SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 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) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . 13
PART II OTHER INFORMATION
Item 3. Defaults Upon Senior Securities. . . . . . . . . . 15
Item 5. Other Information. . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 16
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 2,932,019 3,928,706
Rents and other receivables (net of allowance for
doubtful accounts of $1,326,620 and $1,524,496 at
June 30, 1996 and December 31, 1995, respectively). . . . . . . . . 419,180 1,126,899
Escrow deposits and restricted funds. . . . . . . . . . . . . . . . . 4,219,329 2,110,717
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 94,156 1,184,253
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 7,664,684 8,350,575
------------ -----------
Mortgage notes receivable (net of reserve for
uncollectibility of $327,774 at June 30, 1996 and
$527,774 at December 31, 1995) . . . . . . . . . . . . . . . . . . . . 1,867,695 2,067,695
Investment properties, at cost:
Land and leasehold interests. . . . . . . . . . . . . . . . . . . . 17,654,091 17,654,091
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . 184,416,135 191,845,064
------------ -----------
202,070,226 209,499,155
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . 85,153,609 81,997,627
------------ -----------
Total investment properties, net
of accumulated depreciation . . . . . . . . . . . . . . . . . 116,916,617 127,501,528
Investment in unconsolidated venture, at equity . . . . . . . . . . . . 645,060 547,381
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,703,246 4,147,934
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . 2,649,728 2,910,837
Venture partners' deficits in ventures. . . . . . . . . . . . . . . . . 13,601,140 8,905,564
------------ -----------
$147,048,170 154,431,514
============ ===========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . $ 33,532,012 28,216,001
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,382,189 1,559,456
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 494,095 675,234
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,331,094 2,270,877
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . 1,150,734 1,511,605
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 38,890,124 34,233,173
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 221,373 222,353
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . 124,264,886 128,508,546
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . 428,241 231,178
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 163,804,624 163,195,250
Deferred gain on sale of investment property. . . . . . . . . . . . . . 1,867,695 2,067,695
Venture partners' subordinated equity in ventures . . . . . . . . . . . 3,095,516 3,830,469
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (12,766,583) (12,478,272)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (1,116,446) (1,116,446)
------------ -----------
(13,882,029) (13,593,718)
------------ -----------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . . 121,935,233 121,935,233
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (84,704,894) (77,935,440)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (45,067,975) (45,067,975)
------------ -----------
(7,837,636) (1,068,182)
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . . . (21,719,665) (14,661,900)
------------ -----------
$147,048,170 154,431,514
============ ===========
<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
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1996 1995 1996 1995
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . $ 8,468,033 8,165,086 16,720,469 16,554,465
Interest income . . . . . . . . . . . . . . . . 57,040 52,293 103,344 89,223
----------- ---------- ----------- ----------
8,525,073 8,217,379 16,823,813 16,643,688
----------- ---------- ----------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . 4,126,688 4,259,866 7,983,358 8,193,189
Depreciation. . . . . . . . . . . . . . . . . . 1,639,818 1,659,155 3,155,982 3,253,464
Property operating expenses . . . . . . . . . . 4,743,670 4,455,205 9,141,407 8,536,618
Professional services . . . . . . . . . . . . . 51,248 83,467 146,918 168,567
Amortization of deferred expenses . . . . . . . 355,949 247,890 618,120 494,859
General and administrative. . . . . . . . . . . 139,376 87,446 224,001 159,264
Provision for value impairment. . . . . . . . . -- -- 8,500,000 --
----------- ---------- ----------- ----------
11,056,749 10,793,029 29,769,786 20,805,961
----------- ---------- ----------- ----------
Operating earnings (loss) . . . . . . . . (2,531,676) (2,575,650) (12,945,973) (4,162,273)
Partnership's share of operations of
unconsolidated venture . . . . . . . . . . . . 42,490 56,024 97,679 5,170
Venture partners' share of ventures'
operations. . . . . . . . . . . . . . . . . . . 805,795 967,246 5,590,529 1,673,782
----------- ---------- ----------- ----------
Net operating earnings (loss) . . . . . . (1,683,391) (1,552,380) (7,257,765) (2,483,321)
Gain on sale of investment property . . . . . . . 200,000 -- 200,000 --
----------- ---------- ----------- ----------
Net earnings (loss) . . . . . . . . . . . $(1,483,391) (1,552,380) (7,057,765) (2,483,321)
=========== ========== =========== ==========
Net earnings (loss) per
limited partnership
interest:
Net operating earnings
(loss). . . . . . . . . . . . . . . $ (11.75) (10.84) (50.67) (17.34)
Gain on sale of invest-
ment property . . . . . . . . . . . 1.44 -- 1.44 --
----------- ---------- ----------- ----------
$ (10.31) (10.84) (49.23) (17.34)
=========== ========== =========== ==========
Cash distributions per
limited partnership
interest. . . . . . . . . . . . . . . . $ -- -- -- --
=========== ========== =========== ==========
<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
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (7,057,765) (2,483,321)
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,155,982 3,253,464
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 618,120 494,859
Long-term debt - deferred accrued interest. . . . . . . . . . . . . . . 1,300,070 396,353
Partnership's share of operations of unconsolidated
venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (97,679) (5,170)
Venture partner's share of venture's operations . . . . . . . . . . . . (5,590,529) (1,673,782)
Provision for value impairment. . . . . . . . . . . . . . . . . . . . . 8,500,000 --
Gain on sale of investment property . . . . . . . . . . . . . . . . . . (200,000) --
Changes in:
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . 707,719 (527,880)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,090,097 105,866
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,108,612) 265,988
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . 261,109 131,245
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . (177,267) (363,731)
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (181,139) 847,485
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,217 1,002,147
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . (360,871) (339,554)
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (980) 598
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . 197,063 --
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . . 115,535 1,104,567
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments. . . . . . -- 379,663
Collection of notes receivable. . . . . . . . . . . . . . . . . . . . . . 200,000 --
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (1,071,071) (1,283,642)
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (173,432) (108,980)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . (1,044,503) (1,012,959)
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (227,719) (205,725)
Venture partners' contributions to venture. . . . . . . . . . . . . . . . 160,000 162,500
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . (67,719) (43,225)
------------ -----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . (996,687) 48,383
Cash and cash equivalents, beginning of year. . . . . . . . . . . 3,928,706 2,102,788
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 2,932,019 2,151,171
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 6,743,505 6,794,689
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
============ ===========
<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
JUNE 30, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1995, which
are included in the Partnership's 1995 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of June 30, 1996 and for the six months ended June 30,
1996 and 1995 were as follows:
Unpaid at
June 30,
1996 1995 1996
-------- ------ -------------
Property management
and leasing fees . . . . . . $ 98,696 118,220 --
Insurance commissions . . . . -- 34,756 --
Reimbursement (at cost)
for out-of-pocket
salary and salary-
related expenses
related to the on-site
and other costs for
the Partnership and its
investment properties. . . . 42,414 4,355 38,056
-------- ------- ------
$141,110 157,331 38,056
======== ======= ======
RIVERFRONT OFFICE BUILDING
The restructured loan secured by the building and improvements
requires that net cash flow after debt service and capital be paid into an
escrow account controlled by the lender to be used for future operating
shortfalls, principal payments and costs associated with additional leasing
as approved by the lender. The agreement further prohibits the venture
owning the property from distributing excess cash flow after full funding
of the escrow accounts. Such excess funds are to be retained for operating
shortfalls, principal payments and costs associated with additional leasing
as approved by the lender prior to withdrawing escrow deposits.
Keystone Investors, occupying approximately 25% of Riverfront's net
rentable area, will vacate upon its scheduled lease expiration in September
1996. Although the venture will incur substantial lease up costs when
Keystone expires, the venture anticipates that it can fulfill future debt
service requirements of the restructured loan. However, if future
operating shortfalls are greater than expected and funding of deficits
becomes necessary, the venture would seek additional debt service relief
from the lender. If the venture was unable to obtain relief from the
lender it would likely decide not to commit any additional amounts to the
property. This would likely result in the Partnership no longer having an
ownership interest in the property, and would result in a net gain for
financial reporting and Federal income tax purposes with no corresponding
distributable proceeds.
In addition, as a condition of the loan restructure discussed above,
the ground lease was amended and provides for the deferral of any and all
ground lease payments from 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 ground lessor is a general partner of
the venture partner. At June 30, 1996, the total amount of ground lease
payments in arrears is approximately $616,000.
The Partnership recorded a provision for value impairment of
$8,500,000 as of January 1, 1996. Riverfront is not considered a source of
future liquidity to the Partnership.
767 THIRD AVENUE OFFICE BUILDING
Occupancy at the property is 97% at June 30, 1996. During the
remainder of 1996 and in 1997, expiration of tenant leases will be
approximately 7% and 16%, respectively. There is no assurance that the
expiring tenants can be retained. 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.
Vacancy rates in Midtown Manhattan (the sub-market for this property)
remain high and the increased competition for tenants has resulted in
reduced effective rental rates. The adverse market conditions and the
negative impact of effective rental rates are expected to continue over the
next few years.
MALL OF MEMPHIS
During 1996, occupancy decreased 10% of which approximately one half
was attributable to tenant bankruptcies and liquidations. Expiration of
tenant leases will be approximately 9% and 11%, during the remainder of
1996 and in 1997, respectively. There is no assurance that the tenants
with expiring leases can be retained.
Pursuant to the terms of the note payable to the former venture
partner, the Partnership had guaranteed a portion of the debt service
payments payable on June 1, 1996 and June 1, 1997 in the amount of $300,000
for each payment. Due to the increase in vacancies discussed above and
other property operating considerations, the Partnership decided not to
make the June 1, 1996 payment. As a result, the Partnership is in default
and the $5,000,000 note payable has been classified as current in the
accompanying consolidated financial statements. Due to provisions of the
associated underlying agreements, the former venture partner may only
realize up its security (its former partnership interest in the joint
venture), which the Partnership considers unlikely. However it is possible
that the former venture partner may attempt to exercise its remedies
against the Partnership respecting the guaranteed amounts.
SCOTLAND YARD - PHASE I AND II APARTMENTS
The lender has the right to call the loans securing the properties (at
par) at any time after January 1, 1996. Although no such notification has
been received as of the date of this report and the Partnership has
received no such indication that such notification is imminent, the
Partnership may assign title to the properties to the lender in
satisfaction of the loans if the Partnership is unsuccessful in selling or
refinancing the properties prior to the lender exercising its rights to
call the loans. As a result, the Partnership would recognize a net gain
for financial reporting and Federal income tax purposes with no
corresponding distributable proceeds. In July 1996, the Partnership
entered into contracts with an independent third party to purchase the
properties. If the sale is consummated at the proposed terms the
Partnership would recognize a net gain for financial reporting and Federal
income tax purposes. However, there can be no assurance that a
satisfactory sales transaction will be completed in 1996.
The properties were classified as held for sale as of April 1, 1996
and therefore have not been subject to continued depreciation. The
accompanying consolidated financial statements include $1,010,333 and
$1,033,230 of revenues and $1,413,452 and $1,412,700 of operating expenses
for the three months ended June 30, 1996 and 1995, respectively. The
properties had a net carrying value of $11,814,785 at June 30, 1996 and
$11,884,410 at December 31, 1995.
EL DORADO VIEW APARTMENTS
On July 23, 1996, the Partnership sold the El Dorado View apartment
complex located in Houston, Texas to an independent third party at a sales
price determined by arm's-length negotiations. The property was sold
together with another apartment property which was owned by a partnership
sponsored by an affiliate of the Corporate General Partner. The sales
price of the property was $6,600,000 (before closing costs and prorations).
A major portion of the sales proceeds was utilized to retire the related
underlying mortgage principal of $4,695,000. The Partnership received
approximately $1,740,000 in connection with the sale after all fees and
closing costs. Of this amount, the lender was entitled to an additional
amount of approximately $1,045,000 as participation in the sale proceeds.
Therefore, the Partnership received a net amount of cash of approximately
$695,000. As a result of the sale, the Partnership expects to recognize a
gain for financial reporting and Federal income tax purposes in 1996.
The property was classified as held for sale as of April 1, 1996 and
therefore has not been subject to continued depreciation. The accompanying
consolidated financial statements include $337,081 and $354,425 of revenues
and $439,339 and $462,745 of operating expenses for the three months ended
June 30, 1996 and 1995, respectively. The property had a net carrying
value of $3,709,064 at June 30, 1996 and $3,740,695 at December 31, 1995.
NATIONAL CITY CENTER
A tenant who occupies approximately 66,000 square feet (12.5% of the
building) whose lease is scheduled to expire in late 1996 has informed the
venture that it intends to vacate a major portion (approximately 41,000
square feet) upon expiration of its existing lease. The venture is
currently exploring its options with this space. However, there can be no
assurance that the venture will be able to obtain a renewal for any of the
space, or what the terms of any such renewal will be.
In addition, the venture was notified in August 1995 of the intention
of a tenant who occupies approximately 12,500 square feet and is currently
operating a restaurant on the building's plaza level to terminate its
current lease effective August 31, 1996. Though the venture had been
negotiating with the current restaurant manager since August 1995 to
execute a new long term lease, the restaurant manager now intends to cease
operations on August 31, 1996 due to the restaurant's inability to generate
sufficient income to cover its increasing costs. The tenant will owe the
venture a lease termination fee of $45,000. The venture is currently
exploring its options and is negotiating with several replacement
restaurant tenants. However, there can be no assurance a replacement
tenant will be obtained.
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1996
and for the three and six months ended June 30, 1996 and 1995.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning certain of the
Partnership's investments.
During the second quarter some of the Limited Partners in the
Partnership received from an unaffiliated third party an unsolicited tender
offer to purchase up to 6,637 Interests in the Partnership at between $25
and $35 per Interest. The Partnership recommended against acceptance of
this offer on the basis that, among other things, the offer price was
inadequate. In June such offer expired with approximately 2,319 Interests
being purchased by such unaffiliated third party pursuant to such offer.
In addition, the Partnership has, from time to time, received inquires from
other third parties that may consider making offers for Interests,
including requests for the list of Limited Partners in the Partnership.
These inquiries are generally preliminary in nature. There is no assurance
that any other third party will commence an offer for Interests, the terms
of any such offer or whether any such offer, if made, will be consummated,
amended or withdrawn. The board of directors of JMB Realty Corporation
("JMB") the corporate general partner of the Partnership, has established a
special committee (the "Special Committee") consisting of certain directors
of JMB to deal with all matters relating to tender offers for Interests in
the Partnership, including any and all responses to such tender offers.
The Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests. Expenses incurred in connection with the previous tender offer
and additional potential tender offers for Interests are expected to
increase Partnership operating expenses in the third quarter.
At June 30, 1996, the Partnership and its consolidated ventures had
cash and cash equivalents of approximately $2,932,000. Such funds have
been retained for working capital requirements including the Partnership's
portion of the anticipated net cash flow deficits and potential leasing
costs at the Mall of Memphis, 767 Third Avenue Office Building, National
City Center Office Building and through their projected sales dates in
September 1996, Scotland Yard Phases I and II.
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.
Although the Partnership expects to distribute sale proceeds from the
disposition of certain of the Partnership's remaining assets, without a
dramatic improvement in market conditions, the Limited Partners will
receive significantly less than their original investment. The General
Partners of the Partnership expect to be able to conduct an orderly
liquidation of the remaining investment portfolio as quickly as
practicable. Therefore, the affairs of the Partnership are expected to be
wound up no later than December 31, 1999 (sooner if the properties are sold
in the nearer term), barring unforeseen economic developments.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents at June 30, 1996 as compared
to December 31, 1995 is primarily due to the funding of operating deficits
at certain of the Partnership's investments.
The decrease in rents and other receivables at June 30, 1996 as
compared to December 31, 1995 is primarily due to the timing of receipt of
rental income at Mall of Memphis and Riverfront office building.
The decrease in mortgage notes receivable and deferred gain on sale of
investment property at June 30, 1996 as compared to December 31, 1995 and
the gain on sale of investment property is due to a $200,000 collection of
a portion of past due amounts on notes receivable related to the 1986 sale
of Pavillion Towers.
The decrease in prepaid expenses and the increase in escrow deposits
at June 30, 1996 as compared to December 31, 1995 is primarily due to the
amortization of prepaid real estate taxes and the establishment of a real
estate tax escrow account for 767 Third Avenue. The remaining increase in
escrow deposits is primarily due to fundings to the capital escrow accounts
at Riverfront pursuant to the terms of the mortgage loan.
The aggregate decrease in buildings and improvements and the increase
in venture partner's deficit in venture at June 30, 1996 as compared to
December 31, 1995 and the increase in venture partners' share of venture
operations for the six months ended June 30, 1996 as compared to the six
months ended June 30, 1995 is primarily due to the provision for value
impairment for the Riverfront office building.
The increase in current portion of long-term debt and the
corresponding decrease in long-term debt at June 30, 1996 as compared to
December 31, 1995 is primarily due to the classification of the $5,000,000
note payable to the Partnership's former venture partner in Mall of Memphis
as current in the accompanying consolidated financial statements.
The increase in rental income for the three and six months ended June
30, 1996 as compared to the three and six months ended June 30, 1995 is
primarily due to increased occupancy in 1996 at the Riverfront office
building partially offset by reduced occupancy in 1996 at the Mall of
Memphis.
The increase in property operating expenses for the three and six
months ended June 30, 1996 as compared to the three and six months ended
June 30, 1995 is primarily due to a decrease in the provision for doubtful
accounts related to tenant receivables at Mall of Memphis and an increase
in real estate tax consulting fees due to a tax appeal for the Mall of
Memphis.
The increase in general and administrative expenses for the three and
six months ended June 30, 1996, as compared to the three and six months
ended June 30, 1995 is attributable primarily to the timing of the
recognition of costs for certain outsourcing services, recognition of
certain prior year reimbursable costs to affiliates of the General Partners
and the timing of the recognition of certain printing costs in 1996.
<TABLE>
PART II. OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Reference is made to the Notes to Consolidated Financial Statements filed with this report for discussions of
default under the note payable secured by the Partnership's former venture partner's interest in the Mall of
Memphis which discussions are hereby incorporated herein by reference.
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties.
<CAPTION>
1995 1996
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Scotland Yard Apartments
-Phase II
Houston, Texas . . . . . . 93% 90% 95% 98% 94% 92%
2. Mall of Memphis
Memphis, Tennessee . . . . 82% 82% 82% 84% 76% 74%
3. Riverfront Office
Building
Cambridge,
Massachusetts. . . . . . . 95% 95% 99% 99% 99% 99%
4. Scotland Yard Apartments
-Phase I
Houston, Texas . . . . . . 93% 93% 93% 96% 94% 92%
5. El Dorado View Apartments
Houston, Texas . . . . . . 94% 95% 90% 92% 92% 95%
6. 767 Third Ave.
Office Building
New York, New York . . . . 92% 95% 95% 92% 96% 97%
7. National City Center
Office Building
Cleveland, Ohio. . . . . . 97% 97% 97% 97% 97% 97%
</TABLE>
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
Response:
(a) 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 to Exhibit 3-A 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.
3-B. Amended and Restated Agreement of Limited Partnership set
forth as Exhibit A to the Prospectus, which agreement is hereby
incorporated by reference to Exhibit 3-B 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.
4-A. Long-term debt modification relating to the 767 Third
Avenue Office Building in New York, New York is hereby incorporated by
reference to Exhibit 4-A to the Partnership's Report on Form 10-K (File No.
0-10494) for December 31, 1994 dated on March 27, 1995.
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 by
reference to Exhibit 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.
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 to Exhibit 4-E to the Partnership's Report on Form 10-K for
December 31, 1994 dated on March 27, 1995.
4-F. Loan repayment agreement related to the first through
fourth mortgage loan documents secured by the Riverfront Office Building in
Cambridge Massachusetts is incorporated by reference to Exhibit 4-F to the
Partnership's Report on Form 10-K (File No. 0-10494) for December 31, 1994
dated March 27, 1995.
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.
10-D. Amended and Restated Promissory Note, dated April 30, 1994
between Carlyle/National City Associates and New York Life Insurance
Company relating to the National City Center Office Building is hereby
incorporated by reference to the Partnership's report for June 30, 1994 on
Form 10-Q (File No. 0-10494) dated August 12, 1994.
10-E. Acquisition documents relating to the purchase by the
Partnership of the venture partner's interest in the Mall of Memphis in
Memphis, Tennessee incorporated by reference to the Partnership's report
for September 30, 1995 on Form 10-Q (File No. 0-10494) dated November 9,
1995.
27. Financial Data Schedule
(b) No Reports on Form 8-K has been filed for the quarter covered
by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: August 9, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: August 9, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,932,019
<SECURITIES> 0
<RECEIVABLES> 4,732,665
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,664,684
<PP&E> 202,070,226
<DEPRECIATION> 85,153,609
<TOTAL-ASSETS> 147,048,170
<CURRENT-LIABILITIES> 38,890,124
<BONDS> 124,264,886
<COMMON> 0
0
0
<OTHER-SE> 21,719,665
<TOTAL-LIABILITY-AND-EQUITY>147,048,170
<SALES> 16,720,469
<TOTAL-REVENUES> 16,823,813
<CGS> 0
<TOTAL-COSTS> 12,915,509
<OTHER-EXPENSES> 8,870,919
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,983,358
<INCOME-PRETAX> (12,945,973)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,257,765)
<DISCONTINUED> 200,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,057,765)
<EPS-PRIMARY> (49.23)
<EPS-DILUTED> (49.23)
</TABLE>
