SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1997 Commission file number 0-10494
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
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . 12
PART II OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 15
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 3,076,929 3,697,163
Rents and other receivables (net of allowance for
doubtful accounts of $1,263,396 and $1,495,915 at
March 31, 1997 and December 31, 1996, respectively) . . . . . . . 910,809 628,039
Escrow deposits and restricted funds. . . . . . . . . . . . . . . . 4,618,988 3,678,237
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 569,104 1,167,702
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . 9,175,830 9,171,141
------------ -----------
Mortgage notes receivable (net of reserve for
uncollectibility of $327,774). . . . . . . . . . . . . . . . . . . . 1,867,695 1,867,695
------------ -----------
Investment property, at cost:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,845,861 4,845,861
Buildings and improvements. . . . . . . . . . . . . . . . . . . . 60,801,939 60,783,454
------------ -----------
65,647,800 65,629,315
Less accumulated depreciation . . . . . . . . . . . . . . . . . . 23,507,170 23,002,534
------------ -----------
Total investment property, net
of accumulated depreciation . . . . . . . . . . . . . . . . 42,140,630 42,626,781
Properties held for sale or disposition . . . . . . . . . . . . . 66,290,849 66,102,154
------------ -----------
Total investment properties . . . . . . . . . . . . . . . . . 108,431,479 108,728,935
------------ -----------
Investment in unconsolidated venture, at equity . . . . . . . . . . . 794,800 628,276
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 4,030,992 3,802,233
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . 2,826,308 2,965,832
Venture partner's deficit in venture. . . . . . . . . . . . . . . . . 405,564 405,564
------------ -----------
$127,532,668 127,569,676
============ ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1997 1996
------------- -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 530,753 517,413
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 2,900,522 3,005,313
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . 533,721 612,197
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 2,015,530 1,883,331
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . 668,973 713,459
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 6,649,499 6,731,713
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 205,254 215,186
Long-term debt, less current portion. . . . . . . . . . . . . . . . . 130,469,192 130,058,240
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . 192,706 200,749
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 137,516,651 137,205,888
------------ -----------
Deferred gain on sale of investment property. . . . . . . . . . . . . 1,867,695 1,867,695
------------ -----------
Venture partner's subordinated equity in venture. . . . . . . . . . . 2,547,675 2,600,108
------------ -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . (12,907,601) (12,895,787)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (1,116,446) (1,116,446)
------------ -----------
(14,023,047) (14,011,233)
------------ -----------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . 121,935,233 121,935,233
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . (77,243,564) (76,960,040)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (45,067,975) (45,067,975)
------------ -----------
(376,306) (92,782)
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . . (14,399,353) (14,104,015)
------------ -----------
$127,532,668 127,569,676
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,152,820 8,252,436
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,293 46,304
----------- ----------
7,227,113 8,298,740
----------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . . . . . . . . . . . . 3,267,276 3,856,670
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504,636 1,516,164
Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . 3,580,306 4,397,737
Professional services . . . . . . . . . . . . . . . . . . . . . . . . . . 80,418 95,670
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . 227,044 262,171
General and administrative. . . . . . . . . . . . . . . . . . . . . . . . 81,728 84,625
Provision for unrealizable venture
partner deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 8,500,000
----------- ----------
7,741,408 18,713,037
----------- ----------
Operating earnings (loss) . . . . . . . . . . . . . . . . . . . . . (514,295) (10,414,297)
Partnership's share of operations of
unconsolidated venture . . . . . . . . . . . . . . . . . . . . . . . . . 166,524 55,189
Venture partner's share of venture's
operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,433 287,297
----------- ----------
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . $ (295,338) (10,071,811)
=========== ==========
Net earnings (loss) per limited
partnership interest. . . . . . . . . . . . . . . . . . . . . . . $ (2.06) (70.36)
=========== ==========
Cash distributions per limited
partnership interest. . . . . . . . . . . . . . . . . . . . . . . $ -- --
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (295,338) (10,071,811)
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504,636 1,516,164
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 227,044 262,171
Long-term debt - deferred accrued interest. . . . . . . . . . . . . . . 548,750 546,492
Provision for unrealizable venture partner deficit. . . . . . . . . . . -- 8,500,000
Partnership's share of operations of unconsolidated
venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (166,524) (55,189)
Venture partner's share of venture's operations . . . . . . . . . . . . (52,433) (287,297)
Changes in:
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . (282,770) 346,893
Escrow deposits and restricted funds. . . . . . . . . . . . . . . . . . (940,751) (1,432,612)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 598,598 517,712
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . 139,524 144,491
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,949 (126,650)
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (78,476) 3,794
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,199 (206,139)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . (44,486) (620,347)
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (9,932) (7,034)
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,043) (7,353)
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . . 275,947 (976,715)
------------ -----------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (600,397) (388,015)
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (171,326) (59,160)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . (771,723) (447,175)
------------ -----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
1997 1996
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (124,458) (114,405)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . (124,458) (114,405)
------------ -----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . (620,234) (1,538,295)
Cash and cash equivalents, beginning of year. . . . . . . . . . . 3,697,163 3,928,706
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 3,076,929 2,390,411
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 2,586,327 3,516,317
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1996, which
are included in the Partnership's 1996 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell or dispose of such property and active marketing activity has
commenced or is expected to commence in the near term or the Partnership
has concluded that it may dispose of the property by no longer funding
operating deficits or debt service requirements of the property thus
allowing the lender to realize upon its security. In accordance with SFAS
121, any properties identified as "held for sale or disposition" are no
longer depreciated. Under the prior accounting policy, provisions for
value impairment were recorded with respect to investment properties
whenever the estimated future cash flows from a property's operations and
projected sale were less than the property's carrying value and were
limited to the excess, if any, of the property's carrying value over the
outstanding balance of the property's non-recourse indebtedness.
The net results of operations for the three months ended March 31,
1997 and 1996 for consolidated properties classified as held for sale or
disposition or sold or disposed of during the past two years were
$(254,128) and $(9,733,784), respectively. In addition, the accompanying
consolidated financial statements include $166,524 and $55,189,
respectively, of the Partnership's share of total property operations of
$1,213,236 and $402,088 for its unconsolidated property for the three
months ended March 31, 1997 and 1996, respectively, which is held for sale
or disposition.
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 March 31, 1997 and for the three months ended March
31, 1997 and 1996 were as follows:
<PAGE>
Unpaid at
March 31,
1997 1996 1997
------- ------- -------------
Property management
and leasing fees . . . . . . $83,945 57,461 --
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. . . . 12,729 9,706 12,729
------- ------- ------
$96,674 67,167 12,729
======= ======= ======
The Corporate General Partner has deferred payment of partnership
management fees of $11,936. In addition, distributions to the General
Partners of the first quarter 1991 net cash flow of the Partnership
aggregating $7,161 have been deferred. The General Partners and their
affiliates have also deferred payment of the Partnership's share of
property management and leasing fees of approximately $171,000 for the
Partnership's unconsolidated venture, which is not included in the
consolidated financial statements. These amounts do not bear interest and
are expected to be paid in future periods.
RIVERFRONT OFFICE BUILDING
In 1996, Blue Cross Blue Shield, occupying approximately 88,000 square
feet, or approximately 26% of the leasable space of the building, had
notified the venture that it would be vacating the premises upon its lease
expiration, originally set for March 1998. As a result, the venture
entered into a termination agreement with Blue Cross Blue Shield whereby
the tenant would vacate certain spaces by certain dates before its lease
expiration date for a set payment. This agreement allows the venture to
maximize the cash flow of the property. Although the venture will incur
substantial lease-up costs as a result of the Blue Cross Blue Shield lease
expiration, the venture anticipates that it can fulfill future debt service
requirements of the restructured loan. Additionally, the Cambridge,
Massachusetts market, in which the property operates, has been improving.
However, if future operating shortfalls are greater than expected and
funding of deficits becomes necessary, the Partnership would make a
decision to commit additional funds to this investment property based on,
among other things, the likelihood of the return of such additional
investments plus a reasonable profit thereon. The ability of this
investment property to provide liquidity to the Partnership is dependent on
the property's value and the satisfaction of certain preference levels to
the unaffiliated venture partner pursuant to the joint venture agreement.
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 and utilized
for operating shortfalls, principal payments and costs associated with
additional leasing as approved by the lender prior to withdrawing escrow
deposits.
<PAGE>
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 March 31, 1997, the total amount of deferred and
accrued ground lease expense is approximately $736,000.
As a result of the adoption of SFAS 121, the Partnership recorded a
provision for unrealizable venture partner deficit of $8,500,000 as a
result of the uncertainty of the Partnership recovering the deficit capital
account from future operations and ultimate sale of the property. Such
provision was recorded as of January 1, 1996 based upon an analysis of the
property's discounted estimated future cash flows over the projected
holding period and was recorded to reduce the venture partner's deficit
account to its then estimated recoverable amount. In addition, no
additional venture losses have been allocated to the venture partner as of
January 1, 1996.
The property has been considered held for sale or disposition as of
December 31, 1996, and therefore, is no longer subject to continued
depreciation.
767 THIRD AVENUE OFFICE BUILDING
Occupancy at the property is 95% at March 31, 1997. During 1997 and
1998, expiration of tenant leases will be approximately 10% and 20%,
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 the reduced effective rental rates are expected to
continue through 1998.
The 767 Third Avenue Venture has a loan which matures in May 1998 and
bears interest at 10%. The venture is currently discussing obtaining
replacement financing to extend the term of the loan as well as reduce the
interest rate. In conjunction with such discussions, the Partnership has
had discussions with the venture partner regarding a sale of the
Partnership's interest to the venture partner and have reached an agreement
in principle for such sale. 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
any refinancing or sale will be finalized. Accordingly, the property has
been considered held for sale or disposition as of December 31, 1996, and
therefore, is no longer subject to continued depreciation.
MALL OF MEMPHIS
Occupancy at the property is 73% at March 31, 1997. The mall has
suffered from a number of store closings, many prior to lease expiration,
primarily as a result of tenants filing for bankruptcy and liquidation. In
addition, the property has been subjected to increased competition for
shoppers and tenants from strip centers and large discount stores.
Although certain tenants continue to perform well, overall tenant sales at
the property have gradually declined over the last several years. Due to
recent poor sales performances, many tenants are electing not to renew
their leases or are renewing at lower rates. Several other tenants whose
leases are not due to expire in the near term have approached the
Partnership seeking rent relief. The Partnership has granted rent relief
to certain tenants that could demonstrate that without a reduction in their
rent, they would no longer be able to remain in business at the mall. As a
result of these market and property conditions, the property's cash flow is
expected to decline.
<PAGE>
Any decision to commit additional funds to this investment property
for any purpose will be based on, among other things, the likelihood of the
return of such additional investment plus a reasonable profit thereon. In
addition, the Partnership is contemplating approaching the lender regarding
a loan modification. If substantial future operating deficits are incurred
and the lender is unwilling to grant an acceptable loan modification, the
Partnership would likely decide not to commit additional amounts to the
property. This would result in the Partnership no longer having an
ownership interest in the property and would result in a gain for Federal
income tax purposes with no corresponding distributable proceeds.
Pursuant to the terms of the note payable to the former venture
partner, the Partnership guaranteed a portion of the debt service payments
payable on June 1, 1997 in the amount of $300,000.
NATIONAL CITY CENTER
At the National City Center Office Building located in Cleveland,
Ohio, a tenant who occupied approximately 66,000 square feet (12.5% of the
building) whose lease expired in late 1996 informed the Partnership that it
intended to vacate a portion (approximately 45,000 square feet) upon
expiration of its existing lease. In the fourth quarter of 1996, the
venture and the tenant reached an agreement in which the tenant delayed
downsizing its space until February 1997 and extended the term of the
remaining space (approximately 21,000 square feet) until late 2000 at a
slightly higher rate. In addition, a tenant (who occupied approximately
12,500 square feet and was operating a restaurant on the building's plaza
level) terminated its lease effective August 31, 1996. Upon termination,
the tenant was required to pay the venture a lease termination fee of
$45,000. In January 1997, the venture collected the termination fee from
the tenant. The venture is currently exploring its options and is seeking
replacement tenants for the vacant space in the building. However, there
can be no assurance that any replacement tenants will be obtained.
In the first quarter of 1997, the Carlyle/National City venture
successfully appealed its 1995 and 1994 real estate taxes. The venture
received a refund of approximately $270,000 as a result of the appeal.
Additionally, the venture was informed that it had successfully appealed
its 1996 real estate taxes (payable in 1997). This will result in a
decrease in real estate taxes of approximately $165,000. However, a
portion of such refund will cause the issuance of rent credits to the
tenants as the tenants are generally responsible for their allocable
portion of the real estate taxes pursuant to their lease agreements.
The venture is currently planning to market the property for sale in
1997.
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1997 and for the three months ended March 31, 1997 and 1996.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning certain of the
Partnership's investments.
At March 31, 1997, the Partnership and its consolidated ventures had
cash and cash equivalents of approximately $3,077,000. Such funds are
available for working capital requirements including the Partnership's
portion of the anticipated net cash flow deficits at the Mall of Memphis
and 767 Third Avenue Office Building and its share of potential leasing
costs at the Mall of Memphis, 767 Third Avenue Office Building and National
City Center Office Building. 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, unanticipated
operating deficits.
Although the Partnership expects to distribute sale proceeds from the
disposition of certain of the Partnership's remaining assets, the Limited
Partners are expected to receive significantly less than their full
original investment from all sources. 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 March 31, 1997 as
compared to December 31, 1996 is primarily due to the funding of operating
deficits (including capital additions) at Mall of Memphis.
The increase in rents and other receivables and the decrease in
unearned rents at March 31, 1997 as compared to December 31, 1996 is
primarily due to the timing of receipts of rental income at certain of the
Partnership's investment properties.
The increase in escrow deposits and restricted funds at March 31, 1997
as compared to December 31, 1996 is primarily due to the fundings of the
real estate tax escrow for 767 Third Avenue Office Building and the escrow
accounts for Riverfront Office Building as the joint venture is required to
deposit excess cash flow after debt service payments to fund future
operating short-falls, principal payments and costs associated with
additional leasing approved by the lender.
The decrease in prepaid expenses at March 31, 1997 as compared to
December 31, 1996 is primarily due to the timing of real estate tax
payments for 767 Third Avenue Office Building.
The decreases in rental income, mortgage and other interest and
property operating expenses for the three months ended March 31, 1997 as
compared to the three months ended March 31, 1996 is primarily due to the
sales of Scotland Yard I & II Apartments and El Dorado View Apartments on
November 1, 1996 and July 23, 1996, respectively.
The increase in interest income for the three months ended March 31,
1997 as compared to the three months ended March 31, 1996 is primarily due
to increases in interest earned on the Mall of Memphis environmental escrow
and the escrow deposits and restricted funds at Riverfront Office Building.
<PAGE>
The decrease in depreciation expense for the three months ended March
31, 1997 as compared to the three months ended March 31, 1996 is primarily
due to the 767 Third Avenue Office Building and Riverfront Office Building
being classified as of December 31, 1996 as held for sale or disposition
and therefore were not subject to continued depreciation. In addition, the
sales of El Dorado View (sold July 23, 1996) and Scotland Yard I and II
(sold November 1, 1996) apartments contributed to the decrease.
The $8,500,000 provision for unrealized venture partner deficit at
March 31, 1996 is the result of the uncertainty of the Partnership
recovering the deficit capital account from further operations and ultimate
sale of the Riverfront Office Building.
The increase in Partnership's share of operations of unconsolidated
venture for the three months ended March 31, 1997 as compared to the three
months ended March 31, 1996 is primarily due to a decrease in depreciation
as a result of the classification of the National City Center Office
Building as an asset held for sale as of December 31, 1996 which therefore
is not subject to continued depreciation.
The decrease in venture partner's share of venture operations for the
three months ended March 31, 1997 as compared to the three months ended
March 31, 1996 is due to the increase in the results of operations of the
767 Third Avenue Office Building primarily as a result of the property
being classified as held for sale, and therefore is not subject to
depreciation, as discussed above.
<PAGE>
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties owned during 1997.
<CAPTION>
1996 1995
------------------------------------- ------------------------------
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. Mall of Memphis
Memphis, Tennessee . . . . 78% 74% 76% 75% 73%
2. Riverfront Office
Building
Cambridge,
Massachusetts. . . . . . . 99% 99% 80% 85% 90%
3. 767 Third Ave.
Office Building
New York, New York . . . . 96% 97% 95% 96% 95%
4. National City Center
Office Building
Cleveland, Ohio. . . . . . 97% 97% 95% 95% 89%
</TABLE>
<PAGE>
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 for December
31, 1992 on Form 10-K (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 for
December 31, 1992 on Form 10-K (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 for December 31, 1994
on Form 10-K (File No. 0-10494) 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 for December 31, 1992
on Form 10-K (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 for December 31, 1994
on Form 10-K (File No. 0-10494) dated 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 for December 31, 1996 on Form 10-K (File No. 0-10494)
dated March 21, 1997.
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.
<PAGE>
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 on Form 10-Q (File
No. 0-10494) for June 30, 1994 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 on
Form 10-Q (File No. 0-10494) for September 30, 1995 dated November 9, 1995.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: May 9, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: May 9, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,076,929
<SECURITIES> 0
<RECEIVABLES> 6,098,901
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,175,830
<PP&E> 65,647,800
<DEPRECIATION> 23,507,170
<TOTAL-ASSETS> 127,532,668
<CURRENT-LIABILITIES> 6,649,499
<BONDS> 130,469,192
<COMMON> 0
0
0
<OTHER-SE> (14,399,353)
<TOTAL-LIABILITY-AND-EQUITY>127,532,668
<SALES> 7,152,820
<TOTAL-REVENUES> 7,227,113
<CGS> 0
<TOTAL-COSTS> 4,311,986
<OTHER-EXPENSES> 162,146
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,267,276
<INCOME-PRETAX> (514,295)
<INCOME-TAX> 0
<INCOME-CONTINUING> (295,338)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (295,338)
<EPS-PRIMARY> (2.06)
<EPS-DILUTED> (2.06)
</TABLE>
