SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1997 Commission file no. 0-12433
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(Exact name of registrant as specified in its charter)
Illinois 36-3149589
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Documents incorporated by reference: None
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings. . . . . . . . . . . . . . 7
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . 7
PART II
Item 5. Market for the Partnership's Limited
Partnership Interests and
Related Security Holder Matters. . . . . . . 7
Item 6. Selected Financial Data. . . . . . . . . . . 8
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . 10
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 11
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 12
Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . 33
PART III
Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . 33
Item 11. Executive Compensation . . . . . . . . . . . 36
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 38
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 39
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 39
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . 42
i
<PAGE>
PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report. Capitalized
terms used herein, but not defined, have the same meanings as used in the
Notes.
The registrant, Carlyle Real Estate Limited Partnership - XII (the
"Partnership"), is a limited partnership formed in late 1981 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois to invest in improved income-producing commercial and residential
real property. The Partnership sold $160,000,000 in Limited Partnership
Interests (the "Interests"), to the public pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933 (Registration No.
2-76443). A total of 160,000 Interests have been sold to the public at
$1,000 per Interest. The offering closed on April 19, 1983. No Limited
Partner has made any additional capital contribution after such date. The
Limited Partners of the Partnership share in their portion of the benefits
of ownership of the Partnership's real property investments according to
the number of Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments have been held by fee title, leasehold estates and/or
through joint venture partnership interests. The Partnership has disposed
of its last remaining real property investment located in the state of
Ohio. A presentation of information about industry segments, geographic
regions, raw materials or seasonality is not applicable and would not be
material to an understanding of the Partnership's business taken as a
whole. Pursuant to the Partnership Agreement, the Partnership is required
to terminate no later than December 31, 2032. At sale of a particular
property, the net proceeds, if any, are generally distributed or reinvested
in existing properties rather than invested in acquiring additional
properties. As discussed further in Item 7, the Partnership currently
expects to conduct an orderly liquidation of its remaining investment
property as quickly as possible and wind up its affairs not later than
December 31, 1998, barring any unforeseen economic developments.
The Partnership made the real property investments set forth in the
following table:
<PAGE>
<TABLE>
<CAPTION>
Name, Type of Property Date of
and Location Size Purchase Sale or Disposal Date Type of Ownership
- ---------------------- ---- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Country Square
Apartments
Carrollton, Texas . 434 units 9-30-82 2-2-93 fee ownership of land
and improvements
(through joint
venture partnership)
2. Timberline
Apartments
Denver, Colorado. . 200 units 11-1-82 7-25-90 fee ownership of land
and improvements
3. Summerfield/Oak-
ridge Apartments
Aurora, Colorado. . 472 units 12-1-82 1-3-91 fee ownership of land
and improvements
(through joint
venture partnership)
4. Arbor Town
Apartments-I
Arlington, Texas. . 200 units 12-29-82 11-26-84 fee ownership of land
and improvements
5. Arbor Town
Apartments-II
Arlington, Texas. . 202 units 11-1-82 11-26-84 fee ownership of land
and improvements
6. Sierra Pines
Apartments
Houston, Texas. . . 404 units 3-31-82 7-29-93 fee ownership of land
and improvements
7. Presidio West
Apartments-II
Houston, Texas. . . 400 units 9-16-82 1-1-86 fee ownership of land
and improvements
8. Meadows South-
west Apartments
Houston, Texas. . . 384 units 4-1-82 12-28-90 fee ownership of land
and improvements
9. The Crossing
Apartments
Houston, Texas. . . 366 units 8-1-82 7-29-93 fee ownership of land
and improvements
<PAGE>
Name, Type of Property Date of
and Location Size Purchase Sale or Disposal Date Type of Ownership
- ---------------------- ---- -------- ---------------------- ---------------------
10. Stonybrook
Apartments-I & II
Tucson, Arizona. . 411 units 10-1-82 5-23-96 fee ownership of land
and improvements
(through joint venture
partnership) (a)(b)
11. First Interstate
Center
Seattle,
Washington . . . . 921,000 3-10-82 12-15-95 fee ownership of
sq.ft. improvements and
n.r.a. and ground leasehold
interest (through joint
venture partnership)
(a)(b)
12. Carrara Place
Office Building
Englewood,
Colorado . . . . . 233,000 11-23-82 12-8-94 fee ownership of land
sq.ft. and improvements
n.r.a. (through joint venture
partnership)
13. San Mateo
Fashion Island
San Mateo,
California . . . . 832,000 9-10-82 12-31-86 fee ownership of land
sq.ft. and improvements and
g.l.a. ground leasehold
interest in land
(a)
14. Permian Mall
Odessa, Texas. . . 665,000 12-28-82 4-2-96 fee ownership of land
sq.ft. and improvements (a)
g.l.a.
15. National City
Center Office
Building
Cleveland, Ohio. . 786,400 7-27-83 12-18-97 fee ownership of land
sq.ft. and improvements
n.r.a. (through joint
venture partnership)
(a) (b)
<PAGE>
Name, Type of Property Date of
and Location Size Purchase Sale or Disposal Date Type of Ownership
- ---------------------- ---- -------- ---------------------- ---------------------
16. Yerba Buena
West Office
Building
San Francisco,
California . . . . 268,000 8-30-85 6-24-92 fee ownership of land
sq.ft. and improvements
n.r.a. (through joint venture
partnership)(a)
<FN>
- ---------------
(a) This property has been sold or disposed. Reference is made to the Notes for a description of the sale or
disposition of such real property investment.
(b) Reference is made to the Notes for a description of the joint venture partnership through which the
Partnership made this real property investment.
</TABLE>
<PAGE>
The Partnership's real property investments were subject to
competition from similar types of properties (including properties owned by
affiliates of the General Partners) in the vicinities in which they were
located. Such competition was generally for the retention of existing
tenants. Additionally, the Partnership was in competition for new tenants.
Reference is made to Item 7. Approximate occupancy levels for the
remaining investment property owned in 1997 are set forth in the table in
Item 2 below to which reference is made. The Partnership maintained the
suitability and competitiveness of its property in its market primarily on
the basis of effective rents, tenant allowances and services provided to
tenants.
On December 18, 1997, the Partnership through its joint venture sold
the National City Center office building. Reference is made to the Notes
for a further description of such transaction.
The Partnership has no employees.
The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.
<PAGE>
<TABLE>
ITEM 2. PROPERTIES
The Partnership owned directly or through joint venture partnerships the property or interest in the property
referred to under Item 1 above to which reference is hereby made for a description of said property.
The following is a listing of principal businesses or occupations carried on in and approximate occupancy
levels by quarter during fiscal years 1997 and 1996 for the Partnership's investment property owned during 1997:
<CAPTION>
1996 1997
------------------------- -------------------------
At At At At At At At At
Principal Business 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> <C>
1. National City Center
Office Building
Cleveland, Ohio. . . . . Banking 97% 97% 95% 95% 89% 89% 90% N/A
<FN>
- --------------------
An "N/A" indicates that the Partnership's interest in the property was sold and was not owned by the
Partnership at the end of the quarter.
</TABLE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any pending material legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
1996 and 1997.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1997, there were 15,936 record holders of the
159,990 Interests outstanding of the Partnership. There is no public
market for Interests and it is not anticipated that a public market for
Interests will develop. Upon request, the Corporate General Partner may
provide information relating to a prospective transfer of Interests to an
investor desiring to transfer his Interests. The price to be paid for the
Interests, as well as any other economic aspects of the transaction, will
be subject to negotiation by the investor. There are certain conditions
and restrictions on the transfer of Interests, including, among other
things, the requirements that the substitution of a transferee of Interests
as a Limited Partner of the Partnership be subject to the written consent
of the Corporate General Partner, which may be granted or withheld in its
sole and absolute discretion. The rights of a transferee of Interests who
does not become a substituted Limited Partner will be limited to the rights
to receive his share of profits or losses and cash distributions from the
Partnership, and such transferee will not be entitled to vote such
Interests or have other rights of a limited partner. No transfer will be
effective until the first day of the next succeeding calendar quarter after
the requisite transfer form satisfactory to the Corporate General Partner
has been received by the Corporate General Partner. The transferee
consequently will not be entitled to receive any cash distributions or any
allocable share of profits or losses for tax purposes until such succeeding
calendar quarter. Profits or losses from operations of the Partnership for
a calendar year in which a transfer occurs will be allocated between the
transferor and the transferee based upon the number of quarterly periods in
which each was recognized as the holder of Interests, without regard to the
results of Partnership's operations during particular quarterly periods and
without regard to whether cash distributions were made to the transferor or
transferee. Profits or losses arising from the sale or other disposition
of Partnership properties will be allocated to the recognized holder of the
Interests as of the last day of the quarter in which the Partnership
recognized such profits or losses. Cash distributions to a holder of
Interests arising from the sale or other disposition of Partnership
properties will be distributed to the recognized holder of the Interests as
of the last day of the quarterly period with respect to which distribution
is made.
Reference is made to Item 6 below for a discussion of cash distribu-
tions made to the Limited Partners.
Reference is made to Item 7 below for a discussion of unsolicited
tender offers received from unaffiliated third parties.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1997 1996 1995 1994 1993
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . $ 13,953,548 17,687,780 23,238,472 43,570,909 49,186,211
============ =========== =========== =========== ===========
Earnings (loss) before
gain on sale or dispo-
sition of investment
property . . . . . . . . 2,486,816 405,819 (707,698) (2,916,402) (4,671,481)
Gain on sale or
disposition of
investment properties,
or interest in investment
properties, net of
venture partners' share. 17,031,847 7,080,695 15,690,781 30,614,901 4,091,683
Extraordinary items . . . -- -- (675,062) --
------------ ----------- ----------- ----------- -----------
Net earnings (loss) . . . $ 19,518,663 7,486,514 14,983,083 27,023,437 (579,798)
============ =========== =========== =========== ===========
Net earnings (loss)
per limited part-
nership interest (b):
Earnings (loss) before
gain on sale or dispo-
sition of investment
property . . . . . . . $ 14.92 2.44 (4.25) (17.50) (28.03)
Gain on sale or
disposition of
investment properties,
or interest in invest-
ment properties, net
of venture partners'
share. . . . . . . . . 56.61 43.81 97.08 189.42 25.32
Extraordinary items . . -- -- -- (4.18) --
------------ ----------- ----------- ----------- -----------
Net earnings
(loss). . . . . . $ 71.53 46.25 92.83 167.74 (2.71)
============ =========== =========== =========== ===========
<PAGE>
1997 1996 1995 1994 1993
------------- ------------- ----------- ------------ ------------
Total assets. . . . . . . $ 34,436,873 69,599,208 95,288,548 125,013,528 209,636,156
============ =========== =========== =========== ===========
Long-term debt. . . . . . $ -- 54,277,855 59,465,831 93,051,656 194,712,434
============ =========== =========== =========== ===========
Cash distributions
per Interest (c). . . . $ -- 60.00 145.00 -- --
============ =========== =========== =========== ===========
<FN>
- -------------
(a) The above selected financial data should be read in conjunction with the consolidated financial
statements and the related notes appearing elsewhere in this annual report.
(b) The net earnings (loss) per Interest is based upon the number of Interests outstanding at the end of each
year.
(c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each Partner's taxable income (loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of the Partnership. Accordingly, cash
distributions to the Limited Partners since the inception of the Partnership have not resulted in taxable income
to such Limited Partners and have therefore represented a return of capital.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the public offering of Interests as described in
Item 1, the Partnership had approximately $141,004,000 (after deducting
selling expenses and other offering costs) with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such invest-
ments and to satisfy working capital requirements. Portions of the
proceeds were utilized to acquire the properties described in Item 1 above.
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 at 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 expired. As of the date of this report, the
Partnership is aware that 5.49% 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, it is unlikely that any further tender offers will be made for
Interests. 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.
At December 31, 1997, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $34,100,000. Such funds are
available for future 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.
In February 1998, Carlyle/National City made a distribution 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,
in February 1998, the Partnership paid a 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 an operating distribution
of $4,799,700 ($30 per interest) to the Limited Partners and $199,987 to
the General Partners.
STONYBROOK APARTMENTS
On May 23, 1996, the Partnership, through the Stonybrook Partners
Limited Partnership joint venture, sold the Stonybrook Apartments I & II.
Reference is made to the Notes for a further description of such sale.
NATIONAL CITY CENTER
On December 18, 1997, the Partnership through the Carlyle/National
City joint venture, sold the National City Center office building.
Reference is made to the Notes for a further description of such sale.
PERMIAN MALL
On April 2, 1996, the lender realized upon its security in the Permian
Mall. Reference is made to the Notes for a further description of such
disposition.
<PAGE>
GENERAL
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
anticipated that the Limited Partners will receive approximately half of
their original investment from all sources.
RESULTS OF OPERATIONS
Significant variances between periods reflected in the accompanying
consolidated financial statements not otherwise reported are primarily the
result of the sale of the National City Center Office Building in December
1997, the sale of Stonybrook Apartments in May 1996 and the lender
realizing upon its security in the Permian Mall in April 1996.
The decreases in depreciation and increase in venture partners' share
of ventures' operations for the year ended December 31, 1997 as compared to
the year ended December 31, 1996 and the year ended December 31, 1996 as
compared to the year ended December 31, 1995 are primarily due to the
classification of the National City Center as assets held for sale as of
December 31, 1996 and Stonybrook Apartments and Permian Mall as assets held
for sale as of January 1, 1996 and therefore not subject to continued
depreciation, as of those dates.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses. Due to the sale of the Partnership's last
remaining investment property in 1997 and the expected liquidation of the
Partnership in 1998, inflation is not expected to significantly impact
future operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1997 and 1996
Consolidated Statements of Operations, years ended December 31,
1997, 1996 and 1995
Consolidated Statements of Partners' Capital Accounts (Deficit),
years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows, years ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements
SCHEDULES NOT FILED:
All schedules have been omitted as the required information is inap-
plicable or the information is presented in the consolidated financial
statements or related notes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII:
We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XII (a limited partnership) and consolidated
ventures as listed in the accompanying index. These consolidated financial
statements are the responsibility of the General Partners of the
Partnership. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XII and consolidated ventures at
December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1997, in conformity with generally accepted accounting
principles.
As discussed in the Notes to the consolidated financial statements, in
1996, the Partnership and its consolidated ventures changed their method of
accounting for long-lived assets and long-lived assets to be disposed of to
conform with Statement of Financial Accounting Standards No. 121.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 25, 1998
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
------
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 34,078,416 6,667,839
Interest, rents and other receivables . . . . . . . . . . . . . . . 358,457 68,860
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . -- 59,345
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,964,692
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . 34,436,873 8,760,736
------------ -----------
Properties held for sale or disposition . . . . . . . . . . . . . -- 59,086,511
------------ -----------
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . -- 319,838
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . -- 819,823
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 612,300
------------ -----------
$ 34,436,873 69,599,208
============ ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1997 1996
------------ -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ -- 1,172,876
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 754,294 552,586
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . -- 266,075
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . -- 1,864,657
Other current liabilities . . . . . . . . . . . . . . . . . . . . . -- 691,250
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . 4,547,444
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . -- 305
Long-term debt, less current portion. . . . . . . . . . . . . . . . . -- 54,277,855
------------ -----------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . 754,294 58,825,604
Venture partner's equity in venture . . . . . . . . . . . . . . . . . 4,018,589 628,277
Partners' capital accounts (deficit):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . 99,049 (7,974,796)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (900,049) (900,049)
------------ -----------
(800,000) (8,873,845)
------------ -----------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . 141,003,683 141,003,683
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . (57,691,752) (69,136,570)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (52,847,941) (52,847,941)
------------ -----------
30,463,990 19,019,172
------------ -----------
Total partners' capital accounts (deficits). . . . . . . . . . 29,663,990 10,145,327
------------ -----------
$ 34,436,873 69,599,208
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $ 13,507,001 17,181,310 22,300,351
Interest income . . . . . . . . . . . . . . . . . 446,547 506,470 938,121
------------ ----------- -----------
13,953,548 17,687,780 23,238,472
------------ ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . . 4,495,800 6,025,827 9,024,210
Depreciation. . . . . . . . . . . . . . . . . . . -- 2,573,900 3,478,485
Property operating expenses . . . . . . . . . . . 5,924,002 7,873,109 11,000,332
Management fees to corporate general partner. . . -- 55,557 --
Professional services . . . . . . . . . . . . . . 149,150 243,600 271,107
Amortization of deferred expenses . . . . . . . . 62,706 62,600 64,233
General and administrative. . . . . . . . . . . . 405,027 366,474 385,664
------------ ----------- -----------
11,036,685 17,201,067 24,224,031
------------ ----------- -----------
2,916,863 486,713 (985,559)
Venture partners' share of ventures'
operations. . . . . . . . . . . . . . . . . . . . (430,047) (80,894) 277,861
------------ ----------- -----------
Earnings (loss) before gain on sale or
disposition of property. . . . . . . . . . 2,486,816 405,819 (707,698)
Gain on sale or disposition, net of venture
partners' share . . . . . . . . . . . . . . . . . 17,031,847 7,080,695 15,690,781
------------ ----------- -----------
Net earnings (loss) . . . . . . . . . . . . $ 19,518,663 7,486,514 14,983,083
============ =========== ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1997 1996 1995
------------ ------------ ------------
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on sale
or disposition of investment
property. . . . . . . . . . . . . . . $ 14.92 2.44 (4.25)
Net gain on sale or disposition
of interests in investment
properties, net of venture
partner's share . . . . . . . . . . . 56.61 43.81 97.08
------------ ----------- -----------
Net earnings (loss) . . . . . . . . . . . . $ 71.53 46.25 92.83
============ =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ -------------------------------------------------------
CONTRI-
BUTIONS
NET CASH NET OF NET
CONTRI- EARNINGS DISTRI- OFFERING EARNINGS CASH
BUTIONS (LOSS) BUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ---------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
Decem-
ber 31,
1994 . . .$1,000 (8,190,436) (583,877) (8,773,313) 141,003,683 (91,390,527) (20,047,816) 29,565,340
Net earnings
(loss) . . -- 128,600 -- 128,600 -- 14,854,483 -- 14,854,483
Cash dis-
tribution
($145 per
Limited
Partner
interest). -- -- (234,351) (234,351) -- -- (23,200,725) (23,200,725)
------ ---------- -------- ---------- ----------- ----------- ----------- ----------
Balance
(deficit)
Decem-
ber 31,
1995 . . . 1,000 (8,061,836) (818,228) (8,879,064) 141,003,683 (76,536,044) (43,248,541) 21,219,098
Net earnings
(loss) . . -- 87,040 -- 87,040 -- 7,399,474 -- 7,399,474
Cash dis-
tribution
($60 per
Limited
Partner
interest). -- -- (81,821) (81,821) -- -- (9,599,400) (9,599,400)
------ ---------- -------- ---------- ----------- ----------- ----------- ----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ -------------------------------------------------------
CONTRI-
BUTIONS
NET CASH NET OF NET
CONTRI- EARNINGS DISTRI- OFFERING EARNINGS CASH
BUTIONS (LOSS) BUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ---------- ----------- ----------- ----------- ------------- -----------
Balance
(deficit)
Decem-
ber 31,
1996 . . . 1,000 (7,974,796) (900,049) (8,873,845) 141,003,683 (69,136,570) (52,847,941) 19,019,172
Net earnings
(loss) . . 8,073,845 -- 8,073,845 -- 11,444,818 -- 11,444,818
Cash dis-
tribution
($0 per
Limited
Partner
interest). -- -- -- -- -- -- -- --
------ ---------- -------- ---------- ----------- ----------- ----------- ----------
Balance
(deficit)
Decem-
ber 31,
1997 . . .$1,000 99,049 (900,049) (800,000) 141,003,683 (57,691,752) (52,847,941) 30,463,990
====== ========== ======== ========== =========== =========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
------------ ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $ 19,518,663 7,486,514 14,983,083
Items not requiring (providing) cash:
Depreciation. . . . . . . . . . . . . . . . . . -- 2,573,900 3,478,485
Amortization of deferred expenses . . . . . . . 62,706 62,600 64,233
Amortization of discount on long-term debt. . . -- 79,333 299,737
Venture partners' share of ventures'
operations and gain on sale or
disposition of investment properties. . . . . 3,390,312 87,825 5,437,608
Total gain on sale or disposition of
investment properties or interests
in investment properties. . . . . . . . . . . (19,992,112) (7,087,626) (21,406,250)
Changes in:
Interest, rents and other receivables . . . . . (992,367) (5,710) 10,707
Prepaid expenses. . . . . . . . . . . . . . . . 59,345 39,166 (13,714)
Escrow deposits . . . . . . . . . . . . . . . . 979,577 (72,572) 531,334
Accrued rents receivable. . . . . . . . . . . . 819,823 51,122 (229,785)
Accounts payable. . . . . . . . . . . . . . . . 193,803 (7,635) (173,151)
Accrued interest. . . . . . . . . . . . . . . . (266,075) (5,171) 1,298,520
Accrued real estate taxes . . . . . . . . . . . (1,864,657) 438,312 43,339
Other current liabilities . . . . . . . . . . . (691,250) 617,652 (316,075)
Tenant security deposits. . . . . . . . . . . . -- (12,201) (1,204)
------------ ------------ -------------
Net cash provided by (used in)
operating activities. . . . . . . . . . 1,217,768 4,245,509 4,006,867
------------ ------------ -------------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996 1995
------------ ------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of
short-term investments. . . . . . . . . . . . . -- -- 1,944,746
Additions to investment properties. . . . . . . . (579,997) (1,479,343) (603,671)
Proceeds from sale of investment properties,
net of selling expenses . . . . . . . . . . . . 26,371,722 4,571,594 --
Escrow (deposits) refunds, net. . . . . . . . . . 1,597,415 (246,999) (385,450)
Payment of deferred expenses. . . . . . . . . . . (23,577) (5,657) --
------------ ------------ -------------
Net cash provided by (used in)
investing activities. . . . . . . . . . 27,365,563 2,839,595 955,625
------------ ------------ -------------
Cash flows from financing activities:
Bank overdrafts . . . . . . . . . . . . . . . . . -- (604,570) 604,570
Principal payments on long-term debt. . . . . . . (1,172,754) (1,077,624) (1,690,043)
Distributions to limited partners . . . . . . . . -- (9,599,400) (23,200,725)
Distributions to general partners . . . . . . . . -- (81,821) (234,351)
------------ ------------ -------------
Net cash provided by (used in)
financing activities. . . . . . . . . . (1,172,754) (11,363,415) (24,520,549)
------------ ------------ -------------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . 27,410,577 (4,278,311) (19,558,057)
Cash and cash equivalents,
beginning of year . . . . . . . . . . . 6,667,839 10,946,150 30,504,207
------------ ------------ -------------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . $ 34,078,416 6,667,839 10,946,150
============ ============ =============
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996 1995
------------ ------------ -----------
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . $ 4,761,875 5,951,665 7,425,953
============ ============ =============
Non-cash investing and financing activities:
Disposition of investment properties:
Balance due on mortgage note payable canceled . $ -- 22,054,561 --
Balance due on note payable canceled. . . . . . -- -- 15,000,000
Discount on long-term debt canceled . . . . . . -- (4,220,143) --
Recognition of deferred gain on sale
of interest in investment property. . . . . . -- -- 5,000,000
Reduction of investment property. . . . . . . . -- (15,700,569) --
Reduction of current assets and liabilities . . -- 515,905 --
Reduction of accrued interest payable . . . . . -- -- 1,406,250
------------ ------------ -------------
Non-cash gain recognized on
disposition of investment property. . . . . $ -- 2,649,754 21,406,250
============ ============ =============
Sale of investment properties:
Total sales proceeds,
net of selling expenses . . . . . . . . . . $ 80,649,699 8,632,944 --
Principal balance on loans payable. . . . . . (54,277,977) (4,061,350) --
------------ ------------ -------------
Cash sales proceeds from sale of
investment properties, net of
selling expenses . . . . . . . . . . . $ 26,371,722 4,571,594 --
============ ============ =============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership held (through a joint venture) an equity investment in
an office building located in Ohio. Business activities consisted of
rentals to a variety of commercial and retail companies, and the ultimate
sale of such real estate. The Partnership currently expects to conduct an
orderly liquidation and wind up its affairs not later than December 31,
1998.
The accompanying consolidated financial statements include the
accounts of the Partnership and its majority-owned ventures, Carlyle
Seattle Associates ("Carlyle Seattle") (prior to sale of its interest),
Stonybrook Partners Limited Partnership ("Stonybrook") (prior to its sale
in May 1996), Carlyle/National City Associates ("Carlyle/National City")
(prior to its sale in December 1997). The effect of all transactions
between the Partnership and the consolidated ventures has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to Wright-Carlyle Seattle
("First Interstate"), effective December 1, 1994, due to the sale of 49.95%
of Carlyle Seattle's interest until the remaining interest was sold on
December 15, 1995. Accordingly, the accompanying consolidated financial
statements do not include the accounts of entities accounted for under the
equity method.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying 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 GAAP and consolidation adjustments are not recorded on the
records of the Partnership. The net effect of these items for the years
ended December 31, 1997 and 1996 is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1997 1996
------------------------------ ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
(UNAUDITED) (UNAUDITED)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . $ 34,436,873 49,203,008 69,599,208 22,631,510
Partners' capital accounts
(deficits):
General partners. . . . . . . . (800,000) (217,650) (8,873,845) (3,752,860)
Limited partners. . . . . . . . 30,463,990 49,335,043 19,019,172 6,716,371
Net earnings (loss):
General partners. . . . . . . . 8,073,845 3,535,210 87,040 1,906,605
Limited partners. . . . . . . . 11,444,818 42,618,671 7,399,474 19,243,593
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . . 71.53 266.38 46.25 120.28
============ =========== =========== ===========
</TABLE>
<PAGE>
The net earnings (loss) per limited partnership interest is based upon
the limited partnership interests outstanding at the end of each year.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations and certificates 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 ($33,940,437 and
$5,760,588 held at December 31, 1997 and 1996, respectively) as cash
equivalents, which includes investments in an institutional mutual fund
which holds U.S. Government obligations, with any remaining amounts
reflected as short-term investments being held to maturity.
Deferred expenses were comprised principally of deferred leasing
commissions and deferred lease assumption costs which were amortized over
the lives of the related leases and deferred mortgage costs which were
amortized over the term of the related notes.
Although certain leases of the Partnership provided for tenant
occupancy during periods for which no rent was due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrued
rental income for the full period of occupancy on a straight-line basis.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership may be
required under applicable law to remit directly to the taxing authorities
amounts representing withholding from distributions paid to partners.
The Partnership has acquired, either directly or through joint
ventures, ten apartment complexes, four office buildings, and two enclosed
shopping malls. During 1984, the Partnership sold its interest in the
Arbor Town Apartments-I and the Arbor Town Apartments-II complexes but
retained a security interest therein. Subsequently, in 1992, the first
mortgage lenders on the Arbor Town Apartments-I and Arbor Town Apartments-
II complexes realized upon their security and obtained title to the
properties resulting in the Partnership no longer having such security
interest in the properties. In 1986, the Partnership conveyed its interest
in the Presidio West Apartments-II and sold its interest in the San Mateo
shopping center. In 1990, the Partnership disposed of its interest in the
Timberline Apartments and sold its interest in the Meadows Southwest
Apartments. In 1991, the Partnership, through its joint venture, disposed
of its interest in the Summerfield/Oakridge Apartments. In 1992, the joint
venture which owned the Yerba Buena West Office Building transferred title
to the property to the lender. In 1993, the Partnership sold its interest
in the Sierra Pines Apartments and The Crossing Apartments, and disposed of
its interest in the Country Square Apartments. In 1994, the Partnership
redeemed its interest in Carrara Place Limited. Also in 1994, Carlyle
<PAGE>
Seattle sold 49.95% of its interest in and issued an option to sell its
remaining 50.05% interest in the First Interstate venture. In 1995,
Carlyle Seattle sold its remaining interest in the First Interstate
venture, as discussed below. In 1996, the Partnership, through a joint
venture, sold the Stonybrook Apartments. Also, in 1996, the lender
realized upon its security and obtained title to the Permian Mall. In
1997, the Partnership, through a joint venture, sold the National City
Center office building.
Depreciation on the operating properties had been provided over
estimated useful lives of 5 to 30 years using the straight-line method.
Maintenance and repair expenses were charged to operations as
incurred. Significant betterments and improvements were capitalized and
depreciated over their estimated useful lives.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. SFAS 121 requires that the Partnership record an
impairment loss on its properties to be held for investment whenever their
carrying value cannot be fully recovered through estimated undiscounted
future cash flows from their operations and sale. The amount of the
impairment loss to be recognized would be the difference between the
property's carrying value and the property's estimated fair value. The
Partnership's policy is to consider a property to be held for sale or
disposition when the Partnership has committed to a plan to sell of such
property and active marketing activity has commenced or is expected to
commence in the near term. In accordance with SFAS 121, any properties
identified as "held for sale or disposition" were no longer depreciated.
Adjustments for impairment loss for such properties (subsequent to the date
of adoption of SFAS 121) were made in each period as necessary to report
these properties at the lower of carrying value or fair value less costs to
sell. The adoption of SFAS 121 did not have any effect on the
Partnership's financial position, results of operations or liquidity.
The results of operations for consolidated properties, net of venture
partners' share, sold or disposed of during the past three years were
$2,703,152, $728,582 and ($801,138), respectively, for the three years
ended December 31, 1997, 1996 and 1995.
During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. These standards became
effective for reporting periods after December 15, 1997. As the
Partnership's capital structure only has general and limited partnership
interests, the Partnership will not experience any significant impact on
its consolidated financial statements.
INVESTMENT PROPERTIES
National City Center Office Building
In July 1983, the Partnership acquired, through Carlyle/National City
(a joint venture with Carlyle Real Estate Limited Partnership-XI, a
partnership sponsored by the Corporate General Partner of the Partnership
("Carlyle-XI")), an interest in an office building in Cleveland, Ohio.
The Partnership made an initial contribution of $35,081,513 to
Carlyle/National City. The terms of the Carlyle/National City venture
agreement provide that the capital contributions, annual cash flow, net
proceeds from sale or refinancing and profit or loss will be allocated or
distributed 86.2745% to the Partnership. The Partnership's net cash
investment in the property was $27,708,692 before the $5,568,354
distribution resulting from the increase in the first mortgage loan.
<PAGE>
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 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.
Carlyle/National City reached an agreement with the current mortgage
lender to refinance the existing mortgage effective April 28, 1994. The
loan was amortized over 22 years with a scheduled balloon payment due on
April 10, 2001. The lender required an escrow account of $612,300 to be
established at the inception of the refinancing for certain specific future
tenant improvement costs at the property. The escrowed funds were to be
released to the venture upon lender approval of such costs. The lender
also required an escrow of the tenant improvement costs related to the
extension of the Baker & Hostetler lease. The Venture was required to
escrow approximately $313,000 per year in 1994 through 1996 and to escrow
approximately $229,000 per year in 1997 and 1998. In 1996, approximately
$92,000 was received from the tenant improvement escrow. Additionally, in
January 1997 approximately $820,000 was received from the tenant
improvement escrow. All remaining amounts held in escrow prior to the sale
of National City Center (including interest earned on the escrowed funds)
were refunded to Carlyle/National City in the fourth quarter of 1997.
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. There are no assurances that the joint venture will recover
any amounts as a result of this action.
Permian Mall
The lender that held the mortgage secured by the Permian Mall
investment property realized upon its security on April 2, 1996. As the
Partnership had committed to a plan to sell or dispose of the property, the
property was classified as held for sale or disposition as of January 1,
1996 and therefore was not subject to continued depreciation. As a result
of the disposition of the property, the Partnership recognized a gain of
$2,643,751, net of venture partner's share, for financial reporting
purposes and realized a gain of $14,801,353 for Federal income tax purposes
in 1996 with no corresponding distributable proceeds.
<PAGE>
In 1997, the Partnership received a bankruptcy settlement related to a
prior tenant at the Permian Mall. The amount of the settlement was
approximately $153,000. Additionally, 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.
Stonybrook Apartments
On May 23, 1996, the Partnership, through the Stonybrook Partners
Limited Partnership joint venture, sold the land and related improvements
known as the Stonybrook Apartments I & II. As the Partnership had
committed to a plan to sell or dispose of the property, the property was
classified as held for sale or disposition as of January 1, 1996 and
therefore was not subject to continued depreciation. The purchaser was not
affiliated with the Partnership or its General Partners and the sale price
was determined by arm's-length negotiations. The sale price of the land
and improvements was $8,632,944 (after deducting selling costs). A portion
of the sales proceeds was utilized to retire the mortgage debt with an
outstanding balance of $4,061,350. As a result of the sale, the
Partnership recognized a gain of $4,436,944, net of venture partner's
share, for financial reporting purposes and recognized a gain of $7,716,980
for Federal income tax purposes in 1996.
First Interstate Center
During 1982, the Partnership acquired, through a joint venture ("First
Interstate") between Carlyle Seattle and the developer, an office building
in Seattle, Washington. Carlyle Seattle was a joint venture between the
Partnership and Carlyle Real Estate Limited Partnership-X ("C-X"), an
affiliated partnership sponsored by the Corporate General Partner of the
Partnership. Under the terms of the First Interstate venture agreement,
Carlyle Seattle made initial cash contributions aggregating $30,000,000
($22,000,000 by the Partnership).
The terms of the Carlyle Seattle venture agreement provided that all
the capital contributions were to be made in the proportion of 73.3% by the
Partnership and 26.7% by C-X. The Carlyle Seattle venture agreement
further provided that all of the venture's share of First Interstate's
annual cash flow, sale or refinancing proceeds, operating profits and
losses, and tax items would be allocated 73.3% to the Partnership and 26.7%
to C-X.
Prior to the sale transaction described below, Carlyle Seattle was
generally entitled to receive a cumulative $2,400,000 per annum preferred
distribution of cash flow. Any excess cash flow was first distributable to
the First Interstate joint venture partner up to the next $400,000 then 50%
to Carlyle Seattle and 50% to the First Interstate joint venture partner.
Operating profits or losses of the First Interstate joint venture generally
were allocated in the same ratio as the allocation of annual cash flow,
however, the joint venture partner was to be allocated not less than 25% of
such profits and losses.
In May 1994, Carlyle Seattle executed an agreement which granted an
option to sell its interest in the Wright-Carlyle Seattle ("First
Interstate") venture to the unaffiliated venture partner. The agreement
provided 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 $500,000 on
September 22, 1994) with an option for the unaffiliated venture partner to
<PAGE>
purchase the remaining 50.05% of Carlyle Seattle's interest between one
year and two years after the sale closing date. On December 1, 1994
(initial sale transaction closing) Carlyle Seattle received (from the
unaffiliated joint venture partner) $20,276,000 in cash (less non-
refundable deposits as described above) for 49.95% of its interest as
explained above. The unaffiliated venture partner paid $5,000,000 in cash
for the option of the unaffiliated venture partner to purchase the
remaining 50.05% of Carlyle Seattle's interest in First Interstate.
Additionally, the unaffiliated venture partner loaned Carlyle Seattle
$15,000,000 (bearing interest at a rate of 9% per annum with accrued
interest and unpaid principal due on January 1, 1997) which was secured by
the remaining 50.05% of Carlyle Seattle's interest in First Interstate.
The exercise price for the remaining 50.05% interest was to be $21,350,000
if the purchase option was exercised on or before December 22, 1995 and
increasing 7% per annum thereafter until the termination of the option
period. The $5,000,000 option purchase price and the balance of unpaid
principal and accrued interest on the $15,000,000 Carlyle Seattle loan
could be applied toward the exercise price. In connection with the sale
transaction, the First Interstate joint venture agreement was amended to
cause the joint venture to be converted to a limited partnership in which
Carlyle Seattle was the sole limited partner and the unaffiliated venture
partner was the sole general partner. Additionally, the amendment stated
that no profits, income or gain shall be allocable to Carlyle Seattle
except to the extent that Carlyle Seattle receives distributions from First
Interstate and operating losses shall be allocated to the extent of Carlyle
Seattle's positive capital account balance and thereafter at 25.025%. The
amended Venture Agreement provided that any distributions to Carlyle
Seattle be subordinate to the joint venture partner's preferred return (as
defined). No distributions were made to Carlyle Seattle from operations
subsequent to the initial sale transaction. Additionally, effective
December 1, 1994, until the remaining interest was sold on December 15,
1995, the equity method of accounting has been applied with respect to
Carlyle Seattle's interest in First Interstate as Carlyle Seattle's
interest had decreased to less than 50% and converted to a limited
partnership interest. The Partnership's share of proceeds from this
transaction was approximately $29,522,000. Carlyle Seattle recognized a
gain of $34,583,869 (of which the Partnership's share was $25,210,324) for
financial reporting purposes in 1994 and a gain of $83,565,440 (of which
the Partnership's share was $61,224,798) for Federal income tax purposes in
1994.
On December 15, 1995, the unaffiliated venture exercised its option to
purchase the Partnership's remaining 50.05% interest in Carlyle Seattle for
$21,350,000. The exercise price was satisfied by applying the $5,000,000
option purchase price paid at the initial closing and applying the balance
of unpaid principal ($15,000,000) and accrued interest ($1,406,250) on the
Carlyle Seattle loan. Therefore, there were no additional cash proceeds
from the sale of Carlyle Seattle's remaining 50.05% interest. As a result
of this transaction, Carlyle Seattle realized a gain on sale of
approximately $21,406,000 for financial reporting purposes in 1995 of which
the Partnership's share is approximately $15,691,000.
The office building was managed by an affiliate of the First
Interstate joint venture partner for a fee computed at 2% of base and
percentage rents.
<PAGE>
LONG-TERM DEBT - GENERAL
Long-term debt consists of the following at December 31, 1997 and
1996:
1997 1996
----------- ----------
Mortgage note; secured by the
National City Center office building
in Cleveland, Ohio; payable in
monthly installments of principal
and interest (at 8.5% per annum) of
$486,767 until April 10, 2001 when
the remaining principal balance is due
(assumed by buyer upon sale, as
discussed above) . . . . . . . . . . . . $ -- 55,450,731
----------- -----------
Total debt . . . . . . . . . . -- 55,450,731
Less current portion
of long-term debt. . . . . . -- 1,172,876
----------- -----------
Total long-term debt . . . . . $ -- 54,277,855
=========== ===========
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale or other
disposition of investment properties will be allocated first to the General
Partners in an amount equal to the greater of the amount distributable to
the General Partners as sale or refinancing proceeds from sale or other
disposition of investment properties (as described below) or 1% of the
profits from the sale or refinancing. Losses from the sale or other
disposition of investment properties will be allocated 1% to the General
Partners. The remaining sale or other disposition of investment properties
profits and losses will be allocated to the Limited Partners.
The Partnership Agreement provides that notwithstanding any allocation
contained in the Agreement, if at any time profits are realized by the
Partnership, any current or anticipated event that would cause the deficit
balance in absolute amount in the Capital Account of the General Partners
to be greater than their share of the Partnership's indebtedness (as
defined) after such event, then the allocation of Profits to the General
Partners shall be increased to the extent necessary to cause the deficit
balance in the Capital Account of the General Partners to be no less than
their respective shares of the Partnership's indebtedness (as defined)
after such event. A portion of the 1997, 1996 and 1995 Partnership
gains/income for Federal income tax purposes were reallocated to the
General Partners in accordance with this provision. In general, the effect
of this provision is to allow the deferral of the recognition of taxable
gain to the Limited Partners. Such special allocations did not have an
effect on total assets, total partners' capital or net earnings.
The General Partners are not required to make any capital contribu-
tions except under certain limited circumstances upon dissolution and
termination of the Partnership. Distributions of "net cash receipts" of
the Partnership will be allocated 90% to the Limited Partners and 10% to
the General Partners (of which 6.25% constitutes a management fee to the
Corporate General Partner for services in managing the Partnership).
Distributions of "sale proceeds" and "financing proceeds" are to be
allocated 99% to the Limited Partners and 1% to the General Partners until
receipt by the Limited Partners of their initial contributed capital plus a
<PAGE>
stipulated return thereon. Thereafter, distributions of "sale proceeds"
and "financing proceeds" are to be allocated to the General Partners until
the General Partners have received an amount equal to 3% of the gross sales
prices of any properties sold, then the balance 85% to the Limited Partners
and 15% to the General Partners. The Limited Partners shall receive 100%
of such net sale proceeds until the Limited Partners (i) have received cash
distributions of sale or refinancing proceeds in an amount equal to the
Limited Partners' aggregate initial capital investment in the Partnership.
If upon the completion of the liquidation of the Partnership and the
distribution of all Partnership funds, the Limited Partners have not
received cash disbursements to satisfy these requirements, the General
Partners will be required to return all or a portion of the 1% distribution
of net sale or refinancing proceeds described above. As of December 31,
1997 the General Partners have received net sale or refinancing proceeds
aggregating approximately $309,000. Because the Limited Partners have not
received and are not expected to receive cash distributions to satisfy the
above requirements, the General Partners will be required to return the
$309,000.
Allocations among the Partners in the accompanying GAAP basis
financial statements have been made in accordance with the provisions of
the Partnership Agreement. The allocation percentages may differ from year
to year. Differences may therefore result between allocations among the
Partners on the GAAP basis and the tax basis. Such differences would have
no effect on total assets, total Partners' capital or net earnings (loss).
MANAGEMENT AGREEMENTS
Certain of the Partnership's properties are/were managed by affiliates
of the General Partners or their assignees for fees computed as a
percentage of certain rents received by the properties. In December 1994,
one of the affiliated property managers sold substantially all of its
assets and assigned its interest in its management contracts to an
unaffiliated third party. In addition, certain of the management personnel
of the property manager became management personnel of the purchaser and
its affiliates. The successor to the affiliated property manager was
acting as the property manager of the National City Center Office Building
(prior to its sale in December 1997) and Stonybrook Apartments (prior to
its sale in May 1996) after the assignment of the management contracts on
the same terms that existed prior to the assignment.
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 December 31, 1997, 1996 and 1995 are as follows:
<PAGE>
UNPAID AT
DECEMBER 31,
1997 1996 1995 1997
-------- ------- --------- ------------
Property management
and leasing fees . . . $ -- 109,308 378,886 171,556
Management fees to
corporate general
partner. . . . . . . . -- 55,557 -- --
Insurance commissions . 20,569 18,966 36,870 --
Reimbursement (at cost)
for accounting
services . . . . . . . 17,229 8,906 106,919 7,005
Reimbursement (at cost)
for portfolio management
services . . . . . . . 36,491 33,775 39,302 12,326
Reimbursement (at cost)
for legal services . . 14,161 8,740 6,265 6,772
Reimbursement (at cost)
for administrative
charges and other out-of-
pocket expenses. . . . -- 629 125,278 --
-------- ------- --------- -------
$ 88,450 235,881 693,520 197,659
======== ======= ========= =======
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
leasing fees in the consolidated financial statements at December 31, 1997
reflects 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.
In February 1998, the Partnership paid a 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 an operating
distribution of $4,799,700 ($30 per Interest) to the Limited Partners and
$199,987 to the General Partners. Additionally, the Corporate General
Partner was paid a management fee of $333,312.
Effective January 1, 1994, certain officers and directors of the
Corporate General Partner acquired interests in a company which, among
other things, has provided 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 under any existing agreements with
such company. The fees earned by such company from the Partnership in 1997
were $33,315.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with accountants during
fiscal year 1997 and 1996.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation substantially all of the
outstanding stock of which is owned directly or indirectly, by certain of
its officers, directors and members of their families and affiliates. JMB,
as the Corporate General Partner, has responsibility for all aspects of the
Partnership's operations, subject to the requirement that sales of real
property must be approved by the Associate General Partner of the
Partnership, ABPP Associates, L.P., an Illinois limited partnership with
JMB as its sole general partner. The limited partners of the Associate
General Partner are generally officers, directors and affiliates of JMB or
its affiliates. The Partnership is subject to certain conflicts of
interest arising out of its relationships with the General Partners and
their affiliates as well as the fact that the General Partners and their
affiliates are engaged in a range of real estate activities. Certain
services have been provided to the Partnership or its investment properties
by affiliates of the General Partners, including property management
services and insurance brokerage services. In general, such services are
to be provided on terms no less favorable to the Partnership than could be
obtained from independent third parties and are otherwise subject to
conditions and restrictions contained in the Partnership Agreement. The
Partnership Agreement permits the General Partners and their affiliates to
provide services to, and otherwise deal and do business with, persons who
may be engaged in transactions with the Partnership, and permits the
Partnership to borrow from, purchase goods and services from, and otherwise
to do business with, persons doing business with the General Partners or
their affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants and/or for the sale of property.
Because the timing and amount of cash distributions and profits and losses
of the Partnership may be affected by various determinations by the General
Partners under the Partnership Agreement, including whether and when to
sell a property, the establishment and maintenance of reasonable reserves,
the timing of expenditures and the allocation of certain tax items under
the Partnership Agreement, the General Partners may have a conflict of
interest with respect to such determinations.
The names, positions held and length of service therein of each
director and the executive and certain other officers of the Corporate
General Partner are as follows:
<PAGE>
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Chief Executive Officer 8/01/93
Executive Vice President 1/02/87
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 3, 1998. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 3,
1998. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-XI
("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"),
Carlyle Real Estate Limited Partnership-XVI ("Carlyle-XVI"), Carlyle Real
Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB Mortgage Partners,
Ltd.-III ("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV
("Mortgage Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus")
and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the
managing general partner of JMB Income Properties, Ltd.-IV ("JMB
Income-IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income
Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties, Ltd.-X
("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB
Income Properties, Ltd.-XII ("JMB Income-XII") and JMB Income Properties,
Ltd.-XIII ("JMB Income-XIII"). JMB is also the sole general partner of the
associate general partner of most of the foregoing partnerships. Most of
the foregoing directors and officers are also officers and/or directors of
various affiliated companies of JMB including Arvida/JMB Managers, Inc.
(the general partner of Arvida/JMB Partners, L.P. ("Arvida")) and Income
Growth Managers, Inc. (the corporate general partner of IDS/JMB Balanced
Income Growth, Ltd. ("IDS/BIG")). Most of such directors and officers are
also partners of certain partnerships which are associate general partners
in the following real estate limited partnerships: the Partnership,
Carlyle-VII, Carlyle-XI, Carlyle-XIII, Carlyle-XIV, Carlyle-XV,
Carlyle-XVI, Carlyle-XVII, JMB Income-VII, JMB Income-X, JMB Income-XI, JMB
Income-XII, JMB Income-XIII, Mortgage Partners-III, Mortgage Partners-IV,
Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.
<PAGE>
The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 60) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is also a director of Urban Shopping Centers,
Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment
trust in the business of owning, managing and developing shopping centers.
He is a Certified Public Accountant.
Neil G. Bluhm (age 60) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is also a principal of Walton Street Real Estate
Fund I, L.P. and a director of USC, Inc. He is a member of the Bar of the
State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 59) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Stuart C. Nathan (age 56) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 64) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.
John G. Schreiber (age 51) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Advisors, L.P.,
an affiliate of the Blackstone Group, L.P. Mr. Schreiber is also a
director of USC, Inc., a trustee of Amli Residential Property Trust, and a
director of a number of investment companies or managed by T. Rowe Price
Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 48) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 50) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Gary Nickele (age 45) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Gailen J. Hull (age 49) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 62) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Limited Partners, and a
share of profits or losses as described in the Notes. The General Partners
received a share of the Partnership's income aggregating $3,535,210 for
Federal income tax purposes in 1997. In February 1998, the Partnership
paid an operating distribution of $199,987 to the General Partners and a
management fee of $333,312 to the Corporate General Partner.
The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership.
The relationship of the Corporate General Partner (and its directors and
officers) to its affiliates is set forth above in Item 10.
JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned insurance brokerage commissions in 1997 aggregating
approximately $20,569, all of which were paid in 1997 in connection with
the providing of insurance coverage for certain of the real property
investments of the Partnership. Such commissions are at rates set by
insurance companies for the classes of coverage provided.
Effective January 1, 1994, certain officers and directors of the
Corporate 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 under
any existing agreements with such company. The fees earned by such company
from the Partnership in 1997 were $33,315.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses relating to
the administration of the Partnership and the operation of the
Partnership's real property investments. In 1997, the Corporate General
Partner of the Partnership was not due any reimbursement for such
out-of-pocket expenses.
Additionally, the General Partners may be reimbursed for salaries and
salary related expenses of officers and employees of the Corporate General
Partner and its affiliates while directly engaged in the administration of
the Partnership and in the operation of the Partnership's real property
investments. In 1997, such costs were $67,881, of which $26,103 was unpaid
at December 31, 1997.
During 1997, the Partnership owned an approximate 86.3% interest in
Carlyle/National City Associates ("CNCA"), an Illinois general partnership
in which Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), another
partnership sponsored by JMB, owned the remaining 13.7% interest in CNCA.
In December 1997, CNCA sold its interest in the land, building and related
improvements of the National City Center (the "Property"), an approximately
786,000 square foot office building located in Cleveland, Ohio, to BRE/City
Center L.L.C. ("BRE"), a Delaware limited liability company that is
affiliated with Blackstone Real Estate Advisors, L.P., for $82,150,000
(including mortgage indebtedness of approximately $54,278,000 secured by
the Property), subject to prorations and closing costs. John G. Schreiber
is (i) a director of JMB, which is the Corporate General Partner of each of
the Partnership and Carlyle-XI, and (ii) a partner in the Associate General
Partner of each of the Partnership and Carlyle-XI. (JMB is also the
general partner of the Associate General Partner.) Mr. Schreiber and his
<PAGE>
family members, directly or indirectly, own a limited partnership in
Blackstone Real Estate Associates II L.P. and Blackstone Real Estate
Holdings II L.P., through which Mr. Schreiber and his family members have
an interest of up to approximately 3% of the profits of BRE. Mr. Schreiber
and his family members own a limited partnership interest in Blackstone
Real Estate Advisors L.P. ("BREA"), through which Mr. Schreiber and his
family members received a portion of the acquisition fee paid by BRE to
BREA in the amount of $120,370. The price and other terms of the sale of
the Property to BRE were determined by arm's-length negotiation. The
decision on behalf of CNCA to sell the property to BRE was made by JMB,
which, as noted above, is the Corporate General Partner (and the general
partner of the Associate General Partner) of each of the Partnership and
Carlyle-XI, the partners in CNCA. Mr. Schreiber did not participate in
JMB's decision on behalf of CNCA to sell the Property, nor did Mr.
Schreiber participate in the decision on behalf of BRE to purchase the
Property.
<PAGE>
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Corporate General Partner, its officers and directors and the Associate General Partner own the
following Interests of the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership Interests JMB Realty Corporation 100 Interests Less than 1%
directly
Limited Partnership Interests Corporate General Partner, 100 Interests Less than 1%
its officers and directly
directors and the
Associate General
Partner as a group
- ---------------
<FN>
No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
Reference is made to Item 10 for information concerning ownership of the Corporate General Partner.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.
</TABLE>
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) 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. Copies of certain pages are incorporated 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.
4-A. Mortgage loan agreement between Wright-Carlyle
Seattle and The Prudential Insurance Company dated October 16, 1985,
relating to the First Interstate Center is hereby incorporated 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
City Associates and New York Life Insurance Company dated November 15,
1983, relating to the National City Center Office Building is hereby
incorporated 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. Amended and Restated Promissory Note, dated April
30, 1994, between Carlyle/National City Associates and New York Life
Insurance Company relating to the National City Center Office Building is
hereby incorporated herein by reference to the Partnership's report for
March 31, 1994 on Form 10-Q (File No. 0-12433) dated May 11, 1994.
<PAGE>
4-D. Bondowner, Borrower, Remarketing Agent, Issuer
and Trustee Waiver, Appointment of and Acceptance by Successor Remarketing
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 hereby incorporated by
reference to the Partnership's report on Form 10-K (File No. 0-12433) dated
March 27, 1995.
10-A. Acquisition documents including the venture
agreement relating 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
agreement relating 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 the Partnership's report on Form 8-K, dated
August 8, 1983.
10-C. Letter Regarding Sale/Option and Partnership
Amendment, dated May 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
report for June 30, 1994 on Form 10-Q (File No. 0-12433) dated August 12,
1994.
10-D. Letter Agreement Regarding Option Closing 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 report for January 26, 1996 on Form 8-K
(File No. 0-12433) dated December 15, 1995.
10-E. Assignment and Assumption of Partnership Interest
between Carlyle Seattle Associates and Wright Runstad Properties, L.P. is
hereby incorporated herein by reference to the Partnership's report for
January 26, 1996 on Form 8-K (File No. 0-12433) dated December 15, 1995.
10-F. Sale documents and exhibits thereto relating to
the Partnership's sale of the Stonybrook Apartments in Tucson, Arizona 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-G. Substitute Trustee's deed and bill of sale
related to the Partnership's disposition of the Permian Mall in Odessa,
Texas 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.
<PAGE>
10-H. 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.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule.
___________
(b) The following report on Form 8-K was filed since the
beginning of the last quarter of the period covered by this report.
The Partnership's Report on Form 8-K (File No. 0-12433) for
December 18, 1997 dated January 2, 1998 describing the sale of the National
City Center office building was filed.
No annual report for the year 1997 or proxy material has been sent to
the Partners of the Partnership. An annual report will be sent to the
Partners subsequent to this filing.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership 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
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 25, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Corporate General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 25, 1998
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1998
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1998
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1998
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1998
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 25, 1998
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 25, 1998
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1998
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----
3-A. Pages 6-14, 137-139, A-6 to A-11 and
A-13 to A-19 of 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 28, 1983 Yes
3-B. Amended and Restated Agreement of
Limited Partnership set forth as
Exhibit A to the Prospectus Yes
3-C. Acknowledgment 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 Yes
4-A. Mortgage loan agreement related
to the First Interstate Center Yes
4-B. Mortgage loan agreement related
to the National City Center Office
Building Yes
4-C. Amended and restated promissory
note related to National City
Center Office Building Yes
4-D. Bondowner, Borrower, Remarketing
Agent, Bondowner election to
retain Bonds and notice of
remarketing rate relating to
Stonybrook Apartments II Yes
10-A. Acquisition documents related to
First Interstate Center Yes
10-B. Acquisition documents related to
National City Center Office Building Yes
10-C. Letter regarding sale/option and
Partnership Amendment related to
First Interstate Center Yes
10-D. Letter agreement regarding option
closing related to the First
Interstate Center Yes
10-E. Assignment and assumption of
Partnership interest related to
Carlyle Seattle Associates Yes
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XII
EXHIBIT INDEX - CONTINUED
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----
10-F. Sale documents and exhibits
thereto relating to the Partner-
ship's sale of the Stonybrook
Apartments Yes
10-G. Substitute Trustee's deed and
bill of sale related to the
Partnership's disposition of
the Permian Mall Yes
10-H. Purchase agreement and exhibits
thereto relating to the National
City Center office building Yes
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a partner of Carlyle/National City Associates, a
general partnership which held title to the National City Center Office
Building in Cleveland, Ohio (prior to its sale in December 1997). Another
partnership sponsored by the Corporate General Partner is a partner in the
joint venture.
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XII, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1997, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 30th day of January, 1998.
H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer
GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1997,
and any and all amendments thereto, the 30th day of January, 1998.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XII, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1997, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 30th day of January, 1998.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1997,
and any and all amendments thereto, the 30th day of January, 1998.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 34,078,416
<SECURITIES> 0
<RECEIVABLES> 358,457
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34,436,873
<PP&E> 0
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<CURRENT-LIABILITIES> 754,294
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 29,663,990
<TOTAL-LIABILITY-AND-EQUITY> 34,436,873
<SALES> 13,507,001
<TOTAL-REVENUES> 13,953,548
<CGS> 0
<TOTAL-COSTS> 5,986,708
<OTHER-EXPENSES> 554,177
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,495,800
<INCOME-PRETAX> 2,916,863
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,486,816
<DISCONTINUED> 17,031,847
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,518,663
<EPS-PRIMARY> 71.53
<EPS-DILUTED> 71.53
</TABLE>
