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, 1994 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
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. . . . . . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . . . . . 9
PART II
Item 5. Market for the Partnership's Limited Partnership
Interests and Related Security Holder Matters . . . 9
Item 6. Selected Financial Data . . . . . . . . . . . . . . 10
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . 16
Item 8. Financial Statements and Supplementary Data . . . . 25
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . . . . . 59
PART III
Item 10. Directors and Executive Officers of the
Partnership . . . . . . . . . . . . . . . . . . . . 59
Item 11. Executive Compensation. . . . . . . . . . . . . . . 62
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . 63
Item 13. Certain Relationships and Related Transactions. . . 64
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . . . 64
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 66
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, 1994,
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
n.r.a. and 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 partner-
ship)(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. . 284,000 sq.ft. 9/30/81 20% fee ownership of land and
n.r.a. improvements (through joint
venture partnership)(d)(h)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
9. Riverfront Office
Building
Cambridge,
Massachusetts . . . . 340,000 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)
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)
13. 824 Market Street
Office Building
Wilmington,
Delaware. . . . . . . 195,220 sq.ft. 6/15/82 12/12/94 fee ownership of land and
n.r.a. improvements (through joint
venture partnership)(d)(f)
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)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
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
<FN> venture partnership)(d)(i)
-----------------------
(a) The computation of this percentage for properties held at December
31, 1994 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 - Schedule III 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, 1994 are adequately insured.
On December 12, 1994, the lender realized upon its security in the 824
Market Street Office Building. Such transaction was described in the
Partnership's Report on Form 8-K (File No. 0-10494) dated December 23,
1994, which is hereby incorporated herein by reference. Reference is also
made to Note 4(b) 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, 1994.
In May 1994, an affiliate of the General Partners assumed property
management and leasing services at the Mall of Memphis from an affiliate of
the venture partner. Reference is made to Note 6 filed with this annual
report.
The Partnership has approximately 57 full-time and 18 part-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 1994 and 1993 for the Partnership's investment properties owned
during 1994:
<TABLE>
<CAPTION>
1993 1994
------------------------- -------------------------
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 92% 93% 97% 95% 92% 89% 95% 92%
2. South Point Apartments
Houston, Texas. . . . . . . . Residential 95% 93% N/A N/A N/A N/A N/A N/A
3. 824 Market Street
Wilmington, Delaware (a). . . Banking 42% 46% 46% 49% 42% 56% 56% N/A
4. Mall of Memphis
Memphis, Tennessee. . . . . . Retail 88% 90% 90% 91% 88% 85% 87% 85%
5. Riverfront Office Building
Cambridge, Massachusetts
(b) . . . . . . . . . . . . . Insurance/Soft- 80% 73% 72% 85% 89% 90% 91% 95%
ware Development
6. Scotland Yard Apartments
-Phase I
Houston, Texas. . . . . . . . Residential 94% 93% 98% 93% 92% 91% 92% 92%
7. El Dorado View Apartments
Webster, Texas. . . . . . . . Residential 95% 98% 91% 93% 93% 94% 93% 91%
8. 767 Third Ave. Office Building
New York, New York. . . . . . Foreign
Representation 67% 78% 81% 83% 86% 87% 86% 89%
9. National City Center
Office Building
Cleveland, Ohio . . . . . . . Banking 96% 96% 96% 96% 94% 94% 94% 94%
<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 the Partnership's
interest in the property was 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 was obligated to pay rent to the joint venture through the
original terms of their lease which expired at various dates beginning in
December of 1990. Therefore, this property was leased 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 expired 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
1993 and 1994.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1994, there were 13,856 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 distribu-
tions 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, 1994, 1993, 1992, 1991 AND 1990
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . . . . $ 36,744,939 37,574,501 40,441,060 48,842,071 49,696,562
============ ============ ============ ============ ============
Operating loss . . . . . . . . $(12,674,872) (11,510,063) (6,856,914) (6,310,403) (5,409,090)
Partnership's share of
operations of uncon-
solidated ventures. . . . . . (125,370) (136,092) (762,164) (1,319,301) (2,242,349)
Venture partners' share
of ventures' operations . . . 3,968,903 3,679,780 2,339,587 1,148,561 579,207
------------ ------------ ------------ ------------ ------------
Net operating loss . . . . . . (8,831,339) (7,966,375) (5,279,491) (6,481,143) (7,072,232)
Gain on sale or disposi-
tion of investment
properties, net of
venture partner's share . . . 4,693,546 1,433,916 8,790,767 4,235,904 1,795,820
Extraordinary items,
net of venture partner's
share . . . . . . . . . . . . -- -- -- 143,082 2,999,824
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . . $ (4,137,793) (6,532,459) 3,511,276 (2,102,157) (2,276,588)
============ ============ ============ ============ ============
Net earnings (loss) per
limited partnership
interest (b):
Net operating loss. . . . . $ (61.68) (55.62) (36.86) (45.25) (49.37)
Gain on sale or dis-
position of investment
properties, net of
venture partner's
share. . . . . . . . . . . 33.80 10.32 63.29 30.50 12.93
Extraordinary items,
net of venture
partner's share. . . . . . -- -- -- 1.00 20.94
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . . $ (27.88) (45.30) 26.43 (13.75) (15.50)
============ ============ ============ ============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1994, 1993, 1992, 1991 AND 1990 - CONTINUED
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
Total assets . . . . . . . . . $151,349,909 169,411,131 170,266,483 194,905,203 208,586,635
Long-term debt . . . . . . . . $108,263,135 106,140,597 104,843,567 107,084,925 165,802,015
Cash distributions
per Interest (c). . . . . . . $ -- -- -- 3.75 12.50
============ ============ ============ ============ ============
<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.
(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, 1994
<CAPTION>
Property
--------
Mall of Memphis a) The GLA occupancy rate and average base rent per square foot
as of December 31 (excluding percentage rent) for each of the
last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C>
1990. . . . . . . 91% 13.33
1991. . . . . . . 84% 13.88
1992. . . . . . . 87% 13.04
1993. . . . . . . 91% 12.92
1994. . . . . . . 85% 14.05
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option
------------------- ----------- --------- --------------- --------------
<S> <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 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases (1) Leases (1) Leases Expiring
------------ ------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1995 25 31,000 $ 167,292 2.8%
1996 31 72,000 1,059,372 18.0%
1997 9 22,000 381,576 6.5%
1998 6 12,000 234,192 4.0%
1999 12 19,000 483,384 8.2%
2000 9 25,000 554,184 9.4%
2001 12 36,000 637,188 10.8%
2002 8 14,000 448,548 7.6%
2003 9 26,000 560,328 9.5%
2004 3 14,000 328,764 5.6%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with replacement
tenants have been executed as of March 25, 1995.
</TABLE>
<TABLE>
<CAPTION>
Property
--------
767 Third Avenue
Office Building a) The GLA occupancy rate and average base rent per square foot
as of December 31 for each of the last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C>
1990. . . . . . . 96% 53.41
1991. . . . . . . 70% 69.70
1992. . . . . . . 67% 47.95
1993. . . . . . . 83% 40.26
1994. . . . . . . 89% 39.46
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option
------------------- ----------- --------- --------------- --------------
<S> <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 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases (1) Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 13 20,000 $ 834,896 8.7%
1996 18 51,000 1,756,840 18.3%
1997 6 36,000 1,074,866 11.2%
1998 8 54,000 1,814,671 18.9%
1999 3 8,000 266,460 2.8%
2000 -- -- -- --
2001 2 11,000 371,200 3.9%
2002 4 23,000 936,930 9.8%
2003 1 7,000 219,200 2.3%
2004 2 9,000 193,417 2.0%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 25, 1995.
</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, 1994, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $2,103,000 and short-term
investments of approximately $1,393,000. 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 1995 approximately $3,302,000 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 1995 is
currently budgeted to be approximately $2,174,000. Actual amounts expended
in 1995 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. In such regard,
reference is made to the Partnership's property specific discussions below
and also the Partnership's disclosure of certain property lease expirations
in Item 6. 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. The lender also 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, 1994, the Partnership has been reimbursed from the escrow
account approximately $959,000 for capital improvements at the above-
referenced apartment complexes. Additionally, the lender has the right to
call the remaining loans at any time after January 1, 1996. In this
regard, the Partnership is currently marketing the Scotland Yard Phase I
and II and the El Dorado View apartment complexes for sale. If the
Partnership is unsuccessful in selling the properties prior to January 1,
1996 and the lender exercises its right to call the loans, the Partnership
would recognize a gain for financial reporting and Federal income tax
purposes with no corresponding distributable proceeds. 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).
Bitter Creek Apartments
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. 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
Occupancy at the property is 89% at December 31, 1994, up from 83% in
1993. The 767 Third Avenue venture is aggressively marketing the remaining
vacant space. The Partnership is obligated to fund its share of the net
cash flow deficits resulting from costs associated with any leasing
activity at the property.
During 1991 and 1992, the leases for approximately 67% of the space at
the 767 Third Avenue Office Building expired (substantially all of which
have been released as of December 1994 but at lower effective rents).
During the first quarter of 1994, a tenant vacated a portion of its space
(approximately 6,450 square feet or 2% of the building's leasable space)
prior to its lease expiration of January 1997. The venture reached an
agreement with the tenant whereby the lease obligation was terminated in
return for an $800,000 payment to the venture. This space was subsequently
released to a new tenant. 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 (contract rates less
the amortization of tenant improvements and free rent concessions). The
adverse market conditions and the negative impact of effective rental rates
are expected to continue over the next few years. While this building is
in a premier location, it has been adversely impacted by the lower
effective rental rates upon leasing and by 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. The
Partnership purchased a 50% interest in this loan in June 1993. Reference
is made to Note 4(b). In 1993, the reserve account was depleted and the
venture (by way of partner contributions) continues to fund required
leasing costs and debt service shortfalls. During 1994, the venture
partner approached the Partnership regarding purchasing the Partnership's
50% interest in 767 Third Avenue. However, upon review of the proposed
terms, the Partnership did not believe the offer to be in its best interest
and the offer was rejected.
824 Market Street
Occupancy at the 824 Market Street Office building located in
Wilmington, Delaware had risen to 56% during 1994, up from 49% at December
31, 1993. The 824 Market Street venture was aggressively seeking
replacement tenants for the vacant space; however, competition had 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 were unsuccessful and the venture
received a notice of default. Accordingly, for financial reporting
purposes, the underlying debt of approximately $13,515,000 was reflected as
a current liability in the accompanying consolidated financial statements
at December 31, 1993. The first mortgage lender commenced proceedings to
realize upon its security and was the successful bidder at the foreclosure
sale held in October 1994. The deed was conveyed to the first mortgage
lender on December 12, 1994. As a result of the disposition of the
property, the Partnership recognized a gain in 1994 for financial reporting
and Federal income tax purposes of $3,689,195 and $6,805,134, respectively,
with no corresponding distributable proceeds.
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. As of the date of this report,
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, the extent of
which are being negotiated with the lender but which are not expected to
exceed the holdback amount. Though physical occupancy at the property
increased from 85% at December 31, 1993 to 95% at December 31, 1994,
average rent paying occupancy decreased due to (i) a major tenant,
(vacating approximately 25% of the building in July 1992 due to a
downsizing of its operations) continuing to pay rent through the remaining
terms of its leases which expired in April 1993 and (ii) a second major
tenant downsizing its operations in April 1993 by approximately 36,000
square feet or 11% of the building and receiving a rent reduction of
approximately 23% on its remaining leased space. 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, 1994, the
February 1993 through December 1994 debt service payments are delinquent by
approximately $6,724,000. Accordingly, the loan balances of approximately
$34,298,000 have been reflected as a current liability in the consolidated
financial statements. In order to reduce debt service payments, the joint
venture has initiated discussions with the lender to negotiate possible
modifications to the mortgage notes. In this regard, the joint venture has
entered into a non-binding letter of intent with the existing lender for a
restructure of its mortgage loans. The proposed terms of the loan
restructure would retroactively reduce the interest rate payable on the
loans and reduce the term of the loan from its present maturity date of
September 2018 to December 2007. The loans (which currently bear interest
at rates ranging from 10% to 14% per annum) would bear interest at 6% per
annum for the period January 1, 1993 through December 31, 1997.
Thereafter, the interest rate per annum shall be the greater of the rate
derived using the "Coverage Formula" (as defined) or 7% from January 1,
1998 to December 31, 1999; 8.25% from January 1, 2000 to December 31, 2002;
and 9% from January 1, 2003 to December 31, 2007. In addition, the lender
is entitled to earn a minimum internal rate of return of 10.5% per annum
calculated over the restructured loan term. The proposed loan restructure
would also require that net cash flow after debt service and capital be
paid into an escrow account controlled by the lender to be used for
operating shortfalls and costs associated with additional leasing as
approved by the lender. In addition, the property operates under a ground
lease and the joint venture has not made the scheduled ground lease
payments since February 1993. The ground lessor is a general partner of
the venture partner. At December 31, 1994, the total amount of ground
lease payments in arrears is approximately $343,000. In this regard, the
proposed loan restructure discussed above would provide for the waiver of
any and all ground lease payments since the first missed payment in
February 1993 until the earlier of any future mortgage loan prepayment date
(resulting from a sale or refinancing of the property) or December 31,
2007. The proposed loan restructure also provides that if, during calendar
year 1997, projections of gross rental revenue approved by the lender
during the year are not less than $9 million per year for each of the next
five calendar years, annual payments of ground rent would resume, but in a
reduced amount (as defined). There can be no assurances that the
restructure will be obtained. If the joint venture is unable to secure any
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.
Based upon the conditions at the Yerba Buena West Office Building,
including tenant disputes following the October 17, 1989 San Francisco
earthquake, the venture had not made the debt service payments to the
underlying lender, commencing with the January 1990 payment. 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 was unable
to negotiate a loan modification to pay for expected future cash deficits
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, until June 1995, the venture will have a
right of first opportunity to purchase the property if the lender chooses
to sell. 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.
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 $7,600,000 ten
year loan at a rate of 10%. The Partnership's share of the funding in 1993
was $4,719,095 (net of closing costs). Of the amount funded, the
Partnership was required to deposit $1,000,000 in an escrow account as
security against any currently undiscovered environmental issues. The
venture would have been entitled to additional proceeds of $2,025,000 if
the property had achieved certain occupancy levels and debt coverage ratios
by September 30, 1994, however, the venture did not qualify for such
additional proceeds as leasing did not achieve budgeted goals. Reference
is made to Note 4(b). In May 1994, an affiliate of the General Partners
assumed property management and leasing services. Property management fees
are calculated as 3% of base rent (as defined) and leasing commissions are
calculated at a rate, which approximates market, based on the terms of the
related lease. In addition, the venture partner has approached the
Partnership regarding selling its 36.94% interest in the Mall of Memphis to
the Partnership. The Partnership is analyzing the proposal and there can
be no assurances that such transaction will be consummated.
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).
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.
Though the economy has recently shown signs of improvement and
financing is generally becoming more available for certain types of higher-
quality properties in healthy markets, real estate lenders are typically
requiring a lower loan-to-value ratio for mortgage financing than in the
past. This has made it difficult for owners to refinance real estate
assets at their current debt levels unless the value of the underlying
property has appreciated significantly. As a consequence, and due to the
weakness of some of the local real estate markets in which the
Partnership's properties operate, the Partnership is taking steps to
preserve its working capital. Therefore, the Partnership is carefully
scrutinizing the appropriateness of any discretionary expenditures,
particularly in relation to the amount of working capital it has available.
By conserving working capital, the Partnership will be in a better position
to meet future needs of its properties without having to rely on external
financing sources.
Due to the factors discussed above and the general lack of buyers of
real estate today, it is likely that the Partnership may hold some of its
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
The aggregate decrease in cash and cash equivalents and short-term
investments at December 31, 1994 as compared to December 31, 1993 is
primarily due to cash retained at the 824 Market Street office building due
to the suspension of debt service payments during 1993 and the remittance
of such cash to the lender in conjunction with the lender realizing upon
its security in the property in December 1994 as more fully discussed in
Note 4(b).
The decrease in rents and other receivables at December 31, 1994 as
compared to December 31, 1993 is primarily due to (i) the lender realizing
upon its security in the 824 Market Street office building in December
1994, as more fully discussed in Note 4(b), (ii) a decrease in unbilled
receivables related to 1994 at the Riverfront office building and (iii) an
increase in the allowance for doubtful accounts related to certain tenants
at the 767 Third Avenue office building.
The decrease in escrow deposits at December 31, 1994 as compared to
December 31, 1993 is primarily due to the $312,486 reimbursement from the
capital improvement escrow (as approved by the lender for the Partnership's
apartment complexes) during 1994 for balcony repairs at the Scotland Yard I
apartments. Reference is made to Note 4(c).
The decrease in prepaid expenses at December 31, 1994 as compared to
December 31, 1993 is primarily due to the lender realizing upon its
security in the 824 Market Street office building in December 1994, as more
fully discussed in Note 4(b), and a $110,811 reduction in prepaid real
estate taxes at the 767 Third Avenue office building due to a reduction in
the property's assessed value.
The decrease in land and buildings and improvements at December 31,
1994 as compared to December 31, 1993 is primarily due to the lender
realizing upon its security in the 824 Market Street office building in
December 1994, as more fully discussed in Note 4(b), partially offset by
tenant improvements resulting from 1994 leasing activity at the Mall of
Memphis and the 767 Third Avenue and Riverfront office buildings and
balcony repairs in 1994 at the Scotland Yard I and II apartments.
The increase in accumulated depreciation at December 31, 1994 as
compared to December 31, 1993 and the corresponding increase in
depreciation expense for 1994 as compared to 1993 is primarily due to the
full amortization of tenant improvements in 1994 due to a change in
estimate with respect to such tenant improvements related to space formerly
occupied by two major tenants, Saddlebrook and IBM, who had vacated the
Riverfront office building in 1989 and 1993, respectively. Such space was
subsequently released during 1993 and 1994, respectively, resulting in the
demolition of the existing improvements and the installation of new
improvements. Such increase was partially offset by the lender realizing
upon its security in the 824 Market Street office building in December 1994
as more fully discussed in Note 4(b).
The decrease in deferred expenses and the decrease in current portion
of long-term debt at December 31, 1994 as compared to December 31, 1993 is
primarily due to the lender realizing upon its security in the 824 Market
Street office building in December 1994, as more fully discussed in Note
4(b).
The increase in the venture partners' deficit in ventures at December
31, 1994 as compared to December 31, 1993 is primarily due to continuing
operating deficits during 1994 and the 1994 write-off of tenant
improvements at the Riverfront office building, as more fully discussed
above. Reference is made to Note 4(b).
The increase in accounts payable at December 31, 1994 as compared to
December 31, 1993 is primarily due to the timing of payment of operating
expenses at the Partnership's investment properties.
The decrease in unearned rents at December 31, 1994 as compared to
December 31, 1993 is primarily due to the timing of receipt of rental
income primarily at the Mall of Memphis.
The decrease in accrued interest at December 31, 1994 as compared to
December 31, 1993 is primarily due to the lender realizing upon its
security in the 824 Market Street office building in December 1994, as more
fully discussed in Note 4(b) partially offset by the interest accruals
associated with the non-recourse mortgage loans secured by the Riverfront
office building. The Partnership is delinquent in debt service payments at
the Riverfront office building, as more fully discussed in Note 4(b).
The decrease in due to affiliates at December 31, 1994 as compared to
December 31, 1993 is primarily due to the payment in 1994 of salary and
overhead reimbursements related to Partnership operations for the years
1991, 1992 and 1993 which had been previously deferred.
The decrease in tenant security deposits at December 31, 1994 as
compared to December 31, 1993 is primarily due to a reduction in occupancy
during 1994 at the Mall of Memphis and the Scotland Yard I and II
apartments.
The increase in long-term debt, less current portion at December 31,
1994 as compared to December 31, 1993 is primarily due to the accrual of
participation interest which the lender is entitled to under the terms of
the mortgages related to the Partnership's apartment complexes, as more
fully discussed in Note 4(c).
The decrease in the venture partners' subordinated equity in ventures
at December 31, 1994 as compared to December 31, 1993 is primarily due to
the lender realizing upon its security in the 824 Market Street office
building in December 1994 and the venture partner's share of the 1994
operating deficits at the 767 Third Avenue office building. Reference is
made to Note 4(b).
The decrease in rental income for 1994 as compared to 1993 is
primarily due to the sale of the South Point apartments in July 1993, as
more fully discussed in Note 7(f), a reduction in rent paying occupancy at
the 824 Market Street office building during 1994 (the lender realized upon
its security in the building in December 1994), partially offset by an
increase in rent paying occupancy at the 767 Third Avenue office building
during 1994 and an increase in expense recoveries resulting from an
increase in certain expenses at the Mall of Memphis. The decrease in
rental income for 1993 as compared to 1992 is primarily due to the sale of
the South Point apartments in July 1993.
The decrease in interest income for 1994 as compared to 1993 and for
1993 as compared to 1992 is primarily due to the decreased average
investment in interest bearing U.S. Government obligations resulting from
the Partnership's funding of the operating deficits at the 767 Third Avenue
office building during 1993 and 1994.
The increase in mortgage and other interest for 1994 as compared to
1993 is primarily due to the accrual of participation interest which the
lender is entitled to under the terms of the mortgages related to the
Partnership's apartment complexes, as more fully discussed in Note 4(c),
partially offset by the sale of the South Point apartments in July 1993, as
more fully discussed in Note 7(f). The increase in mortgage and other
interest for 1993 as compared to 1992 is primarily due to interest related
to the additional financing secured by the Mall of Memphis during 1993, as
more fully discussed in Note 4(b), and the accrual of participation
interest related to the Partnership's apartment complexes. This increase
is partially offset by the sale of the 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 the South Point apartments in July
1993.
The decrease in property operating expenses for 1994 as compared to
1993 is primarily due to (i) the sale of the South Point apartments in July
1993, (ii) the establishment of a $527,774 reserve at December 31, 1993 due
to the uncertainty of collection of the Partnership's mortgage notes
receivable, as more fully discussed in Note 7(a), (iii) receipt in 1994 of
a $178,835 1993 tax refund at the Riverfront office building due to a
reduction in the property's 1993 assessed value, (iv) a reduction in 1994
real estate taxes of approximately $226,000 at the Riverfront office
building due to a reduction in the property's 1994 assessed value and (v)
the provision for doubtful accounts recorded in 1993 related to rents due
from the former tenant and second mortgage lender at the 824 Market Street
office building. The increase in property operating expenses for 1993 as
compared to 1992 is primarily due to the reserve recorded at September 30,
1993 related to the mortgage notes receivable and the provision for
doubtful accounts related to a former tenant at the 824 Market Street
office building as more fully discussed above.
The decrease in professional services for 1994 as compared to 1993 is
primarily due to a reduction in 1994 in Partnership legal expenses.
The increase in amortization of deferred expenses for 1994 and 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 Partnership's share of operations in unconsolidated
ventures for 1994 and 1993 as compared to 1992 is primarily due to the
disposition of the Partnership's interest in the Yerba Buena West office
building in June 1992, as more fully discussed in Note 3(b).
The increase in the venture partners' share of loss of ventures'
operations for 1994 as compared to 1993 is primarily due to continuing
operating deficits during 1994 and the 1994 write-off of tenant
improvements at the Riverfront office building, as more fully discussed
above, partially offset by a reduction in operating deficits at the 767
Third Avenue office building due to an increase in occupancy during 1994.
The increase in the venture partners' share of loss of ventures' operations
for 1993 as compared to 1992 is primarily due to operating deficits
incurred at the Mall of Memphis and Riverfront office building during 1993.
The gain from sale or disposition of investment properties for 1994
resulted from the lender realizing upon its security in the 824 Market
Street office building; 1993 resulted from the sale of the South Point
apartments; and 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.
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, 1994 and 1993
Consolidated Statements of Operations, years ended December 31, 1994, 1993
and 1992
Consolidated Statements of Partners' Capital Accounts (Deficit),
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows, years ended December 31, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
Schedule
--------
Consolidated Real Estate and Accumulated Depreciation III
SCHEDULES NOT FILED:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the financial statements or related notes.<PAGE>
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 schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XI and consolidated ventures at
December 31, 1994 and 1993, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1994, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 25, 1995
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . $ 2,102,788 2,312,541
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,392,755 2,288,265
Rents and other receivables (net of allowance for doubtful accounts
of $1,627,151 and $1,284,059 at December 31, 1994 and 1993,
respectively). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,337,171 2,230,844
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,231,494 1,510,402
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,298,981 1,636,340
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 7,363,189 9,978,392
------------ ------------
Mortgage notes receivable (net of reserve for uncollectibility
of $527,774, note 7(a)). . . . . . . . . . . . . . . . . . . . . . . . . . . 2,067,695 2,067,695
Investment properties, at cost (notes 2, 3 and 4) - Schedule III:
Land and leasehold interests . . . . . . . . . . . . . . . . . . . . . . . 16,428,011 18,333,011
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . 181,221,236 193,684,179
------------ ------------
197,649,247 212,017,190
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . 75,428,110 72,509,329
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . . . . . . . 122,221,137 139,507,861
Investment in unconsolidated ventures, at equity (note 1). . . . . . . . . . . 479,811 445,473
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,806,743 5,881,001
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520,761 3,108,523
Venture partners' deficits in ventures . . . . . . . . . . . . . . . . . . . . 10,890,573 8,422,186
------------ ------------
$151,349,909 169,411,131
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . . . . . . . $ 34,720,167 48,194,235
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,368,672 1,337,166
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640,109 741,524
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,266,609 8,712,498
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 1,475,804 1,437,411
Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,765 250,699
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . 46,593,126 60,673,533
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,221 184,933
Long-term debt, less current portion (note 4). . . . . . . . . . . . . . . . . 108,263,135 106,140,597
------------ ------------
Commitments and contingencies (notes 1, 2, 3, 4, 8, and 10)
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 155,001,482 166,999,063
Deferred gain on sale of investment properties (note 7(a)) . . . . . . . . . . 2,067,695 2,067,695
Venture partners' subordinated equity in ventures. . . . . . . . . . . . . . . 4,751,737 6,677,585
Partners' capital accounts (deficit):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . (12,310,636) (12,004,318)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . (1,116,446) (1,116,446)
------------ ------------
(13,426,082) (13,119,764)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . . . 121,935,233 121,935,233
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . (73,912,181) (70,080,706)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . (45,067,975) (45,067,975)
------------ ------------
2,955,077 6,786,552
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . . (10,471,005) (6,333,212)
------------ ------------
$151,349,909 169,411,131
============ ============
<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, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . $36,560,773 37,316,818 40,169,886
Interest income. . . . . . . . . . . . . . . . . . . . . 184,166 257,683 271,174
----------- ----------- -----------
36,744,939 37,574,501 40,441,060
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . 19,589,577 19,191,672 18,101,601
Depreciation . . . . . . . . . . . . . . . . . . . . . . 8,518,226 6,750,315 6,963,918
Property operating expenses. . . . . . . . . . . . . . . 19,755,404 21,348,910 20,692,190
Professional services. . . . . . . . . . . . . . . . . . 282,379 360,581 375,718
Amortization of deferred expenses. . . . . . . . . . . . 1,043,910 1,198,944 863,188
General and administrative . . . . . . . . . . . . . . . 230,315 234,142 301,359
----------- ----------- -----------
49,419,811 49,084,564 47,297,974
----------- ----------- -----------
Operating loss . . . . . . . . . . . . . . . . . (12,674,872) (11,510,063) (6,856,914)
Partnership's share of operations of
unconsolidated ventures (note 1) . . . . . . . . . . . . (125,370) (136,092) (762,164)
Venture partners' share of ventures'
operations (note 3). . . . . . . . . . . . . . . . . . . 3,968,903 3,679,780 2,339,587
----------- ----------- -----------
Net operating loss . . . . . . . . . . . . . . . (8,831,339) (7,966,375) (5,279,491)
Gain from sale or disposition of investment
properties, net of venture partner's
share of gain (loss) of ($1,004,351) in 1994
and $881,297 in 1992 (note 4(b)) . . . . . . . . . . . . 4,693,546 1,433,916 8,790,767
----------- ----------- -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Net earnings (loss). . . . . . . . . . . . . . . $(4,137,793) (6,532,459) 3,511,276
=========== =========== ===========
Net earnings (loss) per limited partnership
interest (note 1):
Net operating loss . . . . . . . . . . . . . $ (61.68) (55.62) (36.86)
Gain from sale or disposition of
investment properties, net of
venture partner's share in
1994 and 1992. . . . . . . . . . . . . . . 33.80 10.32 63.29
----------- ----------- -----------
$ (27.88) (45.30) 26.43
=========== =========== ===========
<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, 1994, 1993 and 1992
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------- -------------------------------------------------
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,
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 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
Net loss
(note 5). . . . -- (306,318) -- (306,318) -- (3,831,475) -- (3,831,475)
----- ----------- ------------ ------------ ----------- ----------- ------------ -----------
Balance
(deficit)
December 31,
1994. . . . . . $1,000 (12,310,636) (1,116,446) (13,426,082) 121,935,233 (73,912,181) (45,067,975) 2,955,077
====== =========== ============ ============ =========== =========== ============ ===========
<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, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . $(4,137,793) (6,532,459) 3,511,276
Items not requiring (providing) cash
or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . 8,518,226 6,750,315 6,963,918
Amortization of deferred expenses. . . . . . . . . . 1,043,910 1,198,944 863,188
Reserve for mortgage notes receivable
(note 7(a)). . . . . . . . . . . . . . . . . . . . -- 527,774 --
Long-term debt - deferred accrued
interest . . . . . . . . . . . . . . . . . . . . . 2,544,737 1,061,103 286,636
Partnership's share of operations of
unconsolidated ventures. . . . . . . . . . . . . . 125,370 136,092 762,164
Venture partner's share of venture's
operations and gain (loss) on sale . . . . . . . . (4,973,254) (3,679,780) (1,458,290)
Total gain on sale or disposition of
investment properties. . . . . . . . . . . . . . . (3,689,195) (1,433,916) (9,672,064)
Changes in:
Rents and other receivables. . . . . . . . . . . . . . 840,195 (641,662) 175,831
Escrow deposits. . . . . . . . . . . . . . . . . . . . 278,908 1,140,681 (885,078)
Prepaid expenses . . . . . . . . . . . . . . . . . . . 159,359 388,221 254,349
Accrued rents receivable . . . . . . . . . . . . . . . (412,238) (774,775) (431,556)
Accounts payable . . . . . . . . . . . . . . . . . . . 28,349 (182,695) (376,626)
Unearned rents . . . . . . . . . . . . . . . . . . . . (94,413) 353,510 (865,739)
Accrued interest . . . . . . . . . . . . . . . . . . . 3,686,021 5,197,995 1,448,669
Accrued real estate taxes. . . . . . . . . . . . . . . (28,607) (178,984) (329,832)
Tenant security deposits . . . . . . . . . . . . . . . (39,712) (46,800) (80,806)
Due to affiliates. . . . . . . . . . . . . . . . . . . (128,934) 73,590 9,791
----------- ----------- -----------
Net cash provided by operating activities. . . . 3,720,929 3,357,154 175,831
----------- ----------- -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of
short-term investments . . . . . . . . . . . . . . . . 895,510 (419,666) 1,136,389
Additions to investment properties . . . . . . . . . . . (4,338,481) (5,280,587) (4,116,368)
Principal payments on mortgage notes receivable. . . . . -- -- 60,000
Partnership's contributions to unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . (159,708) (137,250) (49,268)
Payment of deferred expenses . . . . . . . . . . . . . . (525,619) (2,322,486) (1,705,586)
Cash proceeds from sale of investment properties,
net of selling expenses (note 7) . . . . . . . . . . . -- 932,576 2,093,875
----------- ----------- -----------
Net cash used in investing activities. . . . . . (4,128,298) (7,227,413) (2,580,958)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt . . . . . . . . . . . . . . -- 7,600,000 5,000,000
Principal payments on long-term debt . . . . . . . . . . (381,403) (373,858) (516,100)
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. . . . . . . 579,019 1,038,350 332,708
Distributions to venture partners. . . . . . . . . . . . -- (2,993,631) (711,241)
----------- ----------- -----------
Net cash provided by financing
activities . . . . . . . . . . . . . . . . . . 197,616 2,770,861 3,669,419
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . . (209,753) (1,099,398) 1,264,292
Cash and cash equivalents,
beginning of year. . . . . . . . . . . . . . . 2,312,541 3,411,939 2,147,647
----------- ----------- -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . . . . . . $ 2,102,788 2,312,541 3,411,939
=========== =========== ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . $13,358,819 12,932,574 16,652,932
=========== =========== ===========
Non-cash investing and financing activities:
Balance due on mortgage note payable retired . . . . . $13,514,864 -- --
Reduction of land. . . . . . . . . . . . . . . . . . . (1,905,000) -- --
Reduction of buildings and improvements. . . . . . . . (16,801,424) -- --
Reduction of accumulated depreciation. . . . . . . . . 5,599,445 -- --
Reduction of deferred expenses . . . . . . . . . . . . (555,967) -- --
Reduction of accrued interest payable. . . . . . . . . 4,131,910 -- --
Reduction of other assets and liabilities. . . . . . . (294,633) -- --
----------- ----------- -----------
Non-cash gain recognized on disposition
of investment property (note 4(b)) . . . . . . $ 3,689,195 -- --
=========== =========== ===========
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
=========== =========== ===========
<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, 1994, 1993 AND 1992
(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") and Excelsior Associates, LP ("824 Market Street") (property
transferred to lender in December 1994, see note 4(b)). 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/National 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>
1994 1993
------------------------------- ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . . . $151,349,909 25,263,575 169,411,131 26,981,083
Partners' capital accounts
(deficit) (note 5):
General partners.. . . . . . . . . . (13,426,082) (12,146,236) (13,119,764) (12,423,085)
Limited partners.. . . . . . . . . . 2,955,077 (19,556,845) 6,786,552 (18,125,642)
Net earnings (loss) (note 5):
General partners.. . . . . . . . . . (306,318) 276,849 (304,316) 143,339
Limited partners.. . . . . . . . . . (3,831,475) (1,431,203) (6,228,143) (3,524,295)
Net loss per limited
partnership interest . . . . . . . . . (27.88) (10.41) (45.30) (25.63)
============ =========== =========== ============
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The net loss per limited partnership interest is based upon the
Limited Partnership Interests outstanding at the end of each period.
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
($1,932,366 and $0 at December 31, 1994 and 1993, respectively) as cash
equivalents with any remaining amounts (generally with original maturities
of one year or less) reflected as short-term investments being held to
maturity.
Deferred expenses consist primarily of 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 1993 and 1992
consolidated financial statements to conform with the 1994 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 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 Riverfront
Office Building has been classified by the Partnership as a current
liability at December 31, 1994 and 1993 as a result of default (see note
4(b)) and because resolution of such default is 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 $108,685,311
has been calculated to have an SFAS 107 value of $106,716,115 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. During 1994, the lender realized upon its security
and took title to the 824 Market Street Office Building. All of the
properties owned at December 31, 1994 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, 1994 is a party to four operating
joint venture agreements. Pursuant to such venture agreements, the
Partnership made initial capital contributions of approximately $51,345,000
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,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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.
The Partnership has acquired, through the above ventures, an enclosed
shopping mall and three 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 1994, 1993 and 1992, one of the ventures
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"). Yerba Buena transferred title to the
property to the lender in June 1992 as described below.
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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Based upon the conditions at Yerba Buena, including tenant disputes
following the October 17, 1989 San Francisco earthquake, the venture had
not made the debt service payments to the underlying lender commencing with
the January 1990 payment. 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 was unable to negotiate a loan
modification to pay for expected future cash deficits 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, until June 1995, the joint venture will have
a right of first opportunity to purchase the property if the lender chooses
to sell. 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.
In January 1994, the debt service payments under the existing mortgage
for the National City Center Office Building increased from 9-5/8% to 11-
7/8% until the scheduled maturity of the loan in December 1995.
Carlyle/National City reached an agreement with the current mortgage lender
to refinance the existing mortgage effective April 28, 1994, with an
interest rate of 8.5%. The loan will be amortized over 22 years with a
balloon payment due at maturity on April 10, 2001. Carlyle/National City
paid a refundable loan commitment fee of $1,164,524 in 1993 in conjunction
with the refinancing. The fee was applied to accrued interest and the
prepayment penalty of $580,586 based on the outstanding mortgage balance at
the time of refinancing, with the balance of $238,215 refunded to
Carlyle/National City in 1994. In addition, the lender required an escrow
account of $612,000 to be established at the inception of the refinancing
for future tenant improvements costs at the property. The lender also
requires the tenant costs related to a major tenant (Baker & Hostetler)
lease to be escrowed. The venture is required to escrow approximately
$313,000 per year from 1994 through 1996 and approximately $236,000 per
year in 1997 and 1998.
<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, 1994 and 1993:
<CAPTION>
1994 1993
----------- -----------
<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, including participation interest,
is payable (see note 4(c)) . . . . . . . . . . . . . . . . . . . . . . . . . $10,800,673 9,741,419
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
$86,000, $14,000 and $49,000 for 1994, 1993 and 1992,
respectively). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,208,085 30,527,587
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,347,716 3,364,449
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,527,139 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 $37,986,531 is payable;
additional interest equal to 5% of certain rents in
excess of a specified level is payable (no additional
interest was due for 1994, 1993 and 1992); 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
1994 1993
----------- -----------
Promissory note payable to venture partner; secured;
related to 767 Third Avenue; bearing interest
at a rate equal to the prime rate (approximately
8.5% and 6.0% on December 31, 1994 and December 31,
1993, respectively) 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 2,500,000
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
1994, 1993 and 1992) (see note 4(b)) . . . . . . . . . . . . . . . . . . . . 24,780,548 24,780,548
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 1,167,936
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 2,615,507
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, including participation
interest, is payable (see note 4(c)) . . . . . . . . . . . . . . . . . . . . 5,267,921 4,863,715
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
----------- -----------
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, including participation
interest, is payable (see note 4(c)) . . . . . . . . . . . . . . . . . . . . 11,047,246 9,965,969
14-1/8% mortgage note secured by the 824 Market Street
office building in Wilmington, Delaware; retired at
disposition in December 1994; principal and interest of
$165,005 was due monthly through August 1, 2008, the
scheduled maturity date; additional interest was payable
equal to 30% of certain rents in excess of a specified
level (no additional interest was due for 1994, 1993
and 1992) (see note 4(b)). . . . . . . . . . . . . . . . . . . . . . . . . . -- 12,570,184
Second mortgage; secured by the 824 Market Street
office building in Wilmington, Delaware; retired at
disposition in December 1994; bore 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
was scheduled to be due (see note 4(b)). . . . . . . . . . . . . . . . . . . -- 944,680
------------ -----------
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,983,302 154,334,832
Less current portion of long-term debt
(see note 4(b)). . . . . . . . . . . . . . . . . . . . . . . . . . 34,720,167 48,194,235
------------ -----------
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . $108,263,135 106,140,597
============ ===========
</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:
1995 . . . . . . . . . . . $34,720,167
1996 . . . . . . . . . . . 467,357
1997 . . . . . . . . . . . 517,419
1998 . . . . . . . . . . . 3,072,897
1999 . . . . . . . . . . . 74,819,044
===========
(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 or scheduled maturity of the loans, 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).
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. 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.
767 Third Avenue Office Building
Occupancy at the property is 89% at December 31, 1994, up from 83% in
1993. The 767 Third Avenue venture is aggressively marketing the remaining
vacant space. The Partnership is obligated to fund its share of the net
cash flow deficits resulting from costs associated with any leasing
activity at the property.
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
(substantially all of which have been released as of December 1994 but at
lower effective rents). 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
May 1998 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. In 1993, the reserve account was depleted and the venture (by way
of partner contributions) continues to fund required leasing costs and debt
service shortfalls. The loan funded by the Partnership's venture partner
earns interest at an adjustable rate (10.5% at December 31, 1994) 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, less current
portion in the consolidated financial statements. 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. In addition, during 1994, the venture partner
approached the Partnership regarding purchasing the Partnership's 50%
interest in 767 Third Avenue, however, upon review of the proposed terms,
the Partnership did not believe the offer to be in its best interest and
the offer was rejected.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
824 Market Street Office Building
Occupancy at the 824 Market Street office building located in
Wilmington, Delaware had risen to 56% during 1994, up from 49% at December
31, 1993. The 824 Market Street venture was aggressively seeking
replacement tenants for the vacant space; however, competition had 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 were unsuccessful and the venture
received notice of default. Accordingly, for financial reporting purposes,
the underlying debt of approximately $13,515,000 was reflected as a current
liability in the accompanying consolidated financial statements at December
31, 1993. The first mortgage lender commenced proceedings to realize upon
its security and was the successful bidder at the foreclosure sale held in
October 1994. The deed was conveyed to the first mortgage lender on
December 12, 1994. As a result of the disposition of the property, the
Partnership recognized a gain in 1994 for financial reporting purposes and
Federal income tax purposes of $3,689,195 and $6,805,134, respectively,
with no corresponding distributable proceeds.
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. As of the date of this report,
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, the extent of
which are being negotiated with the lender but which are not expected to
exceed the holdback amount. Though occupancy at the property has increased
from 85% at December 31, 1993 to 95% at December 31, 1994, average rent
paying occupancy decreased due to (i) a major tenant (vacating
approximately 25% of the building in July 1992 due to a downsizing of its
operations) continuing to pay rent through the remaining terms of its
leases which expired in April 1993 and (ii) a second major tenant
downsizing its operations in April 1993 by approximately 36,000 square feet
or 11% of the building and receiving a rent reduction of approximately 23%
on its remaining leased space. 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, 1994, the February 1993 through
December 1994 debt service payments are delinquent by approximately
$6,724,000. Accordingly, the loan balances of approximately $34,298,000
have been reflected as a current liability in the consolidated financial
statements. In order to reduce debt service payments, the joint venture
has initiated discussions with the lender to negotiate possible
modifications to the mortgage notes. In this regard, the joint venture has
entered into a non-binding letter of intent with the existing lender for a
restructure of its mortgage loans. The proposed terms of the loan
restructure would retroactively reduce the interest rate payable on the
loans and reduce the term of the loan from its present maturity date of
September 2018 to December 2007. The loans (which currently bear interest
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
at rates ranging from 10% to 14% per annum) would bear interest at 6% per
annum for the period January 1, 1993 through December 31, 1997.
Thereafter, the interest rate per annum shall be the greater of the rate
derived using the "Coverage Formula" (as defined) or 7% from January 1,
1998 to December 31, 1999; 8.25% from January 1, 2000 to December 31, 2002;
and 9% from January 1, 2003 to December 31, 2007. In addition, the lender
is entitled to earn a minimum internal rate of return of 10.5% per annum
calculated over the restructured loan term. The proposed loan restructure
would also require that net cash flow after debt service and capital be
paid into an escrow account controlled by the lender to be used for
operating shortfalls and costs associated with additional leasing as
approved by the lender. There can be no assurances that any restructure
will be obtained. In addition, the property operates under a ground lease
and the joint venture has not made the scheduled ground lease payments
since February 1993. The ground lessor is a general partner of the venture
partner. At December 31, 1994, the total amount of ground lease payments
in arrears is approximately $343,000. In this regard, the proposed loan
restructure discussed above would provide for the waiver of any and all
ground lease payments since the first missed payment in February 1993 until
the earlier of any future mortgage loan prepayment date (resulting from a
sale or refinancing of the property) or December 31, 2007. The proposed
loan restructure also provides that if, during calendar year 1997,
projections of gross rental revenue approved by the lender during the year
are not less than $9 million per year for each of the next five calendar
years, annual payments of ground rent would resume, but in a reduced amount
(as defined). If the joint venture is unable to secure any 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 $7,600,000 ten
year loan at a rate of 10%. The Partnership's share of the funding was
$4,719,095 (net of closing costs). Of the amount funded, the Partnership
was required to deposit $1,000,000 in an escrow account as security against
any currently undiscovered environmental issues. The venture would have
been entitled to additional proceeds of $2,025,000 if the property had
achieved certain occupancy levels and debt coverage ratios by September 30,
1994, however, the venture did not qualify for such additional proceeds as
leasing did not achieve budgeted goals. In May 1994, an affiliate of the
General Partners assumed property management and leasing services.
Property management fees are calculated as 3% of base rent (as defined) and
leasing commissions are calculated at a rate, which approximates market,
based on the terms of the related lease. In addition, the venture partner
has approached the Partnership regarding selling its 36.94% interest in the
Mall of Memphis to the Partnership, however, there can be no assurances
that such transaction will be consummated.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(c) Refinancings
In December 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 1994, 1993 and 1992, contingent
interest aggregated approximately $257,000, $293,000 and $281,000,
respectively. In the event that these properties are sold before the
maturity date of the loans, 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 loans at any
time after January 1, 1996. In this regard, the Partnership is currently
marketing the Scotland Yard Phase I and II and the El Dorado View apartment
complexes for sale. If the Partnership is unsuccessful in selling the
properties prior to January 1, 1996 and the lender exercises its right to
call the loans, the Partnership would recognize a gain for financial
reporting and Federal income tax purposes with no corresponding
distributable proceeds. 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,
1994, the Partnership has been reimbursed from the escrow account
approximately $959,000 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 of $3,605,840 and $1,061,103
as deferred accrued interest included in the balance of long-term debt in
the accompanying consolidated financial statements at December 31, 1994 and
1993, respectively.
(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
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 contribu-
tions 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.
(6) MANAGEMENT AGREEMENTS
In May 1994, an affiliate of the General Partners assumed property
management and leasing services at the Mall of Memphis from an affiliate of
the venture partner. Leasing commissions at the Mall of Memphis are
calculated at a rate, which approximates market, based on the terms of the
related lease.
Certain of the Partnership's properties are managed by affiliates of
the General Partners or their assignees for fees computed as a percentage
of certain rents received by the properties. In December 1994, one of the
affiliated property managers sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. In addition, certain of the management personnel of the property
manager became management personnel of the purchaser and its affiliates.
The successor to the affiliated property manager's assets is acting as the
property manager of the Scotland Yard-Phase I and II Apartments and the El
Dorado View Apartments after the sale on the same terms that existed prior
to the sale.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(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 or 1994 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
December 31, 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 ($60,000) was applied against
the outstanding principal balance. No profit was recognized in 1994, 1993
or 1992.
(b) Mortgage notes receivable relating to the above sale consist of
the following:
1994 1993
------------ ----------
Promissory note secured by personal
guarantees of the buyers of the Part-
nership'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, 1994 and 1993 based on
an imputed rate of 8-1/2% . . . . . . . . . . . . $ 543,094 543,094
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, 1994 and 1993 based on
an imputed rate of 8-1/2% . . . . . . . . . . . . 2,052,375 2,052,375
---------- ---------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
------------ ------------
Total long-term notes receivable . . . . 2,595,469 2,595,469
Reserve for uncollectibility . . . . . . (527,774) (527,774)
---------- ---------
Total long-term notes receivable
(net of reserve for
uncollectibility). . . . . . . . . . . $2,067,695 2,067,695
========== =========
(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(b)). 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.
(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,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 4(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, 1994, the Partnership's and its consolidated ventures'
principal assets are two 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, 1994 are generally for a
term of one year or less and provide for annual rents of approximately
$5,429,000.
Cost of the leased assets net of accumulated depreciation are
summarized as follows at December 31, 1994:
Shopping mall:
Cost . . . . . . . . . . . . . . . $ 55,382,829
Accumulated depreciation . . . . . (19,097,888)
------------
36,284,941
------------
Office buildings:
Cost . . . . . . . . . . . . . . . 115,532,291
Accumulated depreciation . . . . . (45,021,172)
------------
70,511,119
------------
Apartment complexes:
Cost . . . . . . . . . . . . . . . 26,734,127
Accumulated depreciation . . . . . (11,309,050)
------------
15,425,077
------------
Total. . . . . . . . . . . . . . . . $122,221,137
============
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:
1995 . . . . . . . . . . . . . . . . $ 20,085,961
1996 . . . . . . . . . . . . . . . . 18,490,744
1997 . . . . . . . . . . . . . . . . 14,657,147
1998 . . . . . . . . . . . . . . . . 10,819,146
1999 . . . . . . . . . . . . . . . . 8,151,826
Thereafter . . . . . . . . . . . . . 34,360,468
------------
Total. . . . . . . . . . . . . . . . $106,565,292
============
Additional contingent rent (based on sales by property tenants)
included in consolidated rental income was as follows for the years ended
December 31, 1994, 1993 and 1992:
1992 . . . . . . . . . . . . . . . . $424,211
1993 . . . . . . . . . . . . . . . . 352,862
1994 . . . . . . . . . . . . . . . . 277,151
========
(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 at inception,to $298,575
for the years 2007 through 2080). The joint venture has not made the
scheduled ground lease payments since February 1993. At December 31, 1994,
the total amount of ground lease payments in arrears is approximately
$343,000. Reference is made to note 4(b) regarding the potential waiver of
any and all scheduled ground rent payments due under the lease since
February 1993 in conjunction with a proposed loan restructure with the
mortgage lender.
Future minimum rental commitments under this lease are as follows:
1995 . . . . . . . . . . . $ 179,145
1996 . . . . . . . . . . . 187,417
1997 . . . . . . . . . . . 212,230
1998 . . . . . . . . . . . 212,230
1999 . . . . . . . . . . . 212,230
Thereafter . . . . . . . . 18,053,679
-----------
Total. . . . . . . . . . . $19,056,931
===========
<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, 1994 and for the years ended December 31, 1994, 1993 and 1992 are as follows:
<CAPTION>
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Insurance commissions. . . . . . . . . . . . $ 32,821 31,165 35,835 --
Property management and
leasing fees. . . . . . . . . . . . . . . . 381,810 322,125 400,695 40,194
Management fees to Corporate
General Partner . . . . . . . . . . . . . . -- -- -- 11,936
Reimbursement (at cost) for
accounting services . . . . . . . . . . . . 118,917 73,649 96,945 19,234
Reimbursement (at cost) for
legal services. . . . . . . . . . . . . . . 4,920 6,012 8,490 4,602
Reimbursement (at cost) for
data processing services. . . . . . . . . . 1,818 3,896 (1,575) --
Reimbursement (at cost) for
out-of-pocket expenses. . . . . . . . . . . 11,697 12,946 12,368 1,196
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 . . . . . . . . . . . 44,603 49,549 106,002 44,603
-------- ------- ------- -------
$596,586 499,342 658,760 121,765
======== ======= ======= =======
</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 year ended December
31, 1992, total income was $1,431,864, expenses applicable to operating
loss were $3,523,650 and net income was $4,254,514.
<TABLE> SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<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. . . . . $ 5,267,921 470,507 6,113,536 615,541 470,507 6,729,077 7,199,584
Houston,
Texas
(Scotland
Yard-
Phase I) . . . 10,800,673 1,076,225 7,455,923 1,017,159 1,076,225 8,473,082 9,549,307
Houston,
Texas
(Scotland
Yard-
Phase II). . . 11,047,246 1,008,600 8,192,059 784,578 1,008,600 8,976,637 9,985,237
OFFICE
BUILDINGS:
New York,
New York
(767 Third
Avenue)(D) . . 40,486,531 10,252,897 59,515,887 7,764,694 10,252,897 67,280,581 77,533,478
Cambridge,
Massachu-
setts (D). . . 34,297,991 (C) 27,114,515 10,884,298 (C) 37,998,813 37,998,813
SHOPPING
MALL:
Memphis,
Tennessee
(D). . . . . . 41,082,940 3,608,935 39,870,758 11,903,135 3,619,782 51,763,046 55,382,828
------------ ---------- ----------- ---------- ---------- ----------- -----------
Total. . . . $142,983,302 16,417,164 148,262,678 32,969,405 16,428,011 181,221,236 197,649,247
============ ========== =========== ========== ========== =========== ===========
</TABLE>
<TABLE> SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1994
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DEPRECIATION(F) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
APARTMENT BUILDINGS:
Webster, Texas. . . . . . . . $ 3,305,872 1980 7/31/81 5-30 years 171,778
Houston, Texas
(Scotland Yard-
Phase I) . . . . . . . . . . 3,969,808 1981 4/15/81 5-30 years 305,888
Houston, Texas
(Scotland Yard-
Phase II). . . . . . . . . . 4,033,370 1982 6/28/82 5-30 years 282,047
OFFICE BUILDINGS:
New York, New York
(767 Third Avenue)
(D). . . . . . . . . . . . . 30,399,735 1981 9/30/81 5-30 years 2,114,974
Cambridge, Massachusetts
(D). . . . . . . . . . . . . 14,621,437 1983 10/22/81 5-30 years 977,605
SHOPPING MALL:
Memphis,
Tennessee (D). . . . . . . . 19,097,888 1981 8/3/81 5-30 years 1,407,232
----------- ---------
Total. . . . . . . . . . . $75,428,110 5,259,524
=========== =========
<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, 1994 for Federal income tax purposes was
approximately $168,822,092.
(C) Property operated under ground lease; see Note 8(b).
(D) Properties owned and operated by joint ventures; see Note 3.
</TABLE>
<TABLE> SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
(E) Reconciliation of real estate owned:
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . . . . . . . $212,017,190 213,213,361 244,464,720
Additions during period . . . . . . . . . . . . . . . 4,338,481 5,280,587 4,116,368
Dispositions during period. . . . . . . . . . . . . . (18,706,424) (6,476,758) (35,367,727)
------------ ------------ ------------
Balance at end of period. . . . . . . . . . . . . . . $197,649,247 212,017,190 213,213,361
============ ============ ============
(F) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . . . . . . . $ 72,509,329 68,282,112 73,688,543
Depreciation expense. . . . . . . . . . . . . . . . . 8,518,226 6,750,315 6,963,918
Reductions during period. . . . . . . . . . . . . . . (5,599,445) (2,523,098) (12,370,349)
------------ ------------ ------------
Balance at end of period. . . . . . . . . . . . . . . $ 75,428,110 72,509,329 68,282,112
============ ============ ============
</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 1994 and 1993.
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
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Jeffrey R. Rosenthal Managing Director-Corporate 4/22/91
Chief Financial Officer 8/01/93
Douglas H. Cameron Executive Vice President 1/01/95
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, 1995. 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,
1995. 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 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc.,
an affiliate of JMB that is a real estate investment trust in the business
of owning, managing and developing shopping centers, and a director of
Catellus Development Corporation, a major diversified real estate
development company. He is a Certified Public Accountant.
Neil G. Bluhm (age 57) is an individual general partner of JMB Income-
IV and JMB Income-V. Mr. Bluhm has been associated with JMB since August,
1970. Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 56) 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 53) has been associated with JMB since July,
1972. Mr. Nathan is also a director of Sportmart, Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 61) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.
John G. Schreiber (age 48) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is a director of Urban Shopping Centers,
Inc., an affiliate of JMB that is a real estate investment trust in the
business of owning, managing and developing shopping centers. Mr.
Schreiber is President of Schreiber Investments, Inc., a company which is
engaged in the real estate investment business. He is also a senior
advisor and partner of Blackstone Real Estate Partners, an affiliate of the
Blackstone Group, L.P. Since 1994, Mr. Schreiber has also served as a
Trustee of Amli Residential Property Trust, a publicly-traded real estate
investment trust that invests in multi-family properties. He is also a
director of a number of investment companies advised or managed by T. Rowe
Price Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 45) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 47) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Jeffrey R. Rosenthal (age 43) has been associated with JMB since
December, 1987. He is a Certified Public Accountant.
Douglas H. Cameron (age 45) has been associated with JMB since April,
1977. Prior to becoming Executive Vice President of JMB in 1995, Mr.
Cameron was Managing Director of Capital Markets - Property Sales from June
1990. He holds a Masters degree in Business Administration from the
University of Southern California.
Gary Nickele (age 42) 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 43) 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 46) 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 59) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.<PAGE>
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 1994, 1993, and 1992, no cash distributions were paid
to the General Partners. In 1991, the General Partners deferred
distributions of $7,161 and management fees of $11,936.
JMB Properties Company, (which had been an affiliate of the Corporate
General Partner until it was sold to an unaffiliated third party in
December 1994 (see Note 6)), provided property management services to the
Partnership through November 1994 for the El Dorado View Apartments in
Webster, Texas, Scotland Yard - Phase I and Scotland Yard-Phase II in
Houston, Texas. Fees were calculated at 5% of gross income for the
apartment complexes. Such affiliate earned property management fees
amounting to $255,865 in 1994, all of which were paid at December 31, 1994.
In May 1994, JMB Retail Properties, Co., an affiliate of the General
Partners, assumed property management and leasing services at the Mall of
Memphis from an affiliate of the venture partner. Such affiliate earned
property management fees amounting to $125,945 in 1994 of which $40,194
were unpaid at December 31, 1994. 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 1994
aggregating $32,821 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 1994, the
Corporate General Partner of the Partnership was due reimbursement for such
expenses in the amount of $181,955. Cumulative amounts unpaid at December
31, 1994 were $69,635.
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.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the General Partners, the
executive officers and directors of the Corporate General Partner and persons
who own more than ten percent of the Interests to file an initial report
of ownership or changes in ownership of Interests on Form 3, 4 or 5 with the
Securities and Exchange Commission (the "SEC"). Such persons
are also required by SEC rules to furnish the Partnership with copies of all
Section 16(a) forms they file. Timely filing of an initial
report of ownership on Form 3 or Form 5 was not made on behalf of Glenn Emig.
</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
hereby incorporated by reference.
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
27. Financial Data Schedule
99-A. The Partnership's Report on Form 8-K (File No. 0-10494)
dated December 23, 1994 describing the December 12,
1994 disposition of the 824 Market Street Office
Building and exhibit 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) The following on Form 8-K was filed since the beginning of the
last quarter of the period covered by this report:
The Partnership's Report on Form 8-K (File No. 0-10494) dated
December 23, 1994 describing the December 12, 1994 disposition of
the 824 Market Street Office Building and exhibit thereto are
hereby incorporated herein by reference.
No annual report or proxy material for the fiscal year 1994 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 27, 1995
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 27, 1995
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 27, 1995
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 27, 1995
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 27, 1995
JEFFREY R. ROSENTHAL*
By: Jeffrey R. Rosenthal, Chief Financial Officer
Principal Financial Officer
Date: March 27, 1995
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 27, 1995
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 27, 1995
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 27, 1995
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 27, 1995
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 Yes
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
27. Financial Data Schedule No
99-A. Form 8-K for December 12, 1994 Yes
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.
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
officers and directors of JMB Realty Corporation, the corporate
general partner of Carlyle Real Estate Limited Partnership - 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,
1994, 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 31st day of January, 1995.
JUDD D. MALKIN
Judd D. Malkin Chairman and Director
NEIL G. BLUHM
Neil G. Bluhm President and Director
H. RIGEL BARBER
H. Rigel Barber Chief Executive Officer
JEFFREY R. ROSENTHAL
Jeffrey R. Rosenthal Chief Financial Officer
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, 1994, and any and all
amendments thereto, the 31st day of January, 1995.
GARY NICKELE
Gary Nickele
GAILEN J. HULL
Gailen J. Hull
DENNIS M. QUINN
Dennis M. Quinn
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
officers and directors of JMB Realty Corporation, the corporate
general partner of Carlyle Real Estate Limited Partnership - 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,
1994, 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 31st day of January, 1995.
STUART C. NATHAN
Stuart C. Nathan Executive Vice
President, Director of
General Partner
A. LEE SACKS
A. Lee Sacks Director of General
Partner
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, 1994, and any and all
amendments thereto, the 31st day of January, 1995.
GARY NICKELE
Gary Nickele
GAILEN J. HULL
Gailen J. Hull
DENNIS M. QUINN
Dennis M. Quinn
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
of JMB Realty Corporation, the corporate general partner of
Carlyle Real Estate Limited Partnership - XI, does 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, a Report on Form 10-K of
said partnership for the fiscal year ended December 31, 1994, 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 20th day of February, 1995.
GLENN E. EMIG
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of
authority to sign, in the name and on behalf of the above named
officer, a Report on Form 10-K of said partnership for the fiscal
year ended December 31, 1994, and any and all amendments thereto,
the 20th day of February, 1995.
GARY NICKELE
Gary Nickele
GAILEN J. HULL
Gailen J. Hull
DENNIS M. QUINN
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000350667
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,102,788
<SECURITIES> 1,392,755
<RECEIVABLES> 3,867,646
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,363,189
<PP&E> 197,649,247
<DEPRECIATION> 75,428,110
<TOTAL-ASSETS> 151,349,909
<CURRENT-LIABILITIES> 46,593,126
<BONDS> 108,263,135
<COMMON> 0
0
0
<OTHER-SE> (10,471,005)
<TOTAL-LIABILITY-AND-EQUITY> 151,349,009
<SALES> 36,560,773
<TOTAL-REVENUES> 36,744,939
<CGS> 0
<TOTAL-COSTS> 29,317,540
<OTHER-EXPENSES> 512,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,589,577
<INCOME-PRETAX> (12,674,872)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,831,339)
<DISCONTINUED> 4,693,546
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,137,793)
<EPS-PRIMARY> (28)
<EPS-DILUTED> 0
</TABLE>
