,000 on the second
mortgage loan have also been withheld. As a result, the second mortgage loan
of approximately $945,000 has also been reflected as a current liability in
the accompanying consolidated financial statements at December 31, 1993.
Riverfront Office Building
On August 28, 1990, the Riverfront joint venture acquired additional
financing by way of a $5,800,000 fourth mortgage note in order to fund the
costs associated with leasing vacant space. To date, the joint venture has
received approximately $5,730,000 in proceeds. The balance of the proceeds, a
$70,000 engineering holdback, is payable to the joint venture upon completion
of certain structural repairs which due to cash flow operations are expected
to be completed by 1996. The property began operating at a deficit in 1992
and, as a result, debt service payments since July 1992 were made on a delayed
basis. At December 31, 1993, the February through December 1993 debt service
payments totalling approximately $4,248,000 have not been made. Accordingly,
the loan balances of approximately $34,298,000 and $34,338,000 have been
reflected as a current liability in the consolidated financial statements at
December 31, 1993 and 1992, respectively. In order to reduce debt service
payments, the joint venture has initiated discussions with the lender to
negotiate possible modifications to the mortgage notes. As of the date of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
this report the joint venture has submitted approximately $360,000 to the
lender as partial payment of the amounts delinquent at December 31, 1993.
There can be no assurances that any modification will be obtained. If the
joint venture is unable to secure modifications to the mortgage notes, the
joint venture would likely decide, based upon current and anticipated future
market conditions, not to commit any significant additional amounts to this
property. This would result in the Partnership no longer having an ownership
interest in this property and would result in a gain for financial reporting
and Federal income tax purposes to the Partnership with no corresponding
distributable proceeds.
Mall of Memphis
Although occupancy had been increasing, in order for the Mall of Memphis
to maintain is competitive position in the marketplace, the Mall of Memphis
venture completed a mall renovation in 1991. The renovation costs had been
funded by the venture until additional financing was in place. The
Partnership contributed approximately $2,252,000 in addition to foregoing
their share of 1990 and a portion of the 1991 distributable cash flow from the
property to cover their portion of the renovation costs. In March 1993, the
venture finalized additional financing of a $9,625,000 ten year loan at a rate
of 10%, of which $7,600,000 was funded at closing. The Partnership's share of
the funding was $4,719,095 (net of closing costs). Of the amount funded, the
Partnership deposited $1,000,000 in an escrow account as security against any
currently undiscovered environmental issues. The venture may be entitled to
additional proceeds of $2,025,000 should it achieve certain occupancy levels
and debt coverage ratios.
(c) Refinancings
The modification of the existing long-term mortgage notes secured by the
Scotland Yard Apartments - Phase II and the South Point Apartments located in
Houston, Texas expired on June 30, 1990. However, the Partnership continued
to pay debt service according to the previously modified terms through
December 31, 1990. Effective December 27, 1990, the Partnership obtained
replacement mortgage loans from an institutional lender to retire in full
satisfaction, at an aggregate discount, the previously modified existing long-
term mortgage notes secured by the Scotland Yard - Phase I and II, South Point
and El Dorado View apartment complexes. Commencing April 1, 1992, the loans
provide for payment of contingent interest equal to 35% of the amount by which
gross receipts attributable to a fiscal year (all as defined) exceed a base
amount. For the fiscal years 1993 and 1992, contingent interest aggregated
approximately $293,000 and $281,000, respectively. In the event that these
properties are sold before the maturity date of the loan, the lender is
entitled to a prepayment penalty of 6% of the mortgage principal and, in
general, the higher of 65% of the sale proceeds or ten times the highest
contingent interest amount in any of the three full fiscal years preceding the
sale (all as defined). The Partnership sold South Point Apartments in July
1993, as further discussed in note 7(f). The lender has the right to call the
remaining loan at any time after January 1, 1996. The lender required the
establishment of an escrow account, initially of approximately $980,000 in the
aggregate, to be used towards the purchase of major capital items at the
apartment complexes. Additionally, the lender required $150,000 of the sale
proceeds from South Point Apartments to be added to the escrow account. As of
December 31, 1993, the Partnership has been reimbursed from the escrow account
approximately $647,000 for capital improvements at the above-referenced
apartment complexes. Finally, the modification provides for the lender to
participate in the net proceeds from the sale or refinancing of the properties
in the form of additional contingent interest. The Partnership has recorded
an accrual for such participation as deferred accrued interest included in the
balance of long-term debt in the accompanying consolidated financial
statements at December 31, 1993.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(5) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale or other
disposition of investment properties are allocated first to the General
Partners in an amount equal to the greater of the amount distributable to the
General Partners from the proceeds of any such sale (as described below) or 1%
of the profits from the sale. Losses from the sale or other disposition of
investment properties will be allocated 1% to the General Partners. The
remaining sale profits and losses will be allocated to the Limited Partners.
An amendment to the Partnership Agreement, effective January 1, 1991,
generally provides that notwithstanding any allocation contained in the
Agreement, if at any time profits are realized by the Partnership, any current
or anticipated event which would cause the deficit balance in absolute amount
in the Capital Account of the General Partners to be greater than their share
of the Partnership's indebtedness (as defined) after such event, then the
allocation of Profits to the General Partners shall be increased to the extent
necessary to cause the deficit balance in the Capital Account of the General
Partners to be no less than their respective shares of the Partnership's
indebtedness after such event. In general, the effect of this amendment is to
allow the deferral of the recognition of taxable gain to the Limited Partners.
The General Partners are not required to make any capital contributions
except under certain limited circumstances upon dissolution and termination of
the Partnership. Distributions of "net cash receipts" of the Partnership are
allocated 90% to the Limited Partners and 10% to the General Partners (of
which 6.25% constitutes a management fee to the Corporate General Partner for
services in managing the Partnership).
The Partnership Agreement provides that the Limited Partners shall receive
99% and the General Partners shall receive 1% of the sale or refinancing
proceeds of a real property (net after expenses and retained working capital)
until the Limited Partners (i) have received cash distributions of sale or
refinancing proceeds in an amount equal to the Limited Partners' aggregate
initial capital investment in the Partnership, and (ii) have received
cumulative cash distributions from the Partnership's operations which when
combined with sale or refinancing proceeds previously distributed, equal a 6%
annual return on the Limited Partners' average capital investment for each
year (their initial capital investment as reduced by sale or refinancing
proceeds previously distributed) commencing with the first fiscal quarter of
1983. After such distributions, the General Partners shall receive (to the
extent not previously received) proceeds up to 3% of the aggregate sales price
of properties previously sold by the Partnership with any remaining proceeds
allocated 85% to the Limited Partners and 15% General Partners. The Limited
Partners have not yet received cash distributions of sale or refinancing
proceeds in an amount equal to their initial capital investment. Therefore,
no sale proceeds are distributable to the General Partners pursuant to the
distribution levels described above.
Allocations among the partners in the accompanying accrual basis
consolidated financial statements have been made in accordance with the
provisions of the Partnership Agreement and the venture agreements (see note
3). The allocation percentages may differ from year to year based on future
events. Differences may therefore result between allocations among the
partners on the GAAP basis and the tax basis. Such differences would have no
significant effect on total assets, total partners' capital or net loss.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(6) MANAGEMENT AGREEMENTS
An affiliate of the Corporate General Partner has assumed management of
the following properties:
Scotland Yard Apartments - Phase I, Houston, Texas;
El Dorado View Apartments, Webster, Texas;
Scotland Yard Apartments - Phase II, Houston, Texas;
South Point Apartments, Houston, Texas;
(through the date of sale, July 29, 1993):
Management fees for the above properties are calculated at a percentage
of the gross income from the properties.
(7) SALES OF INVESTMENT PROPERTIES
(a) Pavillion Towers, Aurora, Colorado
During April 1986, the Partnership sold its interest in Am-Car Real
Estate Partnership-I ("Am-Car") (which owns the Pavillion Towers office
complex located in Aurora, Colorado) to its venture partners for $1,000,000 in
cash, promissory notes aggregating $3,750,000 and the venture partners'
assumption of the Partnership's share of the debt encumbering the property.
The two promissory notes of $3,000,000 and $750,000 bear interest at various
rates and are due in April 1996. Beginning in 1991, the Partnership has not
received the scheduled interest payments of $15,000 on the $750,000 note and
as of the date of this report, the Partnership has not received the 1993
scheduled interest payment of $60,000 on the $3,000,000 note. Collection of
all past due and future amounts from these notes are considered unlikely;
however, the Partnership is evaluating all of its legal options. Due to the
uncertainty of collection of all past due and future amounts from these notes,
a $527,774 reserve was established at September 30, 1993 to reduce the
mortgage notes receivable balance to an amount not to exceed the related
deferred gain on sale.
The sale was accounted for by the installment method whereby the gain on
sale of $3,057,695 (net of discount on the promissory notes receivable of
$1,682,305) was recognized as collections of principal were received.
Effective January 1, 1990, the Partnership adopted the cost recovery method of
accounting. The interest received in 1992 and 1991 ($60,000 and $60,000,
respectively) was applied against the outstanding principal balance. No
profit was recognized in 1993, 1992 or 1991.
(b) Mortgage notes receivable relating to the above sale consist of the
following:
1993 1992
------------------------
Promissory note secured by personal guarantees
of the buyers of the Partnership's interest
in the Pavillion Tower office complex located
in Aurora, Colorado. Payable interest only
(aggregating $150,000 over the ten-year period)
at various rates. The entire unpaid principal
balance is due April 24, 1996. Balance is
net of $199,406 of unamortized discount at
December 31, 1993 and 1992 based on an im-
puted rate of 8-1/2%. . . . . . . . . . . $ 543,094 543,094
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1993 1992
----------- -----------
Promissory note secured by personal guarantees
of the buyers of the Partnership's interest
in the Pavillion Tower office complex located
in Aurora, Colorado. Payable interest only
(aggregating $600,000 over the ten-year period)
at various rates. The entire unpaid principal
balance is due April 24, 1996. Balance is net
of $797,625 of unamortized discount at
December 31, 1993 and 1992 based on an imputed
rate of 8-1/2%. . . . . . . . . . . . . . 2,052,375 2,052,375
---------- ---------
Total long-term notes receivable 2,595,469 2,595,469
Reserve for uncollectibility . . (527,774) --
----------- ---------
Total long-term notes receivable
(net of reserve for
uncollectibility) . . . . . . $2,067,695 2,595,469
========== =========
(c) Wood Forest Glen Apartments
On April 2, 1992, the Partnership sold its interest in the Wood Forest
Glen Apartments to the lender for approximately $213,000 in excess of the
existing mortgage balance ($11,138,170 at the date of sale). The Partnership
recognized in 1992 a gain of $6,470,625 and $7,058,574 for financial reporting
and Federal income tax purposes, respectively.
(d) Meadowcrest Apartments
On June 9, 1992, the Partnership sold the land, building and related
improvements and personal property of the Meadowcrest apartment complex
located in Dallas, Texas for $9,575,000 in cash before selling costs and
prorations. A major portion of the sales proceeds was utilized to retire the
related underlying mortgage notes of approximately $8,445,000 (a portion of
which were scheduled to mature June 30, 1992). The Partnership received
approximately $861,000 from the sale of the property after deducting expenses
in connection with the sale and the mortgage loan. As a result of the sale,
the Partnership recognized in 1992 a gain of $562,806 and $5,255,084 for
financial reporting and Federal income tax purposes, respectively.
(e) Bitter Creek Apartments
On June 10, 1992, the Partnership, through the Bitter Creek venture, sold
the land, building and related improvements and personal property of the
Bitter Creek apartment complex for $10,250,000 in cash before selling costs
and prorations. A major portion of the sales proceeds was utilized to retire
the related underlying mortgage note of approximately $9,064,000 (note 4(a)).
In addition, pursuant to the venture partner agreement, the Partnership and
venture partner were allocated $338,709 and $681,423 of net sales proceeds,
respectively. The venture agreement generally provides that the gain of
$1,024,264 from the sale of the entire property will be first allocated to the
joint venture partners' respective negative capital accounts. Any amounts
remaining will be allocated 50% to the Partnership and 50% to the venture
partner. The venture partner's share of the gain was $881,297. The
Partnership recognized in 1992 a gain of $142,967 and $2,808,159 for financial
reporting and Federal income tax purposes, respectively.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(f) South Point Apartments
On July 29, 1993, the Partnership sold the land, buildings and related
improvements and personal property of the South Point apartments complex
located in Houston, Texas to an unaffiliated buyer at a sales price determined
by arm's-length negotiations. The sales price of the property was $5,600,000
(before closing costs and prorations). A major portion of the sales proceeds
was utilized to retire the related underlying mortgage principal of
$4,455,000. The Partnership received in connection with the sale, after all
fees and expenses, approximately $932,000. Of this amount, the lender was
entitled to approximately $606,000 as participation in the sales proceeds.
From the sale, the Partnership received a net amount of cash of approximately
$326,000, of which $150,000 was required by the lender to be escrowed for the
benefit of the Partnership's other properties financed by the lender, as more
fully discussed in note 3(c). As a result of the sale, the Partnership has
recognized in 1993 a gain of $1,433,916 and $3,512,797 for financial reporting
purposes and for federal income tax purposes, respectively.
(8) LEASES
(a) As Property Lessor
At December 31, 1993, the Partnership's and its consolidated ventures'
principal assets are three office buildings, one enclosed shopping mall and
three apartment complexes. The Partnership has determined that all leases
relating to these properties are properly classified as operating leases;
therefore, rental income is reported when earned and the cost of each of the
properties, excluding the cost of land, is depreciated over their estimated
useful lives. Leases with office building and shopping center tenants range
in term from one to twenty-four years and provide for fixed minimum rent and
partial reimbursement of operating costs. In addition, leases with shopping
center tenants provide for additional rent based upon percentages of tenant
sales volumes. With respect to the Partnership's shopping center investment,
a substantial portion of the ability of retail tenants to honor their leases
is dependent upon the retail economic sector. Apartment complex leases in
effect at December 31, 1993 are generally for a term of one year or less and
provide for annual rents of approximately $6,527,000.
Cost of the leased assets net of accumulated depreciation are summarized
as follows at December 31, 1993:
Shopping mall:
Cost. . . . . . . . . . . . $ 54,908,429
Accumulated depreciation. . (17,360,044)
------------
37,548,385
------------
Office buildings:
Cost. . . . . . . . . . . . 131,184,365
Accumulated depreciation. . (44,560,214)
------------
86,624,151
------------
Apartment complexes:
Cost. . . . . . . . . . . . 25,924,396
Accumulated depreciation. . (10,589,071)
------------
15,335,325
------------
Total . . . . . . . . . . . . $139,507,861
============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Minimum lease payments, including amounts representing executory costs
(e.g., taxes, maintenance, insurance), and any related profit in excess of
specific reimbursements, to be received in the future under the above
commercial operating lease agreements, are as follows:
1994. . . . . . . . . . . . . $ 19,428,455
1995. . . . . . . . . . . . . 18,558,815
1996. . . . . . . . . . . . . 16,830,400
1997. . . . . . . . . . . . . 13,079,607
1998. . . . . . . . . . . . . 9,009,056
Thereafter. . . . . . . . . . 39,174,884
------------
Total . . . . . . . . . . . . $116,681,217
============
Additional contingent rent (based on sales by property tenants) included
in consolidated rental income was as follows for the years ended December 31,
1993, 1992 and 1991:
1991. . . . . . . . . . . . . $438,875
1992. . . . . . . . . . . . . 424,211
1993. . . . . . . . . . . . . 352,862
========
(b) As Property Lessee
The following lease agreement has been determined to be an operating
lease.
The Riverfront venture owns a net leasehold interest which expires in
2061 (subject to a 19-year extension) in the land underlying the Cambridge,
Massachusetts office building. The lease provides for annual rent equal to
the greater of 2% of gross income from the property or a minimum amount (which
increases on a fixed schedule from $132,700 to $298,575 for the years 2007
through 2080).
Future minimum rental commitments under this lease are as follows:
1994 . . . . . . . . . $ 179,145
1995 . . . . . . . . . 179,145
1996 . . . . . . . . . 187,417
1997 . . . . . . . . . 212,230
1998 . . . . . . . . . 212,230
Thereafter . . . . . . 18,265,909
-----------
Total. . . . . . . . . $19,236,076
===========
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(9) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the Partnership to the General Partners and their affiliates
as of December 31, 1993 and for the years ended December 31, 1993, 1992 and 1991 are as follows:
<CAPTION>
UNPAID AT
DECEMBER 31,
1993 1992 1991 1993
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Disbursement agent fees. . . . . . . . . . . . . . . . . . . . . $ -- -- 1,971 --
Insurance commissions. . . . . . . . . . . . . . . . . . . . . . 31,165 35,835 50,000 --
Property management and leasing fees . . . . . . . . . . . . . . 322,125 400,695 526,873 --
Management fees to Corporate General Partner . . . . . . . . . . -- -- 11,936 11,936
Reimbursement (at cost) for accounting services. . . . . . . . . 73,649 96,945 76,506 204,192
Reimbursement (at cost) for legal services . . . . . . . . . . . 6,012 8,490 6,622 34,564
Reimbursement (at cost) for data processing services . . . . . . 3,896 (1,575) 2,000 --
Reimbursement (at cost) for out-of-pocket expenses . . . . . . . 12,946 12,368 1,261 7
Reimbursement (at cost) for out-of-pocket salary and salary related
expenses relating to on-site and other costs for the Partnership and
its investment properties . . . . . . . . . . . . . . . . . . . 49,549 106,002 140,928 --
-------- -------- -------- -------
$499,342 658,760 818,097 250,699
======== ======== ======== =======
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
The Corporate General Partner has deferred payment of partnership
management fees as set forth in the above table. In addition, distributions
to the General Partners of the first quarter 1991 net cash flow of the
Partnership aggregating $7,161 have also been deferred. These amounts do not
bear interest and are expected to be paid in future periods.
(10) COMMITMENTS AND CONTINGENCIES
The Partnership is a defendant in several actions brought against it
arising in the ordinary course of business. It is the belief of the Corporate
General Partner, based on its knowledge of facts and advice of counsel, that
the claims made against the Partnership in such actions will not result in a
material adverse effect on the Partnership's consolidated financial position
or results of operations.
(11) INVESTMENT IN UNCONSOLIDATED VENTURE
For the Yerba Buena venture (note 3(b)(1)) for the years ended December
31, 1992 and December 31, 1991, total income was $1,431,864 and $2,987,385,
respectively, expenses applicable to operating loss were $3,523,650 and
$7,165,674, respectively, and the net income was $4,254,514 and the net loss
was ($4,178,289), respectively.
SCHEDULE X
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
CHARGED TO COSTS AND EXPENSES
----------------------------------------------
1993 1992 1991
------------ ------------ ------------
Depreciation . . . . . . $6,750,315 6,963,918 7,835,833
Maintenance and repairs. 5,766,650 5,462,682 6,380,656
Taxes:
Real estate. . . . . 5,848,853 6,019,065 6,009,218
Other. . . . . . . . 34,470 46,010 77,453
Advertising. . . . . . . 353,295 366,016 447,265
========== ========== ==========
<TABLE>
SCHEDULE XI
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
<CAPTION>
INITIAL COST TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) AT CLOSE OF PERIOD (B)
----------------------------- COSTS --------------------------------------------
LAND AND BUILDINGS CAPITALIZED LAND AND BUILDINGS
LEASEHOLD AND SUBSEQUENT TO LEASEHOLD AND
ENCUMBRANCE INTEREST IMPROVEMENTS TO ACQUISITION INTEREST IMPROVEMENTS TOTAL (E)
----------- ----------- ------------ -------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
APARTMENT BUILDINGS:
Webster, Texas. . . $ 4,695,000 470,507 6,113,536 539,259 470,507 6,652,795 7,123,302
Houston, Texas
(Scotland Yard-
Phase I) . . . . . 9,300,000 1,076,225 7,455,923 477,343 1,076,225 7,933,266 9,009,491
Houston, Texas
(Scotland Yard-
Phase II). . . . . 9,515,000 1,008,600 8,192,059 590,944 1,008,600 8,783,003 9,791,603
OFFICE BUILDINGS:
New York, New York
(767 Third Avenue)
(D). . . . . . . . 40,486,531 10,252,897 59,515,887 6,660,195 10,252,898 66,176,081 76,428,979
Cambridge, Massachusetts
(D). . . . . . . . 34,297,991 (c) 27,114,515 9,902,037 (c) 37,016,552 37,016,552
Wilmington, Delaware
(D). . . . . . . . 13,514,864 1,905,000 12,277,398 3,556,436 1,905,000 15,833,834 17,738,834
SHOPPING MALL:
Memphis,
Tennessee (D). . . 41,464,343 3,608,935 39,870,758 11,428,736 3,619,781 51,288,648 54,908,429
----------- ---------- ----------- ---------- ---------- ----------- -----------
Total. . . . . . $153,273,729 18,322,164 160,540,076 33,154,950 18,333,011 193,684,179 212,017,190
=========== ========== =========== ========== ========== =========== ===========
</TABLE>
<TABLE> SCHEDULE XI - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1993
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DEPRECIATION(F) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
APARTMENT BUILDINGS:
Webster, Texas. . . . . . . . . . . . . . . $ 3,099,394 1980 7/31/81 5-30 years 164,552
Houston, Texas
(Scotland Yard-
Phase I) . . . . . . . . . . . . . . . . . 3,722,061 1981 4/15/81 5-30 years 221,609
Houston, Texas
(Scotland Yard-
Phase II). . . . . . . . . . . . . . . . . 3,767,616 1982 6/28/82 5-30 years 229,470
OFFICE BUILDINGS:
New York, New York
(767 Third Avenue)
(D). . . . . . . . . . . . . . . . . . . . 27,748,212 1981 9/30/81 5-30 years 2,524,949
Cambridge, Massachusetts
(D). . . . . . . . . . . . . . . . . . . . 11,724,841 1983 10/22/81 5-30 years 1,373,555
Wilmington, Delaware
(D). . . . . . . . . . . . . . . . . . . . 5,087,161 1983 6/15/82 5-30 years 353,236
SHOPPING MALL:
Memphis,
Tennessee (D). . . . . . . . . . . . . . . 17,360,044 1981 8/3/81 5-30 years 909,040
----------- ---------
Total. . . . . . . . . . . . . . . . . . $72,509,329 5,776,411
=========== =========
<FN>
- ------------------
(A) The initial cost to the Partnership represents the original purchase price of the properties, including
amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1993 for Federal income tax purposes was
approximately $183,014,182.
(C) Property operated under ground lease; see Note 8(b).
(D) Properties owned and operated by joint ventures; see Note 3.
</TABLE>
<TABLE> SCHEDULE XI - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
(E) Reconciliation of real estate owned:
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . $213,213,361 244,464,720 251,806,308
Additions during period. . . . . . . . . . . 5,280,587 4,116,368 4,851,889
Dispositions during period . . . . . . . . . (6,476,758) (35,367,727) (12,193,477)
------------ ------------ ------------
Balance at end of period . . . . . . . . . . $212,017,190 213,213,361 244,464,720
============ ============ ============
(F) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . $ 68,282,112 73,688,543 68,904,978
Depreciation expense . . . . . . . . . . . . 6,750,315 6,963,918 7,835,833
Reductions during period . . . . . . . . . . (2,523,098) (12,370,349) (3,052,268)
------------ ------------ ------------
Balance at end of period . . . . . . . . . . $ 72,509,329 68,282,112 73,688,543
============ ============ ============
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with accountants during fiscal
years 1993 and 1992.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. JMB has responsibility for all
aspects of the Partnership's operations, subject to the requirement that sales
of real property must be approved by the Associate General Partner of the
Partnership, Realty Associates-XI, L.P., an Illinois limited partnership with
JMB as the sole general partner. The Associate General Partner shall be
directed by a majority in interest of its limited partners (who are generally
officers, directors and affiliates of JMB or its affiliates) as to whether to
provide its approval of any sale of real property (or any interest therein) of
the Partnership. Various relationships of the Partnership to the Corporate
General Partner and its affiliates are described under the caption "Conflicts
of Interest" at pages 9-14 of the Prospectus, which description is hereby
incorporated herein by reference to Exhibit 3-A to the Partnership's report
for December 31, 1992 on Form 10-K (File No. 0-10494) dated March 19, 1993.
The names, positions held and length of service therein of each director,
executive officer and certain officers of the Corporate General Partner are as
follows:
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Neil G. Bluhm President 5/03/71
Director 5/03/71
Jerome J. Claeys III Director 5/09/88
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Chief Executive Officer 8/01/93
Jeffrey R. Rosenthal Chief Financial Officer 8/01/93
Gary Nickele Executive Vice President 1/01/92
and General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Ira J. Schulman Executive Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors or
officers. The foregoing directors have been elected to serve one-year terms
until the annual meeting of the Corporate General Partner to be held on June
7, 1994. All of the foregoing officers have been elected to serve one-year
terms until the first meeting of the Board of Directors held after the annual
meeting of the Corporate General Partner to be held on June 7, 1994. There
are no arrangements or understandings between or among any of said directors
or officers and any other person pursuant to which any director or officer was
elected as such.
JMB is the Corporate General Partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real
Estate Limited Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV
("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-XVI"),
Carlyle Real Estate Limited Partnership-XVII ("Carlyle-XVII), JMB Mortgage
Partners, Ltd. ("Mortgage Partners"), JMB Mortgage Partners, Ltd.-II
("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III ("Mortgage Partners-
III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage Partners-IV"), Carlyle Income
Plus, Ltd. ("Carlyle Income Plus") and Carlyle Income Plus, Ltd.-II ("Carlyle
Income Plus-II"), and the managing general partner of JMB Income Properties,
Ltd.-IV ("JMB Income-IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB
Income Properties, Ltd.-VI ("JMB Income-VI"), JMB Income Properties, Ltd.-VII
("JMB Income-VII"), JMB Income Properties, Ltd.-VIII ("JMB Income-VIII"), JMB
Income Properties, Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-X
("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB Income
Properties, Ltd.-XII ("JMB Income-XII") and JMB Income Properties, Ltd.-XIII
("JMB Income-XIII"). Most of the foregoing officers and directors are also
officers and/or directors of various affiliated companies of JMB including
Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.
("Arvida")), Arvida/JMB Managers-II, Inc. (the general partner of Arvida/JMB
Partners, L.P.-II ("Arvida-II")) and Income Growth Managers, Inc. (the
Corporate General Partner of IDS/JMB Balanced Income Growth, Ltd. ("IDS/BIG").
Most of such directors and officers are also partners of certain partnerships
which are associate general partners in the following real estate limited
partnerships: Carlyle-VII, Carlyle-IX, Carlyle-X, Carlyle-XII, Carlyle-XIII,
Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB Income-VI, JMB Income-
VII, JMB Income-VIII, JMB Income-IX, JMB Income-X, JMB Income-XI, JMB Income-
XII, JMB Income-XIII, Mortgage Partners, Mortgage Partners-II, Mortgage
Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle Income Plus-
II and IDS/BIG.
The business experience during the past five years of each such director
and officer of the Corporate General Partner of the Partnership in addition to
that described above is as follows:
Judd D. Malkin (age 56) is an individual general partner of JMB Income-IV
and JMB Income-V. Mr. Malkin has been associated with JMB since October,
1969. He is a Certified Public Accountant.
Neil G. Bluhm (age 56) is an individual general partner of JMB Income-IV
and JMB Income-V. Mr. Bluhm has been associated with JMB since August, 1970.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Jerome J. Claeys III (age 51) (Chairman and Director of JMB Institutional
Realty Corporation) has been associated with JMB since September, 1977. He
holds a Masters degree in Business Administration from the University of Notre
Dame.
Burton E. Glazov (age 55) has been associated with JMB since June, 1971
and served as an Executive Vice President of JMB until December 1990. He is a
member of the Bar of the State of Illinois and a Certified Public Accountant.
Stuart C. Nathan (age 52) has been associated with JMB since July, 1972.
He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 60) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.
John G. Schreiber (age 47) has been associated with JMB since December,
1970 and served as an Executive Vice President of JMB until December 1990. He
holds a Masters degree in Business Administration from Harvard University
Graduate School of Business.
H. Rigel Barber (age 44) has been associated with JMB since March, 1982.
He holds a J.D. degree from the Northwestern Law School and is a member of the
Bar of the State of Illinois.
Jeffrey R. Rosenthal (age 42) has been associated with JMB since
December, 1987. He is a Certified Public Accountant.
Gary Nickele (age 41) has been associated with JMB since February, 1984.
He holds a J.D. degree from the University of Michigan Law School and is a
member of the Bar of the State of Illinois.
Ira J. Schulman (age 42) has been associated with JMB since February,
1983. He holds a Masters degree in Business Administration from the
University of Pittsburgh.
Gailen J. Hull (age 45) has been associated with JMB since March, 1982.
He holds a Masters degree in Business Administration from Northern Illinois
University and is a Certified Public Accountant.
Howard Kogen (age 58) has been associated with JMB since March, 1973. He
is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions, when
and as cash distributions are made to the Limited Partners, and a share of
profits or losses as described under the caption "Compensation and Fees" at
pages 6-9, "Cash Distributions" at pages 117-119, "Allocation of Profits or
Losses for Tax Purposes" at page 117 and "Distributions and Compensations;
Allocations of Profits and Losses" at pages A-5 to A-10 of the Prospectus,
which descriptions are hereby incorporated herein by reference to Exhibit 3-A
to the Partnership's report for December 31, 1992 on Form 10-K (File No. 0-
10494) dated March 19, 1993. Reference is also made to Notes 5 and 9 for a
description of such transactions, distributions and allocations. In 1993,
1992, and 1991, no cash distributions were paid to the General Partners. The
General Partners have deferred distributions in 1991 of $7,161.
JMB Properties Company, an affiliate of the Corporate General Partner,
provided property management services to the Partnership for all of 1993 for
the El Dorado View Apartments in Webster, Texas, Scotland Yard - Phase I and
Scotland Yard-Phase II in Houston, Texas, and for South Point Apartments in
Houston, Texas for the period January 1, 1993 through July 29, 1993. Fees are
calculated at 5% of gross income for the apartment complexes. Such affiliate
earned property management fees amounting to $322,125 in 1993 all of which
were paid at December 31, 1993. As set forth in the Prospectus of the
Partnership, the Corporate General Partner must negotiate such agreements on
terms no less favorable to the Partnership than those customarily charged for
similar services in the relevant geographical area (but in no event at rates
greater than 5% of the gross income from a property), and such agreements must
be terminable by either party thereto, without penalty, upon 60 days' notice.
JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1993
aggregating $31,165 in connection with the provision of insurance coverage for
certain of the real property investments of the Partnership. Such commissions
are at rates set by insurance companies for the classes of coverage provided.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses and salaries
relating to the administration of the Partnership and the acquisition and
operation of the Partnership's real property investments. In 1993, the
Corporate General Partner of the Partnership was due reimbursement for such
expenses in the amount of $146,052. Cumulative amounts unpaid at December 31,
1993 were $250,669.
The Partnership is permitted to engage in various transactions involving
affiliates of the Corporate General Partner of the Partnership, as described
under the captions "Compensation and Fees" at pages 6-9, "Conflicts of
Interest" at pages 9-14 and "Powers, Rights and Duties of the General
Partners" at pages A-12 to A-17 of the Prospectus, which descriptions are
hereby incorporated herein by reference to Exhibit 3-A to the Partnership's
report for December 31, 1992 on Form 10-K (File No. 0-10494) dated March 19,
1993. The relationship of the Corporate General Partner to its affiliates is
set forth above in Item 10.
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding Interests of the
Partnership.
(b) The Corporate General Partner and its officers and directors own the following Interests of the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership Interests JMB Realty Corporation 85 Interests directly Less than 1%
Limited Partnership Interests Corporate General 85 Interests directly Less than 1%
Partner and its
officers and
directors as a
group
<FN>
No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire beneficial ownership
of Interests of the Partnership.
(c) There exists no arrangements, known to the Partnership, the operation of which may at a subsequent date result in a
change in control of the Partnership.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with the
Corporate General Partner, affiliates or their management other than those
described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements filed
with this annual report).
(2) Exhibits.
3-A.*The Prospectus of the Partnership dated May 8, 1981, as
supplemented on July 27, 1981, October 9, 1981, November 5, 1981, December 10,
1981, February 19, 1982 and April 23, 1982, as filed with the Commission
pursuant to Rules 424(b) and 424(c), is hereby incorporated herein by
reference. Pages 6-14, 117-119, A-5 to A-10 and A-12 to A-17 are hereby
incorporated herein by reference.
3-B.*Amended and Restated Agreement of Limited Partnership set
forth as Exhibit A to the Prospectus, which agreement is hereby incorporated
herein by reference.
4-A. Long-term debt modification relating to the 767 Third
Avenue Office Building in New York, New York is hereby incorporated herein by
reference.
4-B. Mortgage loan documents secured by the Mall of Memphis in
Memphis, Tennessee are hereby incorporated by reference to the Partnership's
Registration Statement on Post-Effective Amendment No. 2 to Form S-11 (File
No. 2-70724) dated May 8, 1981.
4-C. First through third mortgage loan documents secured by the
Riverfront Office Building in Cambridge, Massachusetts are hereby incorporated
by reference to the Partnership's Registration Statement on Post-Effective
Amendment No. 3 to Form S-11 (File No. 2-70724) dated May 8, 1981.
4-D.*Fourth mortgage loan document secured by the Riverfront
Office Building in Cambridge, Massachusetts is hereby incorporated herein by
reference.
4-E Deed of trust note document dated March 31, 1993 secured
by the Mall of Memphis in Memphis, Tennessee is filed herewith.
10-A.Acquisition documents relating to the purchase by the
Partnership of an interest in the 767 Third Avenue Office Building in New
York, New York are hereby incorporated by reference to the Partnership's
Registration Statement on Post-Effective Amendment No. 2 to Form S-11 (File
No. 2-70724) dated May 8, 1981.
10-B.Acquisition Documents relating to the purchase by the
Partnership of an interest in the Mall of Memphis in Memphis, Tennessee are
hereby incorporated by reference to the Partnership's Registration Statement
on Post-Effective Amendment No. 2 to Form S-11 (File No. 2-70724) dated May 8,
1981.
10-C.Acquisition documents relating to the purchase by the
Partnership of an interest in the Riverfront Office Building in Cambridge,
Massachusetts are hereby incorporated by reference to the Partnership's
Registration Statement on Post-Effective Amendment No. 3 to Form S-11 (File
No. 2-70724) dated May 8, 1981.
21. List of Subsidiaries.
24. Powers of Attorney
99-A.The Partnership's Report on Form 8-K dated August 30, 1993
describing the July 29, 1993 sale of the South Point Apartments and exhibits
thereto are hereby incorporated herein by reference.
_____________
* Previously filed in Exhibits 3-A, 3-B and 4-D to the
Partnership's Report on Form 10-K for December 31, 1992 of the Securities
Exchange Act of 1934 (file no. 0-10494) filed on March 19, 1993.
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 report on Form 8-K was filed since the beginning of the last
quarter of the period covered by this report:
No annual report or proxy material for the fiscal year 1993 has been sent
to the Partners of the Partnership. An annual report will be sent to the
Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
By: JMB Realty Corporation
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date:March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Corporate General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and Director
Date:March 25, 1994
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date:March 25, 1994
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date:March 25, 1994
JEFFREY R. ROSENTHAL*
By: Jeffrey R. Rosenthal, Chief Financial Officer
Principal Financial Officer
Date:March 25, 1994
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date:March 25, 1994
A. LEE SACKS*
By: A. Lee Sacks, Director
Date:March 25, 1994
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date:March 25, 1994
*By:GAILEN J. HULL, Pursuant to a Power of Attorney
By: Gailen J. Hull, Attorney-in-Fact
Date:March 25, 1994
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----
3-A. Pages 6-14, 117-119, A-5 to A-10,
A-12 to A-17 of the Prospectus
of the Partnership dated May 8, 1981 Yes
3-B. Amended and Restated Agreement of
Limited Partnership Yes
4-A. Mortgage loan documents secured
by the 767 Third Avenue
Office Building Yes
4-B. Mortgage loan documents secured
by the Mall of Memphis Yes
4-C. First through third mortgage
loan documents secured by the
Riverfront Office Building Yes
4-D. Fourth mortgage loan document
secured by the Riverfront
Office Building Yes
4-E. Deed of trust note dated
March 31, 1993 secured by the
Mall of Memphis No
10-A. Acquisition documents related
to the 767 Third Avenue
Office Building Yes
10-B. Acquisition documents related
to the Mall of Memphis Yes
10-C. Acquisition documents related
to the Riverfront Office Building Yes
21. List of Subsidiaries No
24. Powers of Attorney No
99-A. Form 8-K for July 29, 1993 Yes
TN113NT
TENNESSEE
DEED Of TRUST NOTE NO. 3
$9,625,000.00 Memphis, Tennessee
March 31, 1993
FOR VALUE RECEIVED, the undersigned, MALL OF MEMPHIS ASSOCIATES, an
Illinois general partnership with offices at c/o The Hahn Company, Suite 700,
4350 La Jolla Village Drive, San Diego, California 92122-1233 (hereinafter
"Maker") promises to pay to TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
AMERICA, a New York corporation, or order, (hereinafter "Holder") during
regular business hours at its offices at 730 Third Avenue, New York, New York
10017 or at such other place as may be designated from time to time in writing
by Holder the principal sum of NINE MILLION SIX HUNDRED AND TWENTY FIVE
THOUSAND AND 00/100ths ($9,625,000.00) DOLLARS, or so much thereof as may have
been advanced hereunder, together with fixed interest thereon at the rate of
Ten (10%) percent per annum thereon or on so much thereof as is from time to
time outstanding and unpaid, from the date of each advance of principal at the
rates and in the manner hereinafter more specifically set forth, in lawful
money of the United States of America which shall at that time be deemed to be
legal tender in payment of all debts and dues, public and private, such
principal and interest to be paid in the following manner, to wit:
(a) Accrued fixed interest only on the unpaid principal balance at
the rate of ten (10%) percent per annum shall be paid on the first (lst)
day of the first (1st) calendar month next succeeding the date hereof;
(b) Commencing on the first (lst) day of the second (2nd) calendar
month next succeeding the date hereof and on the first (lst) day of each
of the next succeeding one hundred nineteen (119) months installments of
principal and fixed interest at the rate of ten and five hundred thirty
one thousandths (10.531%) percent per annum shall be due and payable
each in the amount of EIGHTY FOUR THOUSAND FOUR HUNDRED SIXTY SEVEN AND
40/lOOTHS (84,467.40) DOLLARS. Each of the said installments of
principal and fixed interest, upon receipt, shall be applied first to
the payment of fixed interest at the said rate of ten (10%) percent per
annum upon so much thereof as shall from time to time remain unpaid
thereon and the balance thereof shall be applied in reduction of
principal. The entire principal balance of the Note, if any, together
with all unpaid accrued fixed interest, shall be due and payable in full
on the first (lst) day of the one hundred twentieth (120) month next
succeeding the first day of the second calendar month next succeeding
the date hereof.
Maker acknowledges that a substantial balloon payment will be due upon
maturity date of this Note.
Maker shall have no right to prepay the principal balance in whole or in
part prior to April 1, 1997. On and after April 1, 1997 Maker shall be
entitled to prepay on any regular installment date thereafter the entire
balance of principal, but not less than the entire principal balance, together
with accrued but unpaid fixed interest due thereon within the period between
April 1, 1997 and March 31, 1998 following thirty (30) days' prior written
notice to Holder of Maker's intention to so prepay and, in addition, payment
to Holder of a premium equal to the aggregate of five (5%) percent of the then
unpaid principal balance hereof. Thereafter, prepayment of the entire balance
of principal together with accrued fixed interest may be made on any regular
installment date in each succeeding Loan Year following thirty (30) days'
prior notice to Holder, provided such payment is accompanied with the payment
of the aforementioned percentage premium which shall decline annually after
March 31, 1998 by one half of one (1/2%) percent to a minimum of One (1%)
percent of the amount being prepaid which One (1%) percent premium shall
thereafter continue to maturity of the loan, except that prepayment may be
made without a premium of any kind during the last 90 days of the term of the
loan.
If default be made in the due and timely payment of any installment of
interest or principal and interest when due under modified by the First
Supplement to Deed of Trust, Assignment of this Note or in the performance of
any of the terms, covenants, conditions or warranties contained in the Deed of
Trust as Rents and Security Agreement, Modification of Notes and of Assignment
of Lessor's Interest in Leases of even date (collectively, the "Deed of
Trust") securing payment hereof then, at the option of the Holder of this
Note, the entire principal sum evidenced hereby and secured by said Deed of
Trust, together with fixed interest accrued and unpaid thereon shall
immediately become due and payable. Failure to exercise this option by Holder
shall not constitute a waiver of the right to exercise same in the event of
any subsequent default.
Maker hereby waives and renounces for itself, and all its successors
and assigns, all right to the benefit of any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption,
appraisement, exemption and homestead now provided or which hereafter may be
provided by the Constitution and laws of the United States of America and of
any
state thereof, as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the obligations evidenced
by this Note.
In the event of any default hereunder or under the Deed of Trust
securing this Note and upon acceleration of the entire indebtedness aforesaid,
interest shall accrue thereafter on the unpaid principal balance hereof at the
rate of fifteen (l5%) percent per annum.
If any suit or action is instituted to collect this Note or any part
thereof, or if it is placed in the hands of an attorney for collection, Maker
promises and agrees to pay reasonable attorney's fees, court costs and title
search
expenses .
Maker and all endorsers hereof and all others who may become liable
for all or any part of this obligation agree hereby to be jointly and
severally bound, and they jointly and severally waive and renounce, to the
extent permitted by law, any and all
appraisement privileges as against this debt or any renewal or
exemption rights and the benefit of all valuation and
replacement thereof. They waive demand, protest, notice of nonpayment and any
and all lack of diligence or delays in collection or enforcement hereof; and
expressly consent to any
extension of time, release of any party liable for this obligation, release of
any of the security of this Note, acceptance of other security therefore, or
any other indulgence or forbearance whatsoever. Any such extension, release,
indulgence or forbearance may be made without notice to said party and without
in any way affecting the personal liability of such party.
No failure to accelerate the debt evidenced hereby by reason of default
hereunder, acceptance of a past due installment, or indulgence granted from
time to time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver of such
right of acceleration or of the right of Holder thereafter to insist upon
strict compliance with the terms of this Note, or (ii) to prevent the exercise
of such right of acceleration or of any other right granted hereunder or by
the laws of the State of Tennessee. Maker hereby expressly waives the benefit
of any statute or rule of law or equity now provided, or which may hereafter
be, provided, which would produce a result contrary to or in conflict with the
foregoing. No extension of time for the payment of this Note or any
installment due hereunder, made by agreement with any person now or hereafter
liable for the payment of this Note, shall operate to release, discharge,
modify, change or affect the original liability, if any, of Maker under this
Note, either in whole or in part. This Note may not be changed orally but
only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
Notwithstanding any provisions herein or in the Deed of Trust
securing this Note, it is hereby expressly understood and
agreed that in the event Holder shall at any time take action to enforce the
collection of the indebtedness evidenced by this Note, such Holder will
proceed to foreclose the Deed of Trust securing this Note or sell the security
pursuant to any power
granted or contained therein instead of instituting suit upon
this Note. If, as a result of such foreclosure and sale of the property
described in the Deed of Trust, a lesser sum is realized therefrom than the
amount then due and owing under this Note or under said Deed of Trust, Holder
will never institute any action, suit, claim or demand in law or in equity
against Maker or any subsequent owner or any partner of Maker or any such
owner for or on account of such deficiency. However, nothing in this
paragraph contained shall in any way affect or impair the lien of said Deed of
Trust nor any representation of title made therein by the Maker, all of which
shall remain in force and shall insure
to the benefit of Holder hereof as Beneficiary thereunder, and to any insurer
to title to said property.
Upon default by Maker and following the acceleration of maturity, if
Maker or anyone on Maker's behalf makes a tender of payment of the amount
necessary to satisfy the entire indebtedness made at any time prior to
foreclosure sale (including sale under power of sale hereunder), or during any
redemption period after foreclosure, the tender of payment will
constitute an evasion of the prepayment privilege contained in the Note and
will be deemed to be a voluntary prepayment of the Note. Such prepayment, to
the extent permitted by law, will therefore include a premium required under
the prepayment privilege, if any, contained in the Note, or if at that time
there be no such prepayment privilege then such payment, to the extent
permitted by law, will include a premium for such prepayment which will
consist of the higher amount obtained by:
(a) computing the premium which would be paid if the date on which the
tender of payment is made were April 1, 1997, or
(b) multiplying the outstanding principal balance of this Note on the
date of such tender of payment by the product of (i) the amount
obtained by subtracting (a)the percent per annum of the Treasury
Constant Maturities having a maturity date closest in time to
the remaining term of the Note ("Treasury Yield") as such interest rate
is reported in the Federal Reserve Statistical Release G13 (415) or its
successor publication most recently released prior to the date of
tender of payment, from (b) the fixed rate of ten (10%) percent for the
calculation on the portion of the indebtedness evidenced by this Note, and
(ii) the number of years and fraction thereof remaining between the
date of prepayment and the maturity date of this Note, in
connection with the calculation on the portion of indebtedness
evidenced by this Note, and then arriving at the present value of
such amount by discounting at the then treasury discount rate charged
on loans to depositing institutions by the New York Federal
Reserve Bank.
The Treasury Yield shall be established based on the Treasury
Constant Maturities for the calendar week containing the date of the fifteenth
(15th) day prior to the date of tender of payment. If the Treasury Constant
Maturities is not published for the specific length of time corresponding to
the remaining term of the Note, the Treasury Yield for such length of time
shall be a weighted average of the percent per annum of the Treasury Constant
Maturities for the two (2) periods for Treasury Constant Maturities most
nearly corresponding to the
for Treasury length of the applicable specified period in the Note. If the
publishing of the yield of Treasury Constant Maturities is ever discontinued,
then the Treasury Yield shall mean the index which is published by the
Treasury Department in replacement thereof or, if no such replacement index is
published, the index which, in the Beneficiary's reasonable determination,
most nearly corresponds to the yield of the Treasury Constant Maturities.
Notwithstanding anything in the documents evidencing and securing the
indebtedness to the contrary, it is not the intention of the Holder to charge
or collect any interest (whether fixed, contingent or otherwise) which would
result in a rate of interest being charged which is in excess of the maximum
rate, if any, now permitted by law for this transaction to be charged; and in
the event that any sum in excess of such maximum rate of interest is paid or
charged, the same shall be deemed to have been a prepayment of Principal when
paid, without premium or penalty, and all payments made thereafter shall be
appropriately applied to interest and Principal to give effect to such maximum
rate and after such application, any excess shall be immediately refunded to
Maker. If prior to repayment of this Note the maximum rate of interest, if
any, now permitted by law for this transaction to be charged should be
increased, then for so long as such increase is in effect, the applicable
maximum rate permitted to be charged as referred to in the paragraph
immediately preceding shall be deemed to be such increased rate. If such
maximum rate of interest, if any, now permitted by law to be charged for this
transaction should be eliminated so that there would be no such maximum rate,
then for purposes of this loan there shall thereafter be no maximum rate
limiting the amount that can be charged.
If Maker shall fail to make any payment of interest or principal as
required under this Note, including payments due on maturity, a late charge by
way of damages shall be immediately,
due and payable following any applicable grace period. Maker recognizes that
default in making the payments herein agreed to be paid when due will result
in the Holder incurring additional expense in servicing the loan, in loss to
Holder of the use of the money due and in frustration to Holder in meeting its
loan commitments. Maker agrees that, if for any reason Maker fails to pay the
amounts due under this Note when due following any applicable grace period,
Holder shall be entitled to damages for the detriment caused thereby, but that
it is extremely difficult and impractical to ascertain the extent of such
damages. Maker therefore agrees that a sum equal to five cents ($.05) for
each
one dollar ($1.00) of each payment which becomes delinquent is a reasonable
estimate of the said damages to the Holder, which sum
Maker agrees to pay on demand. Notwithstanding the foregoing,
the charge described in the preceding sentence shall not become
due and payable on a regular monthly installment of interest
and/or principal unless and until Maker shall fail to make any
such payment of interest and/or principal within five (5) days of the date on
which such payment of interest and/or principal shall first become due and
payable.
A default under any of Note No. 1 or Note No. 2, each executed
December 23, 1982, or under this Note No. 3 or any of the documents securing
any of said notes which default has not been cured by Maker within any
applicable notice and cure period will be deemed to be a default under all.
This Note is secured by a Deed of Trust of even date herewith
executed and delivered by Maker to Betty B. Robbins and John A. Somers,
Trustees, for the benefit of Holder covering property situated in the City of
Memphis, County of Shelby, State of Tennessee.
Notwithstanding any term, provision or condition contained herein to
the contrary Holder, by acceptance hereof, agrees that it will not declare the
entire indebtedness evidenced hereby to be due and payable following any
default until (A) five
(5) days have passed following Maker's failure to comply with any obligation
of Maker hereunder that requires either the payment of money or which can be
cured by the prompt payment of money ("Monetary Default") or (B) thirty (30)
days have passed since (i) the mailing or other actual communication by Holder
of notice to Maker of the failure of Maker to duly and timely comply with any
other obligation hereunder ("Non-Monetary Default") and Maker has thereafter
failed to cure or commence to cure said NonMonetary Default to the reasonable
satisfaction of Holder within said 30-day period or (ii) Maker has, in the
reasonable business judgement of Holder, ceased to diligently pursue the
curing of the subject Non-Monetary Default following such notice and prompt
commencement by Maker of such curative action, whichever of B(i)
or B(ii) is later.
If Maker intends to refinance this Note No. 3 in connection with a
prepayment of this Note No. 3 or upon maturity hereof, Maker agrees to make
application first to Holder for Such refinancing. Holder will then have a
period of 60 days from the
date of receipt of the written formal application within which to accept or
decline the application. If Holder declines such application Maker will have
90 days from the earlier of the date Holder declines the application in
writing or the expiration of the 60-day period in which to obtain and submit
to Holder a copy of a bona fide, a fully-executed commitment for the
refinancing on either the same terms as those set forth in the application to
Holder or on terms more favorable to Maker. If Maker fails within the 90-day
period to obtain such a commitment or fail to submit a copy thereof to Holder
or if thereafter Maker fails for any reason to complete the closing of the
refinancing, Maker will once again be obligated to make application to Holder
for the refinancing in accordance with the foregoing. Notwithstanding
anything to the contrary set forth in this Note No. 3, Note No. 1 or Note No.
2 or the Deed of Trust, if Holder declines any application for refinancing and
Maker thereafter obtains alternative refinancing in accordance with the
foregoing, Holder will permit it the alternative refinancing to be secured by
a second lien on the Premises (as that term is defined in the Deed of Trust)
provided (i) the second lien secures an amount not to exceed the
then-outstanding balance of this Note No. 3; (ii) there shall exist at the
time of the closing of the alternative refinancing a minimum ratio of net
income available for debt service to the total debt service of 1.25 to 1.00
for the total debt service on Note No. 1, Note No. 2 and the indebtedness
secured by the second lien as determined by Holder; (iii) the second lien
documents contain subordination provisions reasonably satisfactory to Holder;
and (iv) the second lien holder is an entity reasonably satisfactory to
Holder.
This Note is intended as a contract under and shall be
construed and enforced in accordance with the laws of the State of Tennessee,
except that the parties intend and agree that the laws of the State of New
York shall govern their rights and duties with respect to the interest, loan
charges, commitment fees, and brokerage commissions payable or paid upon the
<PAGE>
indebtedness described herein.
As used herein, the terms "Maker" and "Holder" shall be
deemed to include their respective successors, legal representatives and
assigns, whether by voluntary action by parties or by the operation of law.
IN WITNESS WHEREOF, the undersigned Illinois general partnership has
duly executed and delivered this Note the day and year first above written by
the undersigned general partner(s) of said partnership, said partner(s) being
duly authorized so to act.
MALL OF MEMPHIS ASSOCIATES, an Illinois
general partnership
By its general partner:
Mall of Memphis Associates, a
Tennessee limited partnership,
by its general partner:
Ernest W. Hahn, Inc. a
California corporation, d/b/a The
Hahn Company
By:
Name:
Title:
By:
Name:
Title:
By its general partner:
Carlyle Real Estate Limited
Partnership-XI, an Illinois
limited partnership, by its
general partner:
JMB Realty Corporation,
a Delaware corporation
By:
Name:
Title:
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a partner of Mall of Memphis Associates, a general
partnership which holds title to the Mall of Memphis in Memphis, Tennessee.
The developer of the property is a partner in the joint venture. The
Partnership is a partner of 767 Third Avenue Associates, a general partnership
which holds title to the 767 Third Avenue Building in New York City, New York.
The developer of the property is a partner in the joint venture. The
Partnership is a partner of Riverfront Office Park Joint Venture, a general
partnership which holds title to the Riverfront Office Building in Cambridge,
Massachusetts. The developer of the property was a partner in the joint
venture. The Partnership is a partner of Excelsior Associates, L.P., a
general partnership which holds title to the 824 Market Street Office Building
(formerly Marine Midland Office Building) in Wilmington, Delaware. The
developer of the property is a partner of the joint venture.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the managing general partner of CARLYLE
REAL ESTATE LTD. - XI, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents
of the undersigned with full power of authority to sign in the name and on
behalf of the undersigned officer or directors a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1993, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 23rd day of March, 1994.
JUDD D. MALKIN
- ------------------- Chairman and Director
Judd D. Malkin
NEIL G. BLUHM
- ------------------- President and Director
Neil G. Bluhm
H. RIGEL BARBER
- ------------------- Chief Executive Officer
H. Rigel Barber
JEFFREY R. ROSENTHAL
- ----------------------- Chief Financial Officer
Jeffrey R. Rosenthal
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and directors,
a Report on Form 10-K of said partnership for the fiscal year ended
December 31, 1993, and any and all amendments thereto, the 23rd day of
March, 1994.
GARY NICKELE
------------
Gary Nickele
GAILEN J. HULL
---------------
Gailen J. Hull
DENNIS M. QUINN
---------------
Dennis M. Quinn
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and
directors of JMB Realty Corporation, the managing general partner of CARLYLE
REAL ESTATE LTD. - XI, do hereby nominate, constitute and appoint GARY NICKELE,
GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the
undersigned with full power of authority to sign in the name and on behalf of
the undersigned officer or directors a Report on Form 10-K of said partnership
for the fiscal year ended December 31, 1993, and any and all amendments
thereto, hereby ratifying and confirming all that said attorneys and agents and
any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney
the 26th day of January, 1994.
STUART C. NATHAN
_________________________ Executive Vice President and Director of
Stuart C. Nathan General Partner
A. LEE SACKS
_________________________ Director of General Partner
A. Lee Sacks
The undersigned hereby acknowledge and accept such power of authority to
sign, in the name on behalf of the above named officer and directors, a Report
on Form 10-K of said partnership for the fiscal year ended December 31, 1993,
and any and all amendments thereto, the 26th day of January, 1994.
GARY NICKELE
______________________
Gary Nickele
GAILEN J. HULL
______________________
Gailen J. Hull
DENNIS M. QUINN
___________________________
Dennis M. Quinn
