SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended
June 30, 1998 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 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. . . . . . . . . . . . . . 10
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 12
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 3,760,468 34,078,416
Interest, rents and other receivables . . . . . . . . . . . . . . . 182,943 358,457
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . 3,943,411 34,436,873
------------ ------------
$ 3,943,411 34,436,873
============ ============
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
JUNE 30, DECEMBER 31,
1998 1997
------------- -----------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . $ 346,096 754,294
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . 346,096 754,294
------------ ------------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . 346,096 754,294
Venture partner's equity in venture . . . . . . . . . . . . . . . . . 76,400 4,018,589
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . 85,261 99,049
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (1,100,036) (900,049)
------------ ------------
(1,013,775) (800,000)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . 141,003,683 141,003,683
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . (58,022,652) (57,691,752)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (78,446,341) (52,847,941)
------------ ------------
4,534,690 30,463,990
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . 3,520,915 29,663,990
------------ ------------
$ 3,943,411 34,436,873
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . $ 74,783 3,778,730 74,783 7,242,764
Interest income . . . . . . . . . . . . . . . 63,467 84,537 327,894 176,189
----------- ---------- ----------- -----------
138,250 3,863,267 402,677 7,418,953
----------- ---------- ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . -- 1,164,680 -- 2,339,646
Property operating expenses . . . . . . . . . -- 1,680,632 5,437 2,631,996
Professional services . . . . . . . . . . . . 112,820 48,223 215,172 93,839
Amortization of deferred expenses . . . . . . -- 16,086 -- 31,981
Management fees to corporate
general partner . . . . . . . . . . . . . . -- -- 333,312 --
General and administrative. . . . . . . . . . 50,927 124,235 155,238 232,353
----------- ---------- ----------- -----------
163,747 3,033,856 709,159 5,329,815
----------- ---------- ----------- -----------
(25,497) 829,411 (306,482) 2,089,138
Venture partner's share of
venture's operations. . . . . . . . . . . . . (17,312) (129,911) (38,206) (296,434)
----------- ---------- ----------- -----------
Net earnings (loss) . . . . . . . . . . $ (42,809) 699,500 (344,688) 1,792,704
=========== ========== =========== ===========
Net earnings (loss) per limited
partnership interest. . . . . . . . . . $ (.26) 4.20 (2.07) 10.76
=========== ========== =========== ===========
Cash distributions per limited
partnership interest . . . . . . . . . $ -- -- 160.00 --
=========== ========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (344,688) 1,792,704
Items not requiring (providing) cash:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . -- 31,981
Venture partner's share of venture's operations . . . . . . . . . . . . 38,206 296,434
Changes in:
Interest, rents and other receivables . . . . . . . . . . . . . . . . . 175,514 (125,839)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 59,345
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (270,289)
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . -- 60,681
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . (408,198) (219,023)
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (6,934)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . -- (247,114)
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (548,182)
------------ ------------
Net cash provided by (used in) operating activities . . . . . . . . (539,166) 823,764
------------ ------------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . . . . . . . . . . . . . -- (219,464)
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (95,615)
Tenant improvement costs reimbursements
from escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 820,319
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . -- (5,658)
------------ ------------
Net cash provided by (used in) investing activities . . . . . . . . -- 499,582
------------ ------------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
1998 1997
------------ ------------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . -- (574,023)
Distribution to venture partner . . . . . . . . . . . . . . . . . . . . . (3,980,395) --
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . (25,598,400) --
Distributions to general partners . . . . . . . . . . . . . . . . . . . . (199,987) --
------------ ------------
Net cash provided by (used in) financing activities . . . . . . . . (29,778,782) (574,023)
------------ ------------
Net increase (decrease) in cash and cash equivalents. . . . . . . . (30,317,948) 749,323
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 34,078,416 6,667,839
------------ ------------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 3,760,468 7,417,162
============ ============
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ -- 2,346,580
============ ============
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1997 which are
included in the Partnership's 1997 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of June 30, 1998 and for the six months ended June 30,
1998 and 1997 were as follows:
Unpaid at
June 30,
1998 1997 1998
-------- ------- -----------
Management fees to
corporate general
partner. . . . . . . . . . . $333,312 -- --
Insurance commissions . . . . 8,676 20,569 --
Reimbursement (at cost)
for out-of-pocket
salary and salary-
related expenses
related to on-site and
other costs for the
Partnership and its
investment properties. . . . 22,860 33,753 330
-------- ------- ------
$364,848 54,322 330
======== ======= ======
Effective January 1, 1994, certain officers and directors of the
Corporate General Partner acquired interests in a company which, among
other things, had provided certain property management services to the
remaining property owned by the Partnership through the sale date in
December 1997. Such acquisition had no effect on the fees payable by the
Partnership under any existing agreements with such company. The fees
earned by such company from the Partnership were $16,671 for the six months
ended June 30, 1997.
The General Partners and their affiliates had deferred through
June 30, 1988 payment of certain property management and leasing fees. In
1995, the Partnership paid their share of all previously deferred property
management and leasing fees. The balance of unpaid property management and
<PAGE>
leasing fees in the consolidated financial statements at December 31, 1997
reflected the amount due to the General Partners and their affiliates from
the Partnership's affiliated venture partner in the Carlyle/National City
venture which were paid in February of 1998.
YERBA BUENA OFFICE BUILDING
In June 1992, title to the Yerba Buena Office Building in San
Francisco, California was transferred to the lender by the joint venture (a
partnership comprised of the Partnership, two other limited partnership
sponsored by the Partnership's Corporate General Partner and four
unaffiliated limited partners). In return for a transition of title and
management of the property, the joint venture negotiated the right to share
in future sale proceeds, if any, above certain specified levels. In
addition, the joint venture had a right of first opportunity to purchase
the property during the time frame of June 1995 through May 1998 should the
lender wish to market the property for sale. The lender sold the property
to an unaffiliated third party during 1996. The sale price did not
generate a level of distributable proceeds where the joint venture would
have been entitled to share. However, the joint venture was not given an
opportunity to purchase the property on the same terms it was sold for.
The joint venture has filed a suit against the lender for breach of its
obligation. In June 1998, the court granted the lender's motion for
summary judgment and dismissed the lawsuit. The joint venture currently
intends to appeal the court's order dismissing the lawsuit. There is no
assurance that such an appeal will be successful or that the joint venture
will recover any amounts in connection with the lawsuit.
PERMIAN MALL
The lender that held the mortgage secured by the Permian Mall
investment property realized upon its security on April 2, 1996. The
Partnership has title to a small parcel of land at the Permian Mall, which
was not encumbered by the mortgage. The Partnership is currently exploring
its options related to such outparcel, including marketing the outparcel
for sale. However, there can be no assurance that any such sale will occur
or that it will net any substantial proceeds.
NATIONAL CITY CENTER
On December 18, 1997, Carlyle/National City sold the National City
Center Office Building. As the Partnership had committed to a plan to sell
the property, the property was classified as held for sale or disposition
as of December 31, 1996 and therefore was no longer subject to continued
depreciation. The sale price of the land and improvements was $82,150,000.
Cash proceeds, after selling costs and the $54,277,977 mortgage assumed by
the purchaser, was $26,371,722 of which the Partnership's share was
$22,752,070. As a result of the sale, the Partnership recognized a gain of
$17,031,847, net of venture partner's share of $2,960,266, for financial
reporting purposes and a gain of $48,326,193 for Federal income tax
purposes in the fourth quarter of 1997. In addition, in connection with
the sale of this property and as is customary in such transactions,
Carlyle/National City agreed to certain representations, warranties and
covenants with a stipulated survival period which expires December 17,
1998. Although it is not expected, Carlyle/National City and the
Partnership may ultimately have some liability under such representations,
warranties and covenants which are limited to actual damages and shall in
no event exceed $2,0000,000 in aggregate of which the Partnership's share
is approximately $1,725,000.
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1998
and for the three and six months ended June 30, 1998 and 1997.
<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 consolidated
financial statements for additional information concerning 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. The
Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests.
During 1996 and 1997 some of the Limited Partners in the Partnership
received from unaffiliated third parties unsolicited tender offers to
purchase up to 4.9% of the Interests in the Partnership between $50 and
$105 per Interest. The Partnership recommended against acceptance of these
offers on the basis that, among other things, the offer prices were
inadequate. Such offers have expired. As of the date of this report, the
Partnership is aware that 6.57% of the Interests have been purchased by
such unaffiliated third parties either pursuant to such tender offers or
through negotiated purchases. As the Partnership is currently winding up
its affairs and expects to make a final liquidating distribution in late
1998 (depending upon, among other things, Yerba Buena, as discussed below),
it is unlikely that any further tender offers for Interests will be made.
At June 30, 1998, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $3,760,000. The Partnership's
share of such funds are available for distributions to partners, the
venture partner in Carlyle/National City joint venture, potential
obligations related to representations and warranties given pursuant to the
sale of National City Center and for working capital requirements.
The affairs of the Partnership are expected to be wound up no later
than December 31, 1998, barring unforeseen economic developments. The
timing of such termination will depend upon, among other things, the
resolution of the Yerba Buena lawsuit as discussed in the Notes. It is
uncertain at this time whether this dispute will be resolved by the end of
1998. Because the amount of the potential recovery by the Partnership
would likely exceed the costs of the lawsuit and the costs of keeping the
Partnership open, the Partnership expects to remain open until the lawsuit
is resolved.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents and venture partner's equity
in venture at June 30, 1998 as compared to December 31, 1997 is primarily
due to the Carlyle/National City making a distribution in February of 1998
of a portion of the proceeds from the sale of National City Center office
building to the Partnership's venture partner of $3,980,395. Additionally,
the decrease in cash and cash equivalents is due to the February 1998
distribution of sales proceeds related to the sale of National City Center
office building of $20,798,700 ($130 per interest) to the Limited Partners
and a distribution of $4,799,700 ($30 per interest) to the Limited Partners
and $199,987 to the General Partners from Partnership operational cash flow
and reserves, including those from offering proceeds.
The decrease in interest, rents and other receivables at June 30, 1998
as compared to December 31, 1997 is primarily due to the timing of certain
receipts of the Partnership.
<PAGE>
The decrease in accounts payable at June 30, 1998 as compared to
December 31, 1997 is primarily due to the timing of payments for certain
expenses of the Partnership and the payment of previously deferred
management fees related to National City Center to an affiliate of the
General Partner.
Significant fluctuations in the accompanying consolidated statements
of operations not otherwise reported herein are primarily the result of the
sale of the National City Center in December 1997.
The increase in interest income for the six months ended June 30, 1998
as compared to the six months ended June 30, 1997 is primarily due to a
higher average invested cash balance in 1998 due to the investment of the
sale proceeds related to the National City Center prior to the February
1998 distribution mentioned above.
The increase in professional services for the three and six months
ended June 30, 1998 as compared to the three and six months ended June 30,
1997 is primarily due to legal fees incurred related to the Yerba Buena
lawsuit discussed in the notes to consolidated financial statements.
Management fees to corporate general partner for the six months ended
June 30, 1998 reflect the fees paid related to the February 1998
distribution from Partnership operational cash flow and reserves.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3-A. The Prospectus of the Partnership dated June 21,
1982, as supplemented on August 24, 1982, October 21, 1982, November 1,
1982, December 22, 1982 and February 18, 1983, as filed with the Commission
pursuant to Rules 424(b) and 424(c), is hereby incorporated herein by
reference to the Partnership's Registration Statement on Form S-11 (File
No. 2-76443) dated June 21, 1982.
3-B. Amended and Restated Agreement of Limited Partnership
set forth as Exhibit A to the Prospectus, is incorporated by reference to
the Partnership's Registration Statement on Form S-11 (File No. 2-76443)
dated June 21, 1982.
3-C. Acknowledgement of rights and duties of the General
Partners of the Partnership between ABPP Associates, L.P. (a successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 is hereby incorporated herein by reference to the
Partnership's report for June 30, 1996 on Form 10-Q (File No. 0-12433)
dated August 9, 1996.
10-A. Purchase agreement and exhibits thereto between
Carlyle/National City Associates, an Illinois general partnership, and
BRE/City Center, LLC, a Delaware limited liability company dated
December 3, 1997 is hereby incorporated herein by reference to the
Partnership's report for December 18, 1998 on Form 8-K (File No. 0-12433)
dated January 2, 1998.
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 - XII
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: August 12, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: August 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,760,468
<SECURITIES> 0
<RECEIVABLES> 182,943
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,943,411
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,943,411
<CURRENT-LIABILITIES> 346,096
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,520,915
<TOTAL-LIABILITY-AND-EQUITY> 3,943,411
<SALES> 74,783
<TOTAL-REVENUES> 402,677
<CGS> 0
<TOTAL-COSTS> 5,437
<OTHER-EXPENSES> 703,722
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (306,482)
<INCOME-TAX> 0
<INCOME-CONTINUING> (344,688)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (344,688)
<EPS-PRIMARY> (2.07)
<EPS-DILUTED> (2.07)
</TABLE>
