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 September 30, 1994 Commission file number 0-12433
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(Exact name of registrant as specified in its charter)
Illinois 36-3149589
(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
reportsrequired 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 . . . . . . . . . . . 18
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . 23
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 24
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,009,450 2,789,530
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . 5,632,292 6,865,532
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714,351 1,085,701
Loan commitment fee (note 3(d)). . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,163,524
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182,619 154,073
Escrow deposits (notes 3 and 6). . . . . . . . . . . . . . . . . . . . . . . . . . . 3,087,541 605,734
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,626,253 12,664,094
------------ ------------
Investment properties, at cost:
Land and leasehold interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,021,695 18,021,695
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239,277,970 235,978,139
------------ ------------
257,299,665 253,999,834
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . 89,161,184 82,546,206
------------ ------------
Total investment properties, net of
accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 168,138,481 171,453,628
------------ ------------
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,289,943 5,527,843
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,139,227 5,114,243
Venture partners' deficits in ventures . . . . . . . . . . . . . . . . . . . . . . . . 16,834,476 14,876,348
------------ ------------
$208,028,380 209,636,156
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (notes 3 and 6). . . . . . . . . . . . . . . . . . $ 1,916,610 6,489,518
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,393,497 2,326,663
Amounts due to affiliates (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . 3,557,507 3,596,654
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,936,560 3,364,920
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,988,591 2,764,835
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,792,765 18,542,590
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,915 85,391
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,888,750 2,062,011
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . 201,071,567 194,712,434
------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218,901,997 215,402,426
Venture partners' equity in ventures . . . . . . . . . . . . . . . . . . . . . . . . . 262,840 445,474
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,555,140) (8,373,178)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (564,211) (564,211)
------------ ------------
(9,118,351) (8,936,389)
------------ ------------
Limited partners (160,005 interests):
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . 141,003,683 141,003,683
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (122,973,973) (118,231,222)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (20,047,816) (20,047,816)
------------ ------------
2,018,106 2,724,645
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . . . . . . . (11,136,457) (6,211,744)
------------ ------------
Commitments and contingencies (notes 2, 3 and 4)
$208,028,380 209,636,156
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . $10,810,127 11,289,374 32,809,995 36,995,946
Interest income. . . . . . . . . . . . . . . . . . 117,508 63,108 245,360 215,829
----------- ----------- ---------- ----------
10,927,635 11,352,482 33,055,355 37,211,775
----------- ----------- ---------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . 5,203,433 7,043,816 17,058,539 19,114,707
Depreciation . . . . . . . . . . . . . . . . . . . 2,229,812 2,212,120 6,614,978 6,887,148
Property operating expenses. . . . . . . . . . . . 4,857,781 5,489,022 14,485,666 16,067,518
Professional services. . . . . . . . . . . . . . . 9,008 82,485 246,658 281,006
Amortization of deferred expenses. . . . . . . . . 385,423 319,946 1,023,579 956,360
General and administrative . . . . . . . . . . . . 83,005 82,839 137,032 242,352
----------- ----------- ---------- ----------
12,768,462 15,230,228 39,566,452 43,549,091
----------- ----------- ---------- ----------
Operating loss. . . . . . . . . . . . . . . . (1,840,827) (3,877,746) (6,511,097) (6,337,316)
Venture partners' share of
ventures' operations . . . . . . . . . . . . . . . 1,313,856 746,663 2,087,282 1,797,332
----------- ----------- ---------- ----------
Net operating loss. . . . . . . . . . . . . . (526,971) (3,131,083) (4,423,815) (4,539,984)
Gain on disposition of invest-
ment property (note 3(b)). . . . . . . . . . . . . -- 2,570,946 -- 4,091,683
----------- ----------- ---------- ----------
Net loss before
extraordinary item. . . . . . . . . . . . . (526,971) (560,137) (4,423,815) (448,301)
Extraordinary item, net of
venture partner's share
of $79,689. . . . . . . . . . . . . . . . . -- -- (500,898) --
----------- ----------- ---------- ----------
Net loss. . . . . . . . . . . . . . . . . . . $ (526,971) (560,137) (4,924,713) (448,301)
=========== =========== ========== ==========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
1994 1993 1994 1993
------------ ---------- ------------ ------------
Net loss per
limited partnership
interest:
Net operating loss . . . . . . . . . . . . $ (3.16) (18.79) (26.54) (27.24)
Gain on disposition of
investment property. . . . . . . . . . . -- 15.91 -- 25.32
Extraordinary item, net . . . . . . . . . -- -- (3.10) --
----------- ----------- ---------- ----------
$ (3.16) (2.88) (29.64) (1.92)
=========== =========== ========== ==========
Cash distributions per
limited partnership
interest. . . . . . . . . . . . . . . . . . $ -- -- -- --
=========== =========== ========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(4,924,713) (448,301)
Items not requiring (providing) cash:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,614,978 6,887,148
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . 1,023,579 956,360
Amortization of discount on long-term debt . . . . . . . . . . . . . . . . . . . . 782,222 1,122,193
Venture partners' share of ventures' operations. . . . . . . . . . . . . . . . . . (2,087,282) (1,797,332)
Gain on disposition of investment property
(notes 3(b) and 4(b)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (4,091,683)
Extraordinary items, net of venture partner's
share (note 3(d)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,898 --
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,350 151,391
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,546) 21,524
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,481,807) 629,195
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,984) (321,815)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,834 (233,630)
Amounts due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39,147) (90,384)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,916,363 1,391,536
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223,756 (367,058)
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,524 (72,277)
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (173,261) 102,258
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . 1,803,764 3,839,125
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of
short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,233,240 (587,362)
Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . . . . (1,611,649) (2,642,289)
Cash proceeds from sales of investment properties,
net of selling expenses (note 4(b)). . . . . . . . . . . . . . . . . . . . . . . . -- 1,892,932
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . (225,146) (299,038)
------------ -----------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . (603,555) (1,635,757)
------------ -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
1994 1993
------------ -----------
Cash flows from financing activities:
Refunded portion of loan commitment fee. . . . . . . . . . . . . . . . . . . . . . . 238,215 --
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (1,244,713) (1,293,414)
Venture partners' contributions to venture . . . . . . . . . . . . . . . . . . . . . 159,709 --
Distributions to venture partners. . . . . . . . . . . . . . . . . . . . . . . . . . (133,500) (285,519)
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . . (980,289) (1,578,933)
------------ -----------
Net increase in cash and cash
equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 219,920 624,435
============ ===========
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . $ 14,704,677 15,370,055
============ ===========
Non-cash investing and financing activities:
Refund of loan commitment fee (note 3(d)):
Refundable loan commitment fee . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,163,524 --
Pre-payment penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (580,586) --
Payment of interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . (344,723) --
------------ -----------
Refunded portion of loan commitment fee. . . . . . . . . . . . . . . . . . . $ 238,215 --
============ ===========
Balance due on accelerated wrap-around
mortgage note payable canceled . . . . . . . . . . . . . . . . . . . . . . . . $ -- 12,239,900
Reduction of land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (2,170,000)
Reduction of buildings and improvements. . . . . . . . . . . . . . . . . . . . . -- (14,045,964)
Reduction of accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . -- 5,454,885
Reduction of accrued interest payable. . . . . . . . . . . . . . . . . . . . . . -- 41,916
------------ -----------
Non-cash gain recognized on disposition
of investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 1,520,737
============ ===========
Loan proceeds utilized for additions to invest-
ment property and payment of deferred expenses . . . . . . . . . . . . . . . . . $ 2,248,715 --
============ ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
1994 1993
------------ -----------
Sale of investment properties (note 4(b)):
Total sales proceeds, net of
selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 13,872,932
Principal balance due on loans
payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (11,980,000)
------------ -----------
Cash sales proceeds from sale of
investment property, net of
selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 1,892,932
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
Readers of this quarterly report should refer to the
Partnership'saudited financial statements for the year ended December 31,
1993 which are included in the Partnership's 1993 Annual Report, as
certainfootnote disclosures which would substantially duplicate those
contained in such audited financial statements have been omitted from this
report.
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include
theaccountsof the Partnership and its ventures Carlyle Seattle
Associates("Carlyle Seattle"), Carlyle Seattle's venture, Wright-Carlyle
Seattle ("First Interstate"), Carrara Place Limited ("Carrara"), Carlyle
Carrollton Associates ("Carlyle Carrollton"), Carlyle Carrollton's
venture,Country Square, Ltd. ("Country Square") (note 3(b)), and
Carlyle/National City Associates ("Carlyle/National City"). The effect of
all transactions between the Partnership and the ventures has been
eliminated.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for federal income tax reporting purposes.
Theaccompanying consolidated financial statements have been prepared from
such records after making appropriate adjustments to present the
Partnership's accounts in accordance with generally accepted accounting
principles ("GAAP") and to consolidate the accounts of the ventures as
described above. Such adjustments are not recorded on the records of
thePartnership. The net effect of these items is summarized as follows
forthe nine months ended September 30:
1994 1993
----------------------- -----------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net earnings
(loss). . . . . . $(4,924,713) (9,031,198) (448,301) 5,684,429
Net earnings
(loss) per
limited
partnership
interest. . . . . $ (29.64) (54.19) (1.92) 36.27
=========== ========== ========= =========
The net earnings (loss) per limited partnership interest
("Interest")is based upon the limited partnership interests outstanding at
the end of each period (160,005). Deficit capital balances will result,
throughout the duration of the Partnership, in net gain for financial
reporting and income tax purposes.
Certain amounts in the 1993 financial statements have
beenreclassifiedto conform with the 1994 presentation.
Statement of Financial Accounting Standards No. 95 requires
thePartnership to present a statement which classifies cash receipts
andpayments according to whether they stem from operating, investing
orfinancing activities. The required information has been segregated
andaccumulated according to the classifications specified in the pronounce-
ment. Partnership distributions from unconsolidated ventures are
considered cash flow from operating activities only to the extent of the
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Partnership's cumulative share of net earnings. In addition,
thePartnership records amounts held in U.S. Government obligations
andcertificates of deposit at cost, which approximates market. Therefore,
for the purposes of these statements, the Partnership's policy is to
consider all such amounts held with original maturities of three months or
less (none held at September 30, 1994 and December 31, 1993) as cash
equivalents with any remaining amounts (generally with original maturities
of one year or less) reflected as short-term investments being held to
maturity.
(2) VENTURE AGREEMENTS
(a) General
The Partnership currently is a party to four operating joint
ventureagreements. In general, the joint venture partners, who are either
the sellers (or their affiliates) of the property investments being
acquired, parties which have contributed an interest in the property being
developed, or were subsequently admitted to the ventures, make no cash
contributions to the ventures, but their retention of an interest in the
property, (through the joint venture,) is taken into account in
determiningthe purchase price of the Partnership's interest, which is
determined by arm's-length negotiations. Under certain circumstances,
either pursuant to the venture agreements or due to the Partnership's
obligations as a general partner, the Partnership may be required to make
additional cash contributions to the ventures.
The Partnership has a cumulative preferred interest in net
cashreceipts (as defined) from two of the Partnership's venture properties
- - - Carrara Place Office Building and First Interstate Center.
Suchpreferential interest relates to a negotiated rate of return
oncontributions made by the Partnership. After the Partnership receives
its preferential return, the venture partner is generally entitled to a
non-cumulative return on its interest in the venture; additional net
cashreceipts are generally shared in a ratio relating to the various
ownership interests of the Partnership and its venture partners. One of
the ventures' properties produced net cash receipts during the nine
monthsended September 30, 1994 and 1993. In general, operating profits
andlosses are shared in the same ratio as net cash receipts. If there are
no net cash receipts, substantially all profits or losses are allocated
inaccordance with the partners' respective economic interests.
ThePartnership generally has preferred positions (related to the
Partnership's cash investment in the ventures) with respect to
distributionof sale or refinancing proceeds from the ventures.
There are certain risks associated with the Partnership's
investmentsmade through joint ventures including the possibility that
thePartnership's venture partners in an investment might become unable
orunwilling to fulfill their financial or other obligations, or that
suchventure partners may have economic or business interests or goals that
are inconsistent with those of the Partnership.
(b) First Interstate Center
During 1982, the Partnership acquired, through a joint venture
("FirstInterstate") between an affiliated joint venture ("Carlyle
Seattle")described below and the developer, a fee ownership of
improvementsand a leasehold interest in an office building in Seattle,
Washington. Carlyle Seattle is a joint venture between the Partnership
andCarlyle Real Estate Limited Partnership-X, an affiliated partnership
sponsored by the Corporate
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
General Partner of the Partnership. Under the terms of the
FirstInterstateventure agreement, Carlyle Seattle made initial
cashcontributions aggregating $30,000,000.
The terms of the Carlyle Seattle venture agreement provide that
allthecapital contributions will be made in the proportion of 73.3% by
thePartnership and 26.7% by the affiliated partner. The initial
requiredcontribution by the Partnership to the Carlyle Seattle venture
was$22,000,000. The Carlyle Seattle venture agreement further provides
that all of the venture's share of the First Interstate joint venture's
annual cash flow, sale or refinancing proceeds, operating profits and
losses, and tax items will be allocated 73.3% to the Partnership and 26.7%
to the affiliated partner.
Carlyle Seattle is generally entitled to receive a
preferreddistribution (on a cumulative basis) of annual cash flow equal to
8% of its capital contributions to the First Interstate joint venture.
Cash flow in excess of this preferred distribution is distributable to the
First Interstate joint venture partner up to the next $400,000 and any
remaining annual cash flow is distributable 50% to Carlyle Seattle and 50%
to the First Interstate joint venture partner. Operating deficits, if
any,are shared 50% by Carlyle Seattle and 50% by the First Interstate
jointventure partner. Operating profits or losses of the First Interstate
joint venture generally are allocated in the same ratio as the allocation
of annual cash flow, however, the joint venture partner will be allocated
not less than 25% of such profits and losses. As of December 31, 1993,
$20,049,000 of cumulative preferred distributions due to Carlyle Seattle
were unpaid.
The First Interstate joint venture agreement provides that upon
saleofthe property, Carlyle Seattle will be, in general, entitled to
receive the first $39,000,000 of net sale proceeds plus an amount equal to
any deficiencies (on a cumulative basis) in distributions of Carlyle
Seattle's preferred return of annual cash flow. The First Interstate
jointventure partner will be entitled to receive the next $5,000,000 and
any remaining proceeds will be distributable 50% to Carlyle Seattle and
50%to the First Interstate joint venture partner.
The office building is managed by an affiliate of the First
Interstatejoint venture partner for a fee computed at 2% of base and
percentage rents.
In May 1994, Carlyle Seattle executed an agreement which issues
anoption to sell its entire interest in the First Interstate joint venture
to the unaffiliated venture partner. The agreement provides for the
purchase of 49.95% of Carlyle Seattle's interest by October 17, 1994 (for
which Carlyle Seattle received a non-refundable deposit of $500,000 on
June30, 1994 and which was subsequently extended until December 22, 1994
with the receipt of an additional $500,000 on September 22, 1994) with an
option for the unaffiliated venture partner to purchase the remaining
50.05% Carlyle Seattle interest between one year and two years after the
initial sale closing. Carlyle Seattle would receive by closing (from the
unaffiliated joint venture partner) $20,000,000 cash (less non-refundable
deposits as described above) for 49.95% of its interest as explained
above,$5,000,000 cash and an additional $15,000,000 cash in the form of a
loan to Carlyle Seattle for the option of the unaffiliated venture partner
to purchase the remaining 50.05% of Carlyle Seattle's interest in the
FirstInterstate joint venture. The $15,000,000 loan to Carlyle Seattle
(bearing interest at a rate of 9% per annum with accrued interest and
unpaid principal due on January 1, 1997) is secured by Carlyle Seattle's
remaining 50.05% interest. The exercise price for the remaining 50.05%
interest is $21,350,000 if the
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
purchase option is exercised one year from the initial closing up
to$22,850,000 at the termination of the option period. The exercise
pricewould be satisfied by applying the $5,000,000 option purchase price
paid at the initial closing and applying the balance of unpaid principal
and accrued interest on the $15,000,000 Carlyle Seattle loan. There can
be no assurance that such sale will occur or such option will be exercised.
(c) Carrara
The Carrara joint venture agreement provides that operating profits
orlosses of the venture are allocated 50% to the Partnership and 50% to
theventure partner. Gain arising from the sale or other disposition of
theproperty would be allocated to the venture partner or partners then
having a deficit balance in its or their respective capital accounts in
accordance with the terms of the venture agreement. Any additional gain
would be allocated in accordance with the distribution of sales proceeds.
Commencing July 1, 1994, operating profits or losses have been
allocated100% to the Partnership. The lease for Carrara Place Office
Building's major tenant, which represented 46% of the building's leasable
area and provided for rental payments that were significantly greater than
current market rental rates, expired in December 1992 and the tenant
vacated. The Carrara venture initiated discussions with the mortgage
lender regarding a modification to the mortgage loan.
Concurrent with the modification of the mortgage loan in September
of1993 (see note 3(c)), the Carrara venture has been reorganized such
thatthe Partnership became the sole general partner of the venture, with
its venture partner becoming a limited partner of the venture. In
addition, the property manager (an affiliate of the unaffiliated venture
partner) was replaced by an independent agent effective September 1993.
Based upon an analysis of current and anticipated market conditions, the
Partnership has decided not to commit additional funds to the Carrara
PlaceOffice Building. There must be a significant improvement in market
and property conditions in order for the value of the property to be
greater than the mortgage pay off amount at any point in time, including
accrued interest. Therefore, it is unlikely that any significant proceeds
would be received by the Partnership from a sale of the property or that
the mortgage loan could be refinanced when it becomes due.
(3) LONG-TERM DEBT
(a) General
All investment properties are pledged as security for long-term
debtwhich matures at various dates commencing October, 1994 (see note 6).
In addition, as described below, the Partnership has received mortgage
notemodifications on certain properties which expire on various
datescommencing January 1, 1998. Upon expiration of such modifications or
at loan maturity, should the Partnership not seek or be unable to secure
new or additional modifications or extensions to the loans, based upon
current and anticipated future market conditions, the Partnership may not
commit any significant additional amounts to these properties. Such
decisions would be made on a property-by-property basis.
(b) Country Square Apartments
The Partnership modified the $5,800,000 second mortgage note
securedbythe Country Square apartment complex in Carrollton, Texas
effective June 1, 1989. The pay rate was raised from 4% per annum to 5%
per annum
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(payable in monthly installments of interest only) through December 1,1992.
Interest accrued and was deferred at a rate of 11% per annum from June 1,
1989 through December 31, 1990 and 12% per annum from January 1, 1991
through December 31, 1992; payable each April 30 to the extent of
anyannualcash flow (as defined) or upon the earlier of subsequent sale of
the property or the January 1, 1993 maturity of the note. The lender
notified the Partnership that it would not modify the existing terms of
thesecond mortgage. The Partnership was unable to secure new or
additionalmodifications or extensions to the loan. On February 2, 1993,
the second mortgage lender concluded proceedings to realize upon its
security and took title to the property. As a result, the Partnership
recognized a gain for financial reporting purposes of $1,520,737 and a
gainfor Federal income tax purposes of $5,633,431 in 1993 with no
corresponding distributable proceeds.
(c) Carrara
The lease for Carrara Place Office Building's major tenant,
whichrepresented 46% of the building's leasable area and provided for
rental payments that were significantly greater than current market rental
rates, expired in December 1992 and the tenant vacated. The Carrara
venture initiated discussions with the mortgage lender regarding a
modification to the mortgage loan. Beginning January 1, 1993, the venture
ceased making the scheduled debt service payments on the long-term
mortgagenote. The note was subsequently modified effective January 1,
1993. Under the modification, the maturity date has been extended from
June 30, 1994 until January 1, 1998. Interest continues to accrue at
9.875% from January 1, 1993 until maturity. Effective January 1, 1993,
thenet cash flow of the property (after the required minimum interest
payments of $8,333 monthly or $100,000 annually), subject to certain
reserves including a $350,000 operating reserve to fund deficits, will be
paid to the lender and applied toward the payment of accrued and unpaid
interest, current interest and principal balance of the loan, respectively.
As of the date of this report, no additional amounts have been paid to the
lender. Any capital costs, including re-leasing costs, are to be funded
bythe lender, (subject to their approval) and will be added to the
principal balance of the loan. Approximately $2,453,000 has been funded
bythe lender as of September 30, 1994.
In conjunction with the modification, the venture has agreed
totransfer title to the lender if the venture fails to pay the loan in
fullon the earlier of the extended maturity date or an acceleration of the
loan as a result of the occurrence of an event of default (as defined).
This would result in the Partnership no longer having an ownership
interestin the property. Such a decision would result in a gain for
financial reporting and Federal income tax purposes with no
correspondingdistributable proceeds.
(d) National City Center Office Building
In January 1994, the debt service payments under the existing
mortgagefor the National City Center Office Building increased from 9-5/8%
to 11-7/8% until the scheduled maturity of the loan in December 1995.
Carlyle/National City reached an agreement with the current mortgage
lenderto refinance the existing mortgage effective April 28, 1994, with
aninterest rate of 8.5%. The loan will be amortized over 22 years with
aballoon payment due on April 10, 2001. Carlyle/National City paid
arefundable loan commitment fee of $1,163,524 in 1993 in conjunction
withthe refinancing. Carlyle/National City also paid a prepayment penalty
of $580,586, based on the outstanding mortgage balance at the time
ofrefinancing. In addition, the lender required an escrow account of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
approximately $612,000 to be established at the inception of
therefinancingwhich would be supplemented from time to time for
scheduledfuture tenant improvements costs at the property. The escrowed
funds ($619,000 including accrued interest at September 30, 1994) are to
bereleased to the venture upon lender approval of those costs.
The$1,163,524 refundable loan commitment fee paid by Carlyle/National City
in 1993 was applied to accrued interest and the prepayment penalty, with
the balance of $238,215 refunded to the venture in 1994.
(e) Other
Effective December 27, 1990, the Partnership obtained
replacementloansfrom an institutional lender to retire in full
satisfaction, at an aggregated discount, the previously modified existing
long-term mortgage notes secured by the Sierra Pines Apartments and the
Crossings Apartments. The new lender required the establishment of escrow
accounts, of approximately $253,000 and $291,000, to be used toward the
purchase of capital items at the Sierra Pines Apartments and the Crossings
Apartments, respectively. In 1993, the Partnership sold its interest in
the Sierra Pines Apartments and The Crossing Apartments (see note 4(b)).
As of the date of sale approximately $62,000 and $6,000 were used for such
purposes for the respective properties. The new mortgage loans, which were
cross-collateralized, required interest only payments at 9.5% plus
contingent interest (as defined) until January 1, 1999, when the remaining
balance was scheduled to be payable. In 1993, $176,334 was paid for 1992
contingent interest for the properties and $107,945 was paid in 1993 for
1993 contingent interest for both properties through the date of sale. In
the event that these properties were sold before the maturity date of the
loan, the lender was to receive additional interest of 6% of the
mortgageprincipal and, in general, the higher of 65% of the sale proceeds
(as defined) or ten times the highest contingent interest (as defined)
amount in any of the three full fiscal years preceding the sale.
(4) SALE OF INVESTMENT PROPERTIES
(a) San Mateo Fashion Island
On December 31, 1986, the Partnership sold its right, title
andinterest in the land, leasehold interest and related improvements of
theSan Mateo Fashion Island shopping center for $44,202,559 and
recognizedprofit in full of $9,528,813. The sale price consisted of
$950,000 in cash at closing, the assumption of the existing mortgage note
having an unpaid principal balance of $39,302,559 (for financial reporting
purposes the principal balance was $28,895,264) and an additional
promissory note in the amount of $3,950,000 ($950,000 paid in March 1988)
secured by a subordinated deed of trust on the property. In addition to
the sale price, the Partnership received $7,600,000 from the venture
partner during 1986 under the terms of the venture agreement.
During the first quarter of 1992, the Partnership was advised by
thebuyer (in which the Corporate General Partner has an interest) that it
had initiated discussions directly with the first mortgage lender
regardinga modification to the first mortgage note. The buyer is
currentlymaking reduced payments to the first mortgage lender and has
discontinued making payments to the Partnership as of March 1992. Due to
uncertainty regarding the value of the underlying collateral, the
Partnership reserved for the entire outstanding principal balance and
accrued interest ($3,720,000) on the note receivable as of December 31,
1993 and 1992 in the accompanying consolidated financial statements. In
addition, the entire outstanding principal balance and accrued interest
waswritten off for Federal income tax purposes in 1992.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(b) Sierra Pines and Crossing Apartments
On July 29, 1993, the Partnership sold the land, buildings,
relatedimprovements and personal property of the Sierra Pines and
CrossingApartments located in Houston, Texas. The sale prices of the
land,buildings, related improvements and personal property for Sierra
Pinesand Crossing Apartments were $4,880,000 and $9,535,000, respectively.
A portion of the cash proceeds was utilized to retire the first
mortgagenotes with outstanding balances of $4,380,000 and $7,600,000,
respectively, secured by the properties. The Partnership paid additional
interest of $1,230,923 in the aggregate in connection with the retirement
of the mortgage notes. The Partnership received in connection with these
sales, after additional interest and normal costs of sale, a net amount of
cash of approximately $1,890,000 (including $288,000 in advisory fees) in
the aggregate. As a result of these sales, the Partnership recognized
gains in 1993 for financial reporting purposes of $44,030 and
$2,526,916,respectively, and recognized a gain for Federal income tax
purposes of $1,510,727 and $6,164,118, respectively.
(5) TRANSACTIONS WITH AFFILIATES
Certain of the Partnership's properties are managed by affiliates
ofthe General Partners. In October 1994 one of the affiliated
propertymanagers agreed to sell substantially all of its assets to an
unaffiliated third party. In addition, substantially all of the
managementpersonnel of the property manager will also become management
personnel of the purchaser or its affiliates if the sale is completed.
Thesale is subject to certain closing conditions. In the event that the
sale is completed, it is expected that the successor to the affiliated
property manager's assets would act as the property manager of the
Stonybrook Apartments I and II and the National City Center office
buildingafter the sale on the same terms that existed prior to the sale.
Fees, commissions and other expenses required to be paid by
thePartnership to the General Partners and their affiliates as of
September30, 1994 and for the nine months ended September 30, 1994 and
1993are as follows:
Unpaid at
September 30,
1994 1993 1994
-------- -------- -------------
Property management
and leasing fees. . . . . . . $664,071 769,758 3,524,173
Insurance commissions. . . . . 36,867 50,000 --
Management fees to
Corporate General
Partner . . . . . . . . . . . -- -- 33,334
Reimbursement
(at cost) for
out-of-pocket
expenses. . . . . . . . . . . 26,198 15,932 --
-------- ------- ---------
$727,136 835,690 3,557,507
======== ======= =========
The General Partners and their affiliates had deferred
throughSeptember 30, 1988 payment of certain property management and
leasing fees of which $3,524,173 remains unpaid as of September 30, 1994.
In addition,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
the Partnership deferred the General Partners' cash distribution
andmanagement fee of $19,666 and $33,334, respectively, for the third
andfourth quarters of 1991. These amounts (approximately $22 per
Interest)and amounts currently payable do not bear interest and are
expected to be paid in future periods.
The Corporate General Partner and its affiliates are entitled
toreimbursement for salaries and direct expenses of officers and employees
of the Corporate General Partner and its affiliates relating to
theadministration of the Partnership and operation of Partnership
properties. In 1993, such costs aggregated $40,427, all of which are
unpaid at were paid at September 30, 1994. For the nine months ended
September 30, 1994, such costs aggregated $84,745, all of which were paid
by September 30, 1994.
Effective January 1, 1994, certain officers and directors of
theManaging General Partner acquired interests in a company which, among
other things, has provided and continues to provide certain property
management services to certain of the properties owned by the Partnership.
Such acquisition had no effect on the fees payable by the Partnership
underany existing agreements with such company. The fees earned by such
company from the Partnership for the nine months ended September 30, 1994
were $23,600.
(6) SUBSEQUENT EVENT - STONYBROOK APARTMENTS II
Following discussions with the lender to refinance the
existingmortgage loans secured by the Stonybrook Apartments II, the
Partnership refinanced the $4,152,600 first mortgage loan effective
October1, 1994. The first mortgage loan which was scheduled to mature
October 1, 1994, has been extended to October 1, 1999 with an interest
rateof 7.875% per annum. The loan requires monthly interest and principal
payments of approximately $36,000 with a balloon payment due on October 1,
1999. Upon refinancing the Partnership remitted $45,912 to the lender,
consisting of a $40,000 principal payment and the balance applied to the
accrued interest. Concurrently, the Partnership paid in full the second
mortgage note secured by the property in the amount of $654,800. Accrued
and unpaid interest in the amount of $186,717 was forgiven by the lender.
The total cash remitted to the lender by the Partnership was $700,712
(which was reflected as escrow deposits as of September 30, 1994 in the
accompanying consolidated financial statements).
(7) 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
September 30, 1994 and for the three and nine months ended September 30,
1994 and 1993.<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are Notes to Consolidated
FinancialStatements contained in this report.
At September 30, 1994, the Partnership and its consolidated
ventureshad cash and cash equivalents of approximately $3,010,000. Such
funds and short-term investments of approximately $5,630,000 are available
for capital improvements, distributions to partners and for working
capitalrequirements, including capital improvements and leasing costs
currently being incurred at the National City Center Office Building and
the Permian Mall. Certain of the Partnership's investment properties
currently operate in overbuilt markets which are characterized by lower
occupancies and/or reduced rent levels. The Partnership has taken steps
topreserve its working capital by deciding to suspend distributions to the
Limited and General Partners effective as of the first quarter of 1992.
The Partnership had also deferred cash distributions and partnership
management fees, payable to the Corporate General Partner, related to the
third and fourth quarters of 1991. In addition, as of September 30, 1994,
the General Partners and their affiliates have deferred payment of
certainproperty management and leasing fees of approximately
$3,524,000(approximately $22 per Interest) as more fully described in Note
5. These amounts do not bear interest and are expected to be paid in
future periods.
The Partnership and its consolidated ventures have currently
budgetedfor 1994 approximately $3,555,000 for tenant improvements and
othercapital expenditures. The Partnership's share of such items in 1994
is currently budgeted to be approximately $2,198,000. Not included in
thisamount is approximately $831,000 of roof and parking lot costs at the
Permian Mall which are currently in need of repair. Such costs have been
deferred to 1995, as to fund the Permian Mall improvements, the
Partnershipintends to initiate discussions with the mortgage lender
regarding a modification to the loan. There can be no assurance that a
loan modification can be obtained. Actual amounts expended in 1994 may
vary depending on a number of factors including actual leasing activity,
results of operations, liquidity considerations and other market
conditionsover the course of the year. The source of capital for such
items and for both short-term and long-term future liquidity and
distributions is dependent upon net cash generated by the Partnership's
investment properties and through the sale of such investments. Due to
theproposed sale of the First Interstate Center, the Permian Mall deferred
maintenance and considerations on other properties as discussed below,
onlythe National City Center is considered to be a significant source of
future long-term operational cash generated. In addition, the
Partnershipsdoes not consider the remaining mortgage note receivable
(related to San Mateo Fashion Island) to be a source of future liquidity.
Reference is made to Note 4(a). The Partnership's and its Ventures'
mortgage obligations are all non-recourse. Therefore, the Partnership and
its Ventures are not obligated to pay mortgage indebtedness unless the
related property produces sufficient net cash flow from operations or sale.
The mortgage on Stonybrook Apartments II matured October 1,
1994(Stonybrook Apartments I is not subject to a mortgage loan) with
anoutstanding balance of approximately $4,807,000 at September 30, 1994.
Following discussions with the lender to refinance the existing
mortgageloans secured by the Stonybrook Apartments II, the Partnership
refinanced the $4,152,600 first mortgage loan effective October 1, 1994.
The first mortgage loan has been extended to October 1, 1999 with an
interest rate of 7.875% per annum. The loan requires monthly interest and
principal payments of approximately $36,000 with a balloon payment due on
October 1, 1999. The Partnership remitted $45,912 to the lender,
consisting of a $40,000 principal payment and the balance applied to the
accrued interest. Concurrently, the Partnership paid in full the second
mortgage note secured by the property in the amount of $654,800.
Accrued and unpaid interest inthe amount of $186,717 was forgiven by the
lender. The total cash remitted to the lender by the Partnership was
$700,712 (which was reflected as escrow deposits as of September 30, 1994
in the accompanying consolidated financial statements). Reference is made
to Note 6. The Partnership is currently marketing both phases of the
property for sale.
The lease for Carrara Place Office Building's major tenant,
whichrepresented 46% of the building's leasable area and provided for
rental payments that were significantly greater than current market rental
rates, expired in December 1992. The Denver, Colorado region has been
adversely affected by increased competition for tenants as a result of
overbuilding in the area. As a result of the current market rental rates,
the cash flow generated by the property would have been significantly less
than the payments required under the original mortgage note even if the
space was re-leased. Further, re-leasing the space requires significant
re-leasing costs. Additionally, the lease for a tenant occupying
approximately 17% of the building's leasable area was scheduled to expire
in June 1994. The venture has reached an agreement with the tenant to
extend their lease for an additional five years. The venture has also
reached an agreement with a new tenant to occupy approximately 21% of the
building's leasable area, with the lease scheduled to expire in August
2004. The Carrara venture initiated discussions with the mortgage lender
regarding a modification to the mortgage loan and in September 1993
reachedan agreement to modify the loan retroactive to January 1, 1993.
Under the modification, the maturity date is extended from June 30, 1994
until January 1, 1998. Interest continues to accrue at 9.875% from
January1, 1993 until January 1, 1998. Effective January 1, 1993, the net
cash flow of the property, subject to certain reserves, will be paid to
thelender and applied toward the payment of accrued and unpaid interest,
current interest and principal balance of the loan, respectively. Any
capital costs, including re-leasing costs, are to be funded by the lender,
subject to their approval, and such costs added to the principal balance
ofthe loan. Approximately $2,453,000 has been funded by the lender as of
September 30, 1994.
Concurrent with the modification, the Carrara venture was
reorganizedsuch that the Partnership became the sole general partner of
theventure, with its venture partner becoming a limited partner of the
venture. In addition, the property manager (an affiliate of the
unaffiliated venture partner) was replaced effective September 1993.
Basedupon an analysis of current and anticipated market conditions, the
Partnership has decided not to commit additional funds to the Carrara
PlaceOffice Building. There must be a significant improvement in market
and property conditions in order for the value of the property to be
greater than the mortgage payoff amount at any point in time, including
accrued interest. Therefore, it is unlikely that any significant proceeds
would be received by the Partnership in the event the property were sold
orrefinanced.
In conjunction with the modification, the Carrara venture has
agreedtotransfer title to the lender if the venture fails to pay the loan
in full on the earlier of the extended maturity date or an acceleration of
the loan as a result of the occurrence of an event of default (as defined).
This would result in the Partnership no longer having an ownership
interestin the property. Such a decision would result in a gain for
financial reporting and Federal income tax purposes with no
correspondingdistributable proceeds.
Regarding the First Interstate Center, although new construction
intheSeattle office market has virtually ceased, the overall office
marketremains very competitive due to a significant amount of vacancy
andsublease space on the market. In May 1989, an initiative was passed
inSeattle to limit future development of downtown office space. Over
time,this initiative (which is effective for ten years) may have a
favorable impact on the Seattle office market. Although the occupancy
(97%at September 30, 1994) at First Interstate Center has not been
adversely affected to date by the competitive office market, effective
rental rates have decreased as a result. Due to the competitive market
conditions and the significant amounts of expiring square footage over
the next severalyears, the property will reserve a portion of its cash flow in
orderto cover the re-leasing costs required. In May 1994, Carlyle Seattle
executed an agreement which issues an option to sell its interest in the
First Interstate joint venture to the unaffiliated venture partner.
Theagreement provides for the purchase of 49.95% of Carlyle Seattle's
interest by October 17, 1994 (for which Carlyle Seattle received a non-
refundable deposit of $500,000 on June 30, 1994 and which was subsequently
extended until December 22, 1994 with the receipt of an additional
$500,000on September 22, 1994) with an option for the unaffiliated venture
partner to purchase the remaining 50.05% Carlyle Seattle interest between
one year and two years after the initial sale closing. Carlyle Seattle
would receive by closing (from the unaffiliated joint venture partner)
$20,000,000 cash (less non-refundable deposits as described above) for
49.95% of its interest as explained above, $5,000,000 cash and an
additional $15,000,000 cash in the form of a loan to Carlyle Seattle for
the option of the unaffiliated venture partner to purchase the remaining
50.05% of Carlyle Seattle's interest in the First Interstate joint venture.
The $15,000,000 loan to Carlyle Seattle (bearing interest at a rate of 9%
per annum with accrued interest and unpaid principal due on January 1,
1997) is secured by Carlyle Seattle's remaining 50.05% interest. The
exercise price for the remaining 50.05% interest is $21,350,000 if the
purchase option is exercised one year from the initial closing up to
$22,850,000 at the termination of the option period. The exercise price
would be satisfied by applying the $5,000,000 option purchase price paid
atthe initial closing and applying the balance of unpaid principal and
accrued interest on the $15,000,000 Carlyle Seattle loan. There can be no
assurance that such sale will occur or such option will be exercised. In
addition, the first mortgage loan secured by the property is scheduled to
mature in December 1995. The venture anticipates approaching the mortgage
lender regarding an extension or modification of the existing mortgage
loan. There can be no assurance that any such extension or modification
will be obtained.
At the National City Center Office Building located in
Cleveland,Ohio,a major tenant (Baker & Hostetler) extended its lease term
to 2001, but reduced its space leased by approximately 18,000 square feet
as of January 1993. The extended lease requires tenant improvement costs
of approximately $92,000 per year through the expiration of the lease with
an additional amount to be paid in 1996 of approximately $730,000.
Thesetenant improvement costs will result in the property incurring a
slight deficit for 1994. The Partnership received a lease termination fee
of approximately $1,100,000 from another tenant (KPMG Peat Marwick)
forvacating approximately 19,700 square feet (which was subsequently
leasedto National City Bank). In January 1994, the debt service payments
under the existing mortgage increased from 9-5/8% to 11-7/8% until the
maturity of the loan in December 1995. The Partnership reached an
agreement with the current mortgage lender to refinance the existing
mortgage effective April 28, 1994, with an interest rate of 8.5%. The
loanwill be amortized over 22 years with a balloon payment due on April
20,2001. The Partnership paid a prepayment penalty of $580,586 based upon
the outstanding loan balance at the time of refinancing. In addition, the
lender required an escrow account of $612,000 to be established at the
timeof the refinancing which will be supplemented from time to time for
scheduled future tenant improvements at the property. The escrowed funds
are to be released to the venture upon lender approval of those costs.
The$1,163,524 refundable loan commitment fee paid by the Partnership in
1993 was applied to accrued interest and the prepayment penalty, with the
balance of $238,215 refunded to the Partnership. Real estate taxes
payablein 1994 are expected to increase due to the expiration of a 25%
reduction of a real estate tax abatement that was received when the
property was purchased. The remaining 25% abatement expires in 1998 for
taxes payable in 1999.
There are certain risks associated with the Partnership's
investmentsmade through joint ventures including the possibility that
thePartnership's joint venture partners in an investment might become
unable or unwilling to fulfill their financial or other obligations, or
that such joint venture partners may have economic or business interests or
goals that are inconsistent with those of the Partnership.
Though the economy has recently shown signs of improvement
andfinancing is generally becoming more available for certain types of
higher-quality properties in healthy markets, real estate lenders are
typically requiring a lower loan-to-value ratio for mortgage financing
thanin the past. This has made it difficult for owners to refinance real
estate assets at their current debt levels unless the value of the
underlying property has appreciated significantly. As a consequence, and
due to the weakness of some of the local real estate markets in which
thePartnership's properties operate, the Partnership is taking steps
topreserve its working capital. Therefore, the Partnership is
carefullyscrutinizing the appropriateness of any discretionary
expenditures, particularly in relation to the amount of working capital it
has available. By conserving working capital, the Partnership will be in
abetter position to meet future needs of its properties without having to
rely on external financing sources.
Due to the factors discussed above and the general lack of buyers
ofreal estate today, it is likely that the Partnership may hold some of
itsinvestment properties longer than originally anticipated in order
tomaximize the return to the Limited Partners. Also, in light of the
current severely depressed real estate markets, it currently appears that
the Partnership's goal of capital appreciation will not be achieved.
Although the Partnership expects to distribute from sale proceeds some
portion of the Limited Partners' original capital, without a dramatic
improvement in market conditions the Limited Partners will receive
significantly less than their original investment.
In addition, in connection with sales or other dispositions
(includingtransfers to lenders) of properties (or interests therein) owned
by the Partnership or its joint ventures, the Limited Partners may be
allocated substantial gain for Federal income tax purposes.
RESULTS OF OPERATIONS
The decrease in rents and other receivables as of September 30,
1994ascompared to December 31, 1993 is primarily due to the collection in
1994 of rents related to 1993 at the First Interstate Center.
The decrease in loan commitment fee as of September 30, 1994
ascompared to December 31, 1993 is due to the application of the
loancommitment fee to accrued interest and prepayment penalty related to
the April, 1994 refinancing of the mortgage loan at the National City
Center Office Building (see Note 3(d)).
The increase in prepaid expenses as of September 30, 1994 compared
toDecember 31, 1993 reflects the timing of payments of insurance premiums
at various of the Partnership's properties.
The increase in escrow deposits as of September 30, 1994 compared
toDecember 31, 1993 is due primarily to increased escrow deposits
resultingfrom the January, 1993 modification of the Carrara Place Office
Building mortgage loan (see Note 3(c)), the April, 1994 refinancing of the
National City Center Office Building mortgage loan (see Note 3(d)) and the
escrowing of funds to be remitted to the lender upon the refinancing of
theloans secured by the Stonybrook Apartments II in October, 1994
(approximately $701,000). Reference is made to Note 6.
The increase in buildings and improvements as of September 30, 1994
ascompared to December 31, 1993 is primarily due to tenant improvements
atthe Carrara Place Office Building ($1,690,000, funded by the lender -
Note 3(c)), tenant improvements at Permian Mall ($450,000), parking
garagerenovation and tenant improvements (totaling $400,000) at the
National City Center Office Building along with tenant improvements
($760,000) at the First Interstate Center.
The decrease in current portion of long-term debt as of September
30,1994 compared to December 31, 1993 is primarily due to the refinancing
of the loans secured by the Stonybrook Apartments II effective October
1,1994. The loans were previously classified as current due to
theirmaturity on October 1, 1994 but have been paid in full or extended
toOctober 1, 1999 (see Note 6).
The increase in accrued interest as of September 30, 1994 as
comparedto December 31, 1993 reflects the cumulative unpaid interest
attributable to the Carrara Office Building loan. Reference is made to
Note 3(c).
The decrease in accrued real estate taxes as of September 30, 1994
ascompared to December 31, 1993 is primarily due to the timing of
certainreal estate tax payments.
The decrease in rental income, mortgage and other interest expense
andproperty operating expenses for the three and nine months ended
September 30, 1994 compared to the three and nine months ended September
30, 1993 is primarily due to the second mortgage lender's realization upon
its security represented by the Country Square Apartments in February,
1993(see Note 3(b)) and the sale of the Sierra Pines and Crossing
Apartments in July 1993 (see Note 4(b)). In addition, rental income
decreased due to a $1,100,000 termination fee received in January 1993 at
the National City Center Office Building as discussed above and due to
decreased rental income at the First Interstate Center resulting from
decreased rental rates.
The increase in interest income for the three and nine months
endedSeptember 30, 1994 as compared to the three and nine months
endedSeptember 30, 1993 is primarily due to increases in the rate of
interest earned in 1994 on U.S. Government obligations.
The decrease in depreciation expense for the nine months
endedSeptember 30, 1994 compared to the nine months ended September 30,
1993 is primarily due to the second mortgage lender's realization upon its
security represented by the Country Square Apartments in February, 1993
(see Note 3(b)) and the sale of Sierra Pines and Crossing Apartments in
July 1993 (see Note 4(b)).
The increase in venture partners' share of ventures' operations
forthethree and nine months ended September 30, 1994 as compared to the
three and nine months ended September 30, 1993 and the corresponding
increase in venture partners' deficits in venture as of September 30, 1994
as compared to December 31, 1993, is primarily due to decreased rental
income at the First Interstate Center resulting from decreased effective
rental rates.
The gain on sale or disposition of investment properties for the
ninemonths ended September 30, 1993 is due to the second mortgage
lender'srealization upon its security represented by the Country Square
Apartments (see Note 3(b)) in February 1993 and the sale of the Sierra
Pines and Crossing Apartments in July 1993 (see Note 4(b)). The gain on
sale or disposition of investment properties for the three months ended
September 30, 1993 is due to the sale of the Sierra Pines and Crossing
Apartments in July 1993.
<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.
<CAPTION>
1993 1994
------------------------------- ------------------------------
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. Carrara Place Office Building
Englewood, Colorado . . . . . . . . . . . . . . . . 44% 43% 43% 43% 49% 80% 88%
2. The Crossing Apartments
Houston, Texas. . . . . . . . . . . . . . . . . . . 93% 94% N/A N/A N/A N/A N/A
3. Stonybrook Apartments I & II
Tucson, Arizona. . . . . . . . . . . . . . . . . . 93% 86% 97% 96% 96% 83% 95%
4. Permian Mall
Odessa, Texas . . . . . . . . . . . . . . . . . . . 91% 90% 90% 90% 91% 91% 91%
5. First Interstate Center
Seattle, Washington . . . . . . . . . . . . . . . . 96% 96% 97% 97% 97% 99% 97%
6. Sierra Pines Apartments
Houston, Texas. . . . . . . . . . . . . . . . . . . 92% 92% N/A N/A N/A N/A N/A
7. National City Center Office Building
Cleveland, Ohio. . . . . . . . . . . . . . . . . . 96% 94% 96% 96% 94% 94% 94%
<FN>
- - ------------
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
4-A. Mortgage loan agreement between Wright-Carlyle Seattle
andThe Prudential Insurance Company dated October 16, 1985,relating to the
First Interstate Center is herebyincorporated herein by reference to the
Partnership's report for December 31, 1992 on Form 10-K (File No. 0-
12433)dated March 19, 1993.
4-B. Mortgage loan agreement between Carlyle/National
CityAssociates and New York Life Insurance Company datedNovember 15, 1983,
relating to the National City CenterOffice Building is hereby incorporated
herein by reference to the Partnership's report for December 31, 1992 on
Form 10-K (File No. 0-12433) dated March 19, 1993.
4-C. Agreement of Modification of Note, Deed of trust and
OtherLoan Documents, dated September 23, 1993 between thePartnership and
The Travelers Insurance Company relating to the Carrara Place Office
Building is hereby incorporatedherein by reference to the Partnership's
report for December 31, 1993 on Form 10-K (File No. 0-12344) dated March
25, 1994.
4-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 CenterOffice Building is hereby
incorporated herein by reference to the Partnership's report for March 31,
1994 on Form 10-Q (File No. 0-12344) dated May 11, 1994.
4-E. Bondowner, Borrower, Remarketing Agent, Issuer and
TrusteeWaiver, Appointment of and Acceptance by SuccessorRemarketing Agent,
Bondowner Election to Retain Bonds and Notice of Remarketing Rate, dated
October 1, 1994 relating to the refinancing of the first mortgage note
relating to the Stonybrook Apartments II is filed herewith.
10-A. Acquisition documents including the venture
agreementrelating to the purchase by the Partnership of an interest in the
First Interstate Center in Seattle, Washington are hereby incorporated by
reference to the Partnership's prospectus on Form S-11 (File No. 2-76443),
dated June 21, 1982.
10-B. Acquisition documents including the venture
agreementrelating to the purchase by the Partnership of an interest in the
National City Center Office Building in Cleveland, Ohio are hereby
incorporated by reference to thePartnership's report on Form 8-K (File No.
2-76443), dated August 8, 1983.
10-C. Bargain and Sale Deed relating to the
Partnership'sdisposition of the Timberline Apartments in Denver, Colorado,
dated July 25, 1990 is hereby incorporatedherein by reference to the
Partnership's report for December 31, 1992 on Form 10-K (File No. 0-12433)
dated March 19, 1993.
10-D. Non-Merger Quit Claim Deeds relating to the
Partnership'sdisposition of the Summerfield/Oakridge Apartments in Aurora,
Colorado, dated January 7, 1991 are hereby incorporated herein by reference
to the Partnership'sreport for December 31, 1992 on Form 10-K (FileNo. 0-
12433) dated March 19, 1993.
10-E. Sale documents and exhibits thereto relating to
thePartnership's sale of the Sierra Pines and CrossingApartments in
Houston, Texas are hereby incorporatedherein by reference to the
Partnership's report on Form 8-K (File No. 0-12433), dated August 30, 1993.
10-F. Substitute Trustee's Deed relating to the
Partnership'sdisposition of the Country Square Apartments inCarrollton,
Texas dated February 2, 1993 is hereby incorporated by reference to the
Partnership's report on Form 8-K (File No. 0-12433), dated March 17, 1993.
10-G. Letter Regarding Sale/Option and Partnership
Amendment,datedMay 15, 1994, between Carlyle Seattle Associates and 999
Third Avenue, Ltd. relating to the First Interstate Center in Seattle,
Washington is hereby incorporated herein by reference to the Partnership's
reportfor June 30, 1994 on Form 10-Q (File No. 0-12344) dated August 12,
1994.
27. Financial Data Schedule
(b) No reports on Form 8-K were filed since the beginning of the
lastquarter of the period 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 - XII
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: November 10, 1994
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: November 10, 1994
BONDOWNER ELECTION TO RETAIN BONDS
$4,152,600
The Industrial Development Authority
of the County of Pima
Multifamily Housing Revenue Refunding Bonds
Series 1989D
First Bank National Association
St. Paul, Minnesota
Pursuant to Article III, Sections 3.01(a)(ii) and 3.01(d) of the
Trust Indenture between the Industrial Development Authority of the County
of Pima and Security Pacific Bank Arizona dated as of October 1, 1989, as
amended and supplemented (the "Indenture"), the undersigned hereby
irrevocably elects to retain the Bond described below, subsequent to the
October 1, 1994 Remarketing Date and subject to the Remarketing Rate (both
as defined in the Indenture).
1. The Bond is the sole outstanding bond of the Issuer's
$4,152,600 Multifamily Housing Revenue Refunding Bonds, Series 1989D. The
portion of the Bond to be retained by the owner of the Bond is $4,112,600.
2. The name of the registered owner of the Bond is Tempest
Collateralized Mortgage Fund-I ("Tempest") and such person or entity was
the registered owner of such Bond on the date that the Notice of
Remarketing Rate was given.
3. The address of Tempest is:
8200 Normandie Boulevard, Suite 200
Minneapolis, MN 55437
4. Tempest hereby acknowledges that it has received notice of the
Remarketing Rate of 7 3/8% effective as of October 1, 1994, and through
October 1, 1999.
5. Tempest hereby acknowledges that the Bonds are not transferable
without the prior written consent of the Issuer, in accordance with Article
III, Section 2.08 of the First Supplemental Trust Indenture between the
Issuer and Bank of America Arizona, as successor by merger to the former
trustee, and First Bank National Association, as successor trustee, dated
as of January 1, 1993.
IN WITNESS WHEREOF, the undersigned owner of the Bond or its duly
authorized attorney in fact has executed this Bondowner Election to Retain
Bonds as of the date set forth below.
Dated: September 29, 1994 TEMPEST COLLATERALIZED MORTGAGE
FUND-I
By:
Authorized Representative
APPOINTMENT OF AND ACCEPTANCE BY
SUCCESSOR REMARKETING AGENT
$4,152,600
The Industrial Development Authority
of the County of Pima
Multifamily Housing Revenue Refunding Bonds
Series 1989D
The Industrial Development Authority
of the County of Pima
Tucson, Arizona
First Bank National Association (the "Trustee"), pursuant to that
Trust Indenture dated as of October 1, 1989, as amended by a First
Supplemental Trust Indenture dated January 1, 1993 (together, the
"Indenture"), providing for the issuance of the above-referenced bonds (the
"Bonds") hereby appoints Miller & Schroeder Financial, Inc., ("Miller &
Schroeder") as successor Remarketing Agent under Section 3.04 of the
Indenture, such appointment being effective as of September 23, 1994. The
Trustee hereby requests Miller & Schroeder to acknowledge by the signature
of its authorized officer below, and Miller & Schroeder does hereby so
acknowledge (i) that it assumes the rights and obligations of Remarketing
Agent under the Indenture (but only to the extent necessary to reset the
interest rate on the Bonds at a Remarketing Rate, as defined in the
Indenture), (ii) that there are no fees due and owing to Miller &
Schroeder, as Remarketing Agent which have not been paid or duly provided
for, (iii) that it is a member of the National Association of Securities
Dealers, Inc., (iv) that it has a capitalization of at least $25,000,000,
and (v) that it is authorized by law to perform all the duties imposed upon
it as Remarketing Agent under the Indenture.
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By
Authorized Representative
ACCEPTED: _____________, 1994
MILLER & SCHROEDER FINANCIAL, INC.,
as Remarketing Agent
By
Title
October 1, 1994
First Bank National Association
St. Paul, Minnesota
The Industrial Development Authority
of the County of Pima
Tucson, Arizona
$4,152,600
The Industrial Development Authority
of the County of Pima
Multifamily Housing Revenue Refunding Bonds
Series 1989D
Ladies and Gentlemen:
We have acted as Special Tax Counsel to the Industrial Development
Authority of the County of Pima, Arizona (the "Issuer") regarding the reset
of the interest rate on the Issuer's $4,152,600 Multifamily Housing Revenue
Refunding Bonds, Series 1989D (the "Bonds") at a Remarketing Rate (as
defined in the Indenture) in conjunction with the remarketing of the Bonds
as of October 1, 1994. The Bonds were issued pursuant to a Trust Indenture
(the "Original Indenture") dated as of October 1, 1989 between the Issuer
and Security Pacific Bank Arizona, as trustee (the "Former Trustee") as
amended by a First Supplemental Trust Indenture (the "First Supplement")
dated as of January 1, 1993 between the Issuer and Bank of America Arizona,
as successor by merger to the Former Trustee, and First Bank National
Association, as successor trustee (the "Trustee") (the First Supplement and
the Original Indenture are collectively referred to herein as the
"Indenture"). Pursuant to the Indenture, Miller & Schroeder Financial,
Inc. (the "Remarketing Agent") has delivered notice of the reset of the
rate of interest on the Bonds to the Remarketing Rate (as defined in the
Indenture), to become effective as of October 1, 1994.
Section 3.01(c)(vi) of the Indenture requires an opinion of Tax
Counsel to the effect that the remarketing of the Bonds in accordance with
the terms of the Indenture will not adversely affect the exclusion of the
interest on the Bonds from gross income for federal income tax purposes
under the Internal Revenue Code of 1986, as amended.
In our capacity as Special Tax Counsel for the remarketing of the
Bonds, we have examined a transcript of the proceedings of the Issuer
relating to the issuance of the bonds. The transcript contains, among
other things (i) the Original Indenture, (ii) the First Supplement, (iii)
the Loan Agreement between the Issuer, the Former Trustee, and Stonybrook
Partners Limited Partnership dated as of October 1, 1989 (the "Agreement"),
(iv) the Bondowner Election to Retain Bonds dated as of September 29, 1994,
(v) the Notice of Remarketing Rate dated as of September 23, 1994, and (vi)
such other documents as we have deemed necessary in order to render the
opinions expressed herein.
The scope of our engagement as Special Tax Counsel has extended
solely to an examination of the facts and law incident to rendering an
opinion with respect to the continuation of the exclusion from gross income
for federal income tax purposes of interest on the Bonds subsequent to the
reset of the interest rate thereon to the Remarketing Rate in conjunction
with the remarketing of the Bonds as of October 1, 1994. We have not been
requested to, and have not, investigated or verified original proceedings,
records, data or other materials, but have relied solely upon the
transcript of proceedings provided to us. Our engagement as Special Tax
Counsel has not extended to commenting on the sufficiency of the security
for the Bonds, the marketability of the Bonds, or the financial condition
of the Issuer or the Issuer's program in connection with the Bonds, and we
express no view with respect to such matters. In rendering our opinion, we
have relied upon the certifications and representations contained in the
transcript of proceedings without independent investigation or inquiry.
Based upon the above examination, but subject to the limitations and
qualifications contained herein, we are of the opinion, under existing law,
that the remarketing of the Bonds, as of October 1, 1994, will not
adversely affect the exclusion of interest on the Bonds for federal income
tax purposes.
For the purposes of this opinion, our services have not extended
beyond the examinations and expressions of the conclusions referred to
above. The opinions expressed herein are based upon existing law as of the
date hereof, and we express no opinion herein as of any subsequent date or
with respect to any pending legislation. The opinions expressed herein may
be relied upon only by the addressees hereto and only in regards to the
transaction addressed herein. No other party may rely upon such opinions
nor may any other use be made of such opinions without our written consent.
Respectfully submitted,
NOTICE OF REMARKETING RATE
$4,152,600
The Industrial Development Authority
of the County of Pima
Multifamily Housing Revenue Refunding Bonds
Series 1989D
First Bank National Association The Industrial Development Authority
St. Paul, Minnesota of the County of Pima
Tucson, Arizona
Stonybrook Partners Limited
Partnership
Chicago, Illinois
The undersigned, an authorized officer of Miller & Schroeder
Financial, Inc., acting as Remarketing Agent pursuant to the Appointment of
Successor Remarketing Agent dated as of September 23, 1994, and pursuant to
that Trust Indenture dated as of October 1, 1989, between The Industrial
Development Authority of the County of Pima, Arizona (the "Issuer"), and
Security Pacific Bank Arizona, as trustee (the "Former Trustee") as amended
by a First Supplemental Trust Indenture dated as of January 1, 1993 between
the Issuer and Bank of America Arizona, as successor by merger to the
Former Trustee, and First Bank National Association, as successor trustee
(together, the "Indenture"), providing for the issuance of the
above-captioned bonds (the "Bonds"), hereby gives notice that the
Remarketing Rate (as defined in the Indenture) is 7 3/8% per annum
effective as of October 1, 1994, and through October 1, 1999. The
Remarketing Rate has been calculated according to Sections 2.02 and 3.01(b)
of the Indenture, as the lowest interest rate which will enable the Bonds
to be remarketed at a price equal to 100% of the principal amount of the
Bonds for such period.
Dated: September 23, 1994 MILLER & SCHROEDER FINANCIAL, INC.,
as Remarketing Agent
By:
Authorized Officer
BONDOWNER, BORROWER, REMARKETING AGENT,
ISSUER AND TRUSTEE
WAIVER
$4,152,600
The Industrial Development Authority
of the County of Pima
Multifamily Housing Revenue Refunding Bonds
Series 1989D
The undersigned, authorized officers of JMB Investors III, Inc., the
managing partner of Stonybrook Partners Limited Partnership (the
"Borrower"), Tempest Collateralized Mortgage Fund-I (the "Bondowner"), The
Industrial Development Authority of the County of Pima, Arizona (the
"Issuer"), First Bank National Association (the "Trustee"), and Miller &
Schroeder Financial, Inc. (the "Remarketing Agent"), each regarding the
above-captioned bonds (the "Bonds") respectively, hereby waive on behalf of
the Bondowner, the Borrower, the Remarketing Agent, the Issuer and the
Trustee, respectively, receipt of all required notices of the reset of the
interest rate on the Bonds to a Remarketing Rate (as defined in the Trust
Indenture between the Issuer and Security Pacific Bank Arizona (as former
trustee) (the "Indenture") dated as of October 1, 1989 providing for the
issuance of the Bonds) within the time periods required pursuant to Section
3.01 of the Indenture and hereby expressly consent to the reset of the
interest rate on the Bonds to a Remarketing Rate effective October 1, 1994,
and through October 1, 1999, and further hereby waive receipt of any other
notices required in connection with the remarketing of the Bonds pursuant
to the Indenture, within the time periods required by the Indenture.
Additionally, the Bondowner hereby waives delivery of the Alternate Credit
Facility (as defined in the Indenture), which Alternate Credit Facility is
required by Section 5.8 of the Loan Agreement among the Issuer, Security
Pacific Bank Arizona (as former trustee) and the Borrower (the "Agreement")
dated as of October 1, 1989. This waiver of delivery of the Alternate
Credit Facility does not affect any existing obligation of the Borrower to
pay to the Bondowner the letter of credit fees, as defined in and required
by the Agreement.
Dated: September 29, 1994 TEMPEST COLLATERALIZED MORTGAGE
FUND-I, as Bondowner
By:
Its:
STONYBROOK PARTNERS LIMITED
PARTNERSHIP, a Delaware limited
partnership, as Borrower
By: JMB Investors III, Inc., an
Illinois Corporation, its
managing partner
By:
Its:
MILLER & SCHROEDER FINANCIAL, INC., as
Remarketing Agent
By:
Its:
THE INDUSTRIAL DEVELOPMENT AUTHORITY OF
THE COUNTY OF PIMA, ARIZONA, as Issuer
By:
Its:
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
By:
Its:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000700949
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,009,450
<SECURITIES> 5,632,292
<RECEIVABLES> 3,984,511
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,626,253
<PP&E> 257,299,665
<DEPRECIATION> (89,161,184)
<TOTAL-ASSETS> 208,028,380
<CURRENT-LIABILITIES> (15,792,765)
<BONDS> (201,071,567)
<COMMON> 0
0
0
<OTHER-SE> (11,136,457)
<TOTAL-LIABILITY-AND-EQUITY> (208,028,380)
<SALES> (32,809,995)
<TOTAL-REVENUES> (33,055,355)
<CGS> 0
<TOTAL-COSTS> 22,124,223
<OTHER-EXPENSES> 383,690
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,058,539
<INCOME-PRETAX> 6,511,097
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,423,815
<DISCONTINUED> 0
<EXTRAORDINARY> 500,898
<CHANGES> 0
<NET-INCOME> 4,924,713
<EPS-PRIMARY> 29.64
<EPS-DILUTED> 0
</TABLE>
