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, 1999 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 . . . . . . . . . . . . . . . 13
PART II OTHER INFORMATION
Item 3. Defaults upon Senior Securities . . . . . . . . . . 14
Item 5. Other Information . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 16
<PAGE>
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, 1999 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
------
MARCH 31, DECEMBER 31,
1999 1998
------------- -----------
Current assets:
Cash and cash equivalents . . . . . . $ 3,404,086 3,240,125
Rents and other receivables
(net of allowance for doubtful
accounts of $470,683 and
$490,823 at March 31, 1999
and December 31, 1998,
respectively) . . . . . . . . . . . 450,356 243,207
Escrow deposits and restricted
funds . . . . . . . . . . . . . . . 6,388,716 5,712,511
Prepaid expenses. . . . . . . . . . . 36,884 154,240
------------ -----------
Total current assets. . . . . 10,280,042 9,350,083
------------ -----------
Properties held for sale or
disposition . . . . . . . . . . . 53,539,495 53,497,132
------------ -----------
Total investment properties . . 53,539,495 53,497,132
------------ -----------
Deferred expenses . . . . . . . . . . . 1,725,371 1,833,006
Accrued rents receivable. . . . . . . . 96,976 136,191
Venture partner's deficit in venture. . 1,314,733 1,266,193
------------ -----------
$ 66,956,617 66,082,605
============ ===========
<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,
1999 1998
------------- -----------
Current liabilities:
Current portion of long-term debt . . $ 39,676,002 39,676,002
Accounts payable. . . . . . . . . . . 1,909,597 1,785,119
Unearned rents. . . . . . . . . . . . 411,487 128,484
Accrued interest. . . . . . . . . . . 3,665,811 3,572,226
Accrued real estate taxes . . . . . . 598,780 488,681
------------ -----------
Total current liabilities . . . 46,261,677 45,650,512
Tenant security deposits. . . . . . . . 113,215 120,990
Long-term debt, less current portion. . 54,392,041 53,830,304
Deferred revenue. . . . . . . . . . . . 121,437 131,061
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . 100,888,370 99,732,867
------------ -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . (13,444,609) (13,433,349)
Cumulative cash distributions . . . (1,123,608) (1,123,608)
------------ -----------
(14,567,217) (14,555,957)
------------ -----------
Limited partners:
Capital contributions,
net of offering costs . . . . . . 121,935,233 121,935,233
Cumulative net earnings (losses). . (81,802,694) (81,532,463)
Cumulative cash distributions . . . (59,497,075) (59,497,075)
------------ -----------
(19,364,536) (19,094,305)
------------ -----------
Total partners' capital
accounts (deficits) . . . . . (33,931,753) (33,650,262)
------------ -----------
$ 66,956,617 66,082,605
============ ===========
See accompanying notes to consolidated financial statements.
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
---------- ----------
Income:
Rental income . . . . . . . . . . . . . $4,435,437 4,661,787
Interest income . . . . . . . . . . . . 84,347 215,321
---------- ----------
4,519,784 4,877,108
---------- ----------
Expenses:
Mortgage and other interest . . . . . . 2,313,352 2,286,879
Property operating expenses . . . . . . 2,209,985 2,348,838
Professional services . . . . . . . . . 135,931 144,386
Amortization of deferred expenses . . . 107,635 106,963
General and administrative. . . . . . . 82,912 115,487
---------- ----------
4,849,815 5,002,553
---------- ----------
(330,031) (125,445)
Partnership's share of operations
of unconsolidated venture . . . . . . . -- 20,894
Venture partner's share of ventures'
operations. . . . . . . . . . . . . . . 48,540 62,504
---------- ----------
Net earnings (loss) . . . . . . . $ (281,491) (42,047)
========== ==========
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . $ (1.97) (.29)
========== ==========
Cash distributions per
limited partnership
interest. . . . . . . . . . . . $ -- 105.00
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
---------- ----------
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . $ (281,491) (42,047)
Items not requiring (providing) cash
or cash equivalents:
Amortization of deferred expenses . . 107,635 106,963
Long-term debt - deferred accrued
interest. . . . . . . . . . . . . . 561,737 510,176
Partnership's share of operations
of unconsolidated venture . . . . . -- (20,894)
Venture partner's share of
venture's operations. . . . . . . . (48,540) (62,504)
Changes in:
Rents and other receivables . . . . . (207,149) 279,731
Escrow deposits and restricted
funds . . . . . . . . . . . . . . . (676,205) (720,227)
Prepaid expenses. . . . . . . . . . . 117,356 9,734
Accrued rents receivable. . . . . . . 39,215 20,113
Accounts payable. . . . . . . . . . . 124,478 (218,769)
Unearned rents. . . . . . . . . . . . 283,003 70,917
Accrued interest. . . . . . . . . . . 93,585 957,543
Accrued real estate taxes . . . . . . 110,099 (41,800)
Tenant security deposits. . . . . . . (7,775) (23,733)
Deferred revenue. . . . . . . . . . . (9,624) (8,798)
------------ -----------
Net cash provided by (used in)
operating activities. . . . . . 206,324 816,405
------------ -----------
Cash flows from investing activities:
Additions to investment properties. . . (42,363) --
Payment of deferred expenses. . . . . . -- (86,003)
Proceeds from sale of investment
property. . . . . . . . . . . . . . . -- 3,980,395
------------ -----------
Net cash provided by (used in)
investing activities. . . . . . (42,363) 3,894,392
------------ -----------
Cash flows from financing activities:
Distributions to limited partners . . . -- (14,429,100)
Distributions to general partners . . . -- (7,162)
------------ -----------
Net cash provided by (used in)
financing activities. . . . . . -- (14,436,262)
------------ -----------
Net increase (decrease) in cash
and cash equivalents. . . . . . 163,961 (9,725,465)
Cash and cash equivalents,
beginning of year . . . . . . . 3,240,125 13,840,535
------------ -----------
Cash and cash equivalents,
end of period . . . . . . . . . $ 3,404,086 4,115,070
============ ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1999 1998
---------- ----------
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other
interest. . . . . . . . . . . . . . . $ 1,658,030 819,160
============ ===========
Non-cash investing and financing
activities. . . . . . . . . . . . . . $ -- --
============ ===========
See accompanying notes to consolidated financial statements.
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1998, which
are included in the Partnership's 1998 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 and disclosure of
contingent 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. As of March 31, 1999, the Partnership and its
consolidated ventures have or have previously committed to plans to sell or
dispose of all their remaining investment properties. Accordingly, all
consolidated properties have been classified as held for sale or
disposition in the accompanying consolidated financial statements as of the
respective date of such plan's adoption. The results of operations, net of
venture partner's share, for the three months ended March 31, 1999 and 1998
for these properties and for properties sold or disposed of in the past two
years were ($16,197) and $330,206, respectively. In addition, the
accompanying consolidated financial statements include $20,894 of the
Partnership's share of total property operations of $152,233 for its
unconsolidated property for the three months ended March 31, 1998 which was
sold in December 1997.
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, 1999 and for the three months ended
March 31, 1999 and 1998 were as follows:
<PAGE>
Unpaid at
March 31,
1999 1998 1999
-------- ------- -------------
Property management
and leasing fees . . . . . . . $ 41,256 64,052 --
Insurance commissions . . . . . -- 1,427 --
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. . . . . 18,011 16,486 --
-------- ------- ------
$ 59,267 81,965 --
======== ======= ======
The Corporate General Partner had 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 $7,162 had been deferred. The General Partners and their
affiliates had also deferred payment of the Partnership's share of property
management and leasing fees of approximately $171,000 for the Partnership's
unconsolidated venture. These amounts, which did not bear interest, were
paid during the quarter ended March 31, 1998.
RIVERFRONT OFFICE BUILDING
The Cambridge, Massachusetts market, in which the property operates,
has been improving. As a result, the venture has recently been successful
in attracting new tenants to the property such that as of March 31, 1999,
the property was 100% occupied. However, if future operating shortfalls
are greater than expected and funding of deficits becomes necessary, the
Partnership would make a decision whether or not to commit additional funds
to this investment property based on, among other things, the likelihood of
the return of such additional investment plus a reasonable profit thereon.
The amount of liquidity this investment property can provide 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 and/or the successful consummation of an
agreement in principle, as discussed below, to dispose of the Partnership's
interest in the property.
The restructured loan secured by the building and improvements
provides for participating interest whereby the lender is entitled to earn
a minimum internal rate of return ranging from 9% to 10.5% per annum
calculated over the restructured loan term and a Residual Amount (as
defined) of approximately 50% of the proceeds from a sale of the property
in excess of such minimum internal rate of return.
The restructured loan 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.
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. However, if the property produces certain
<PAGE>
levels of gross receipts (as defined by the restructured loan) for the
years 1998 through 2003, the restructured loan allows for partial payments
of ground rent to be reinstated. Ground rent payments did not resume in
1998 and, based on current projections, the venture does not expect ground
rent payments to resume in 1999. The ground lessor is a general partner of
the venture partner. At March 31, 1999, the total amount of deferred and
accrued ground lease expense is approximately $1,065,000.
The joint venture has been marketing the property for sale and, in
this regard, the Partnership and the unaffiliated venture partner have
reached an agreement in principle to contribute their respective interests
in the property (including their interests as lessees under the ground
lease) to a newly formed joint venture, which includes the underlying
lender. If the agreement is consummated, the Partnership will receive
$9,300,000 and the venture partner will receive $454,545 as well as
interests in the new joint venture in exchange for their respective
interests in the property. In addition, the existing joint venture will no
longer be liable for the underlying mortgage debt (approximately
$49,392,000 at March 31, 1999). There can be no assurances that the
Partnership's interest in the property will be transferred under the terms
of the agreement in principle or under any other terms. However, if the
Partnership is successful in transferring its interest in the property
under the terms of the agreement in principle, the Partnership would no
longer have an ownership interest in the property and would recognize a
significant gain for financial reporting and Federal income tax purposes
with approximately $9,300,000 (less transaction costs) in distributable
proceeds in 1999.
MALL OF MEMPHIS
As discussed more fully below, in May 1999, the Partnership
transferred title to the land, building and improvements, and other assets
and liabilities related to the property in consideration of a discharge of
the mortgage loan.
Occupancy at the property was 67% at March 31, 1999. The mall had
experienced a number of store closings, many prior to lease expiration,
primarily as a result of tenants filing for bankruptcy and liquidating. In
addition, the property had been subjected to increased competition for
shoppers and tenants from strip centers and large discount stores in its
market area. Although certain tenants continued to perform well, overall
tenant sales at the property continued to decline. Due to poor sales
performances, many tenants were electing not to renew their leases or were
renewing at lower rates. Several other tenants whose leases were not due
to expire in the near term had approached the Partnership seeking rent
relief. The Partnership had 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 had been
decreasing and was expected to decline further in the future.
The Partnership initiated discussions with the underlying lender
regarding a loan modification and, in connection with these discussions,
advanced approximately $604,000 to cover the property's required debt
service payments through December 31, 1997. However, the lender was
unwilling to grant an acceptable loan modification to cover future
operating deficits. The Partnership therefore decided not to commit any
additional amounts to the property and, effective January 1, 1998,
suspended the payment of required debt service on its first, second and
third mortgage notes secured by the property. At March 31, 1999, these
notes had an aggregate principal balance of $39,676,002 and accrued but
unpaid interest of approximately $2,738,000. As a result, the Partnership
was in default and these mortgage notes were classified as current in its
consolidated financial statements. The lender agreed to allow the
Partnership to recoup its 1997 advance from 1998 operating cash flow.
During 1998, the Partnership recouped its 1997 advance and began remitting
<PAGE>
cash flow payments to the lender. Such cash flow payments were net of
repayment of the Partnership's 1997 advance and estimated future property
operating deficits related to real estate tax obligations. Accordingly, as
of June 30, 1998, the Partnership classified all property cash as
restricted. The Partnership entered into negotiations with the lender and
an unaffiliated third party regarding the sale of the property to the
unaffiliated third party. In May 1999, the Partnership transferred title
to the land, building and improvements, and other assets and liabilities
related to the property in consideration of a discharge of the mortgage
loan, resulting in the Partnership no longer having an ownership interest
in the property. The Partnership has no future liability for any
representations, warranties or covenants to the purchaser as a result of
the disposal of this property. The Partnership was released from its
environmental indemnity agreement as a result of this transaction, and was,
therefore, able to withdraw approximately $1,000,000 from an escrow account
primarily established to secure a portion of its potential obligation under
the environmental indemnity. As a result, the Partnership will recognize a
gain for financial reporting and Federal income tax purposes with a
substantially smaller amount of corresponding distributable proceeds in
1999.
Pursuant to the terms of a note payable by the Partnership to the
former venture partner, the Partnership guaranteed a portion of the debt
service payment payable on June 1, 1997 in the amount of $300,000 on a
recourse basis. The Partnership made the June 1, 1997 guaranteed debt
service payment in December 1998. The note payable was secured only by the
venture partner's former partnership interest in the joint venture and was
non-recourse to the Partnership. As a result of the Partnership
transferring title to the property owned by the joint venture in May 1999,
as discussed above, the Partnership is not obligated to pay the outstanding
principal and interest (approximately $5,926,000 at March 31, 1999).
YERBA BUENA OFFICE BUILDING
Due to the default of the joint venture that owned the Yerba Buena
Office Building (a partnership comprised of the Partnership, two other
partnerships sponsored by the Partnership's Corporate General Partner, and
four unaffiliated limited partners) in the payment of required debt
service, the former lender to such joint venture realized on its security
by taking title to the property in June 1992. In return for a smooth
transition of title and management of the property (relative to which the
existing property manager that was affiliated with the Partnership's
Corporate General Partner agreed to continue to manage the property), the
joint venture was able to negotiate, among other things, a right of first
opportunity to purchase the property during the time frame from June 1995
through May 1998 should the lender wish to market the property for sale.
The lender sold the property in 1996. However, the joint venture was not
given an opportunity to purchase the property as required by the previous
settlement with the lender. As previously reported, such joint venture
filed a lawsuit against the lender for breach of its obligations. In June
1998, the court granted the lender's motion for summary judgement and
dismissed the lawsuit. In dismissing the action, the court apparently
relied upon a release given by the management company relative to the
settlement of its claims against the lender and the termination of its
management contract for the property. Such settlement was the result of
claims made by the management company in a separate lawsuit, due to the
non-payment of management fees. Though the intent of the management
company in providing the release was confined to matters relative to
management only, the court apparently ruled that it covered the earlier
transaction with the joint venture as well. In addition, the former lender
filed a claim and subsequently received an order against the joint venture
for legal fees expended in the litigation (the Partnership's potential
share of such amount is approximately $300,000). The joint venture has
appealed the dismissal of the lawsuit. The joint venture and the lender
agreed to cap the fee award and the venture then posted a bond on that
amount. If the joint venture's appeal of the dismissal is successful, the
joint venture will have no obligation for the fees. In December 1998, one
of the affiliated venture partners, to resolve its claims and liabilities,
paid an agreed upon amount to the joint venture in respect of its estimated
<PAGE>
liabilities related to the litigation and withdrew from the venture. There
can be no assurance that the litigation will ultimately be successful, or
that the Partnership will ultimately realize any amounts (or avoid any
payments) with respect thereto. If the joint venture is unable to
negotiate a settlement in such lawsuit, the Partnership may elect to
contribute its share of the outstanding judgment for the lender's legal
fees and then withdraw from the joint venture. Such election would be
based upon, among other things, a determination by the Partnership that the
expected gain from litigation, taking into account the prospects for
success, would likely be insufficient to offset the costs of operating the
Partnership through a lengthy appeal process.
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,
1999 and for the three months ended March 31, 1999 and 1998.
<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.
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.
In January 1998, an unaffiliated third party made an unsolicited
tender offer to some of the Holders of Interests. This offer sought to
purchase up to 4.5% of the Interests in the Partnership at $110 per
Interest. The Special Committee recommended against acceptance of the
offer on the basis that, among other things, the offer price was
inadequate. This offer expired in February 1998.
The Partnership is also aware that, in November 1998 and March 1999,
unaffiliated third parties made unsolicited tender offers to some of the
Holders of Interests. These offers sought to purchase between 3.0% and
4.7% of the Interests in the Partnership at between $20 and $35 per
Interest. The Special Committee recommended against acceptance of these
offers on the basis that, among other things, the offer prices were
inadequate. These offers have expired.
As of the date of this report, the Partnership is aware that 4.39% of
the Interests have been purchased by unaffiliated third parties either
pursuant to such tender offers or through negotiated purchases. It is
possible that other offers for Interests may be made by unaffiliated third
parties in the future, although 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.
At March 31, 1999, the Partnership had cash and cash equivalents of
approximately $3,404,000. Such funds are available for working capital
requirements. Based upon current market conditions, the Partnership had
decided not to commit any additional amounts to the Mall of Memphis which
had been incurring net operating deficits. The Partnership entered into
negotiations with the lender and an unaffiliated third party regarding the
sale of the property to the unaffiliated third party. In May 1999, the
Partnership transferred title to the land, building and improvements, and
other assets and liabilities related to the property in consideration of a
discharge of the mortgage loan, which resulted in the Partnership no longer
having an ownership interest in such property. The Partnership has no
future liability for any representations, warranties or covenants to the
purchaser as a result of the disposal of this property. The Partnership
was released from its environmental indemnity agreement as a result of this
transaction, and was, therefore, able to withdraw approximately $1,000,000
from an escrow account primarily established to secure a portion of its
potential obligation under the environmental indemnity. Consequently, the
Partnership will recognize a gain for financial reporting and Federal
income tax purposes, with a substantially smaller amount of corresponding
distributable proceeds, in 1999.
Although the Partnership is hopeful it will be able to distribute sale
proceeds from the disposition of the Riverfront Office Building, 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 property as quickly as practicable. Other than some
modest reserves for certain typical representations and warranties expected
to be made in conjunction with the disposition of the Partnership's
interest in the Riverfront Office Building, the affairs of the Partnership
<PAGE>
are expected to be wound up no later than December 31, 1999 (sooner if the
remaining property is sold or disposed of in the nearer term), barring
unforeseen economic developments.
RESULTS OF OPERATIONS
The increase in rents and other receivables at March 31, 1999 as
compared to December 31, 1998 is primarily due to the timing of receipts of
rental income at Mall of Memphis.
The increase in escrow deposits and restricted funds at March 31, 1999
as compared to December 31, 1998 is primarily due to (i) the Partnership's
classification beginning in 1998 of all property cash at the Mall of
Memphis as restricted and (ii) the timing of payment of real estate taxes
at the Riverfront Office Building and deposits of 1999 net cash flow
generated by the Riverfront Office Building into escrow as required by the
underlying lender, partially offset by the Partnership's payment to the
underlying lender for the Mall of Memphis of approximately $1,036,000
representing cash flow generated by the property during the fourth quarter
of 1998.
The decrease in prepaid expenses at March 31, 1999 as compared to
December 31, 1998 is primarily due to the timing of payment of property
insurance premiums at the Mall of Memphis.
The increase in unearned rents at March 31, 1999 as compared to
December 31, 1998 is primarily due to the timing of receipts of rental
income at the Riverfront Office Building.
The increase in accrued real estate taxes at March 31, 1999 as
compared to December 31, 1999 is primarily due to the timing of payment of
real estate taxes at the Mall of Memphis.
The decrease in interest income for the three months ended March 31,
1999 as compared to the three months ended March 31, 1998 is primarily due
to the temporary investment in 1998 of the approximately $11,000,000 in
proceeds from the 1997 sale of the Partnership's interest in the 767 Third
Avenue Office Building until the February 28, 1998 distribution of such
proceeds to the Holders of Interests.
The Partnership's share of operations of unconsolidated venture for
the three months ended March 31, 1998 is primarily the Partnership's share
of interest income earned by the venture on the sale proceeds prior to the
venture's distribution to the Partnership of its share of such proceeds in
February 1998.
The decrease in venture partner's share of ventures' operations for
the three months ended March 31, 1999 as compared to the three months ended
March 31, 1998 is primarily due to a decrease in operating losses at the
Riverfront Office Building in 1999 due to an increase in property occupancy
and rental income.
YEAR 2000
The Corporate General Partner has determined that it does not expect
that the consequences of the Partnership's Year 2000 issues would have a
material effect on the Partnership's business, results of operations or
financial condition.
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 defaults under the mortgage notes
secured by the Mall of Memphis investment property, which discussions are
hereby incorporated herein by reference.
<PAGE>
<TABLE>
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties owned during 1999.
<CAPTION>
1998 1999
------------------------------------- ------------------------------
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 (A) . . . 86% 86% 79% 75% 67%
2. Riverfront Office Building
Cambridge, Massachusetts . . 96% 100% 97% 98% 100%
<FN>
(A) Occupancy levels include temporary tenants.
</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.
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 12, 1999
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 12, 1999
<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, 1999 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-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,404,086
<SECURITIES> 0
<RECEIVABLES> 450,356
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,280,042
<PP&E> 53,539,495
<DEPRECIATION> 0
<TOTAL-ASSETS> 66,956,617
<CURRENT-LIABILITIES> 46,261,677
<BONDS> 54,392,041
<COMMON> 0
0
0
<OTHER-SE> (33,931,753)
<TOTAL-LIABILITY-AND-EQUITY> 66,956,617
<SALES> 4,435,437
<TOTAL-REVENUES> 4,519,784
<CGS> 0
<TOTAL-COSTS> 2,317,620
<OTHER-EXPENSES> 218,843
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,313,352
<INCOME-PRETAX> (330,031)
<INCOME-TAX> 0
<INCOME-CONTINUING> (281,491)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (281,491)
<EPS-PRIMARY> (1.97)
<EPS-DILUTED> (1.97)
</TABLE>
