CARLYLE REAL ESTATE LTD PARTNERSHIP XIII, 10-Q, 1994-08-15

CARLYLE REAL ESTATE LTD PARTNERSHIP XIII
10-Q, 1994-08-15
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarter ended June 30, 1994 Commission file #0-12791

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(Exact name of registrant as specified in its charter)

Illinois 36-3207212
(State of organization) (IRS Employer Identification No.)

900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code 312/915-1987

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Item 1. Financial Statements. . . . . . . . . . . . . . . . 3

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . . . . . 27

PART II OTHER INFORMATION

Item 3. Defaults Upon Senior Securities . . . . . . . . . . 35

Item 5. Other Information . . . . . . . . . . . . . . . . . 36

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 38
<TABLE>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 1994 AND DECEMBER 31, 1993

(UNAUDITED)

ASSETS
------

<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,651,965 5,362,152
Short-term investments (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,564,637 23,095,901
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538,800 538,800
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,774,630 3,711,359
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,175 397,109
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,292,584 3,918,882
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,829,791 37,024,203
------------ ------------
Investment properties, at cost:
Land and leasehold interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,935,808 27,002,062
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407,611,557 447,201,128
------------ ------------
428,547,365 474,203,190
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,728,601 149,914,951
------------ ------------
Total investment properties, net of accumulated depreciation. . . . . . . . . . . . 285,818,764 324,288,239
------------ ------------
Investment in unconsolidated venture, at equity (notes 1, 2 and 6). . . . . . . . . . . . . . 2,455,200 2,446,681
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,195,307 5,983,034
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473,687 487,289
Venture partners' deficits in ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,451,244 4,557,854
------------ ------------
$336,223,993 374,787,300
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(a limited partnership)
and Consolidated Ventures
Consolidated Balance Sheets (Continued)

LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------

JUNE 30, DECEMBER 31,
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (note 3). . . . . . . . . . . . . . . . . . . . . . . . . $ 52,202,424 94,086,630
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,831,272 2,397,159
Amounts due to affiliates (note 5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,064,051 14,894,459
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,754,893 770,237
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,277,726 8,591,163
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,638,498 2,064,479
------------- ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,768,864 122,804,127
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737,543 880,056
Investment in unconsolidated venture, at equity (notes 1, 2 and 6). . . . . . . . . . . . . . 75,352,973 72,546,193
Long-term debt, less current portion (note 3) . . . . . . . . . . . . . . . . . . . . . . . . 356,282,997 360,881,897
------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512,142,377 557,112,273
Venture partners' subordinated equity in ventures . . . . . . . . . . . . . . . . . . . . . . 329,403 330,185
Partners' capital accounts (deficits) (note 1):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,988,871) (19,664,338)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,039,022) (1,039,022)
------------ ------------
(21,026,893) (20,702,360)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . . . . . . . . . . . . . 326,224,167 326,224,167
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (451,470,172) (458,202,076)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,974,889) (29,974,889)
------------ ------------
(155,220,894) (161,952,798)
------------ ------------
Total partners' deficits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (176,247,787) (182,655,158)
------------ ------------
Commitments and contingencies (notes 2, 3 and 7)
$336,223,993 374,787,300
============ ============

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------- ---------------------------
1994 1993 1994 1993
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . . . . . .$15,608,890 21,272,799 33,934,399 44,981,060
Interest income . . . . . . . . . . . . . . . . . . . . . . . 140,565 108,885 395,558 222,595
----------- ---------- ---------- -----------
15,749,455 21,381,684 34,329,957 45,203,655
----------- ---------- ---------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . . . . . . 9,004,707 13,597,637 19,798,689 27,976,164
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . 3,468,757 4,705,766 6,956,393 9,550,162
Property operating expenses . . . . . . . . . . . . . . . . . 9,079,650 11,187,128 18,583,300 22,349,867
Professional services . . . . . . . . . . . . . . . . . . . . 218,722 203,581 388,858 521,988
Amortization of deferred expenses . . . . . . . . . . . . . . 285,904 331,465 848,512 660,712
General and administrative. . . . . . . . . . . . . . . . . . 192,261 153,087 289,782 261,662
----------- ---------- ---------- -----------
22,250,001 30,178,664 46,865,534 61,320,555
----------- ---------- ---------- -----------
Operating loss. . . . . . . . . . . . . . . . . . . . 6,500,546 8,796,980 12,535,577 16,116,900
Partnership's share of loss from operations of
unconsolidated ventures
(notes 1, 2 and 6). . . . . . . . . . . . . . . . . . . . . . 1,445,120 1,700,631 2,808,260 3,919,750
Venture partners' share of earnings from ventures' operations
(note 2). . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,161,512) (592,145) (2,390,291) (799,255)
----------- ---------- ---------- -----------
Net operating loss. . . . . . . . . . . . . . . . . . 6,784,154 9,905,466 12,953,546 19,237,395
Gain on sale or disposition of investment properties, net of
venture partner's
share of $2,887,659 in 1994 (notes 3(e), 3(f) and 7(d)) . . . (5,010,732) (1,787,073) (18,364,792) (4,312,031)
----------- ---------- ---------- -----------
Net (earnings) loss before extraordinary item . . . . 777,296 8,118,393 (5,411,246) 14,925,364
Extraordinary item (note 3(d)). . . . . . . . . . . . . . . . . (996,126) -- (996,126) --
----------- ---------- ---------- -----------
Net (earnings) loss . . . . . . . . . . . . . . . . .$ 777,296 8,118,393 (6,407,372) 14,925,364
=========== ========== ========== ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

THREE AND SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------- ---------------------------
1994 1993 1994 1993
------------ ---------- ------------ ------------

Net (earnings) loss per limited partnership interest
(note 1):
Net operating loss. . . . . . . . . . . . . . . .$ 17.79 25.97 33.96 50.43
Gain on sale or disposition of investment
properties. . . . . . . . . . . . . . . . . . . . (13.55) 4.83 (49.66) (11.66)
Extraordinary gain on early extinguishment of
debt (note 3(e)). . . . . . . . . . . . . . . . . (2.69) -- (2.69) --
----------- ---------- ---------- -----------
Net earnings (loss) . . . . . . . . . . . . .$ 1.55 21.14 (18.39) 38.78
=========== ========== ========== ===========
Cash distributions per limited partnership interest .$ -- -- -- --
=========== ========== ========== ===========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,407,372 (14,925,364)
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,956,393 9,550,162
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 848,512 660,712
Amortization of discount on long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . 56,507 50,107
Partnership's share of loss from operations of unconsolidated ventures. . . . . . . . . . . 2,808,260 3,919,750
Venture partners' share of loss from ventures' operations and gain on disposition of
investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,390,291 (799,255)
Long-term debt - deferred accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . 5,328,189 7,946,539
Gain on sale or disposition of investment properties. . . . . . . . . . . . . . . . . . . . (18,364,792) (4,312,031)
Extraordinary item. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (996,126) --
Changes in:
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (55,881)
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 936,729 454,040
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389,934 73,046
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,373,702) (39,563)
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,602 150,814
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434,113 1,630,928
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (830,408) 416,364
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 984,656 (97,180)
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,313,437) 859,916
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (425,981) 215,689
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (142,513) (55,785)
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . (2,672,983) 5,643,008
------------ -----------
Cash flows from investing activities:
Net sales and maturities of short-term investments. . . . . . . . . . . . . . . . . . . . . . 12,531,264 194,504
Additions to investment properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (367,119) (1,342,672)
Cash sales proceeds from sale of investment properties, net of selling expenses (notes 7(b)
and 7(d)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,781,988 861,796
Cash expended in disposition of investment property . . . . . . . . . . . . . . . . . . . . . (1,014) --
Partnership's contributions to unconsolidated ventures. . . . . . . . . . . . . . . . . . . . (10,000) (748,705)
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (144,611) (1,221,925)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . 23,790,508 (2,257,002)
------------ -----------

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
1994 1993
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,436,173) (299,152)
Ventures partners' contribution to venture. . . . . . . . . . . . . . . . . . . . . . . . . . 608,461 --
------------ -----------
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . (8,827,712) (299,152)
------------ -----------
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 12,289,813 3,086,854
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,112,956 17,365,512
============ ===========
Total sales price of investment property, net of selling expenses . . . . . . . . . . . . . . $ -- 16,809,998
Mortgage loan payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (15,904,242)
Due from buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (43,960)
------------ -----------
Cash sales proceeds from sale of investment property, net of selling expenses . . . . $ -- 861,796
============ ===========
Non-cash investing and financing activities:
Total sales price of investment property, net of selling expenses . . . . . . . . . . . . . $ 11,781,988 --
Balance due on long-term debt cancelled (notes 3(e) and 3(f)) . . . . . . . . . . . . . . . 41,351,685 --
Reduction in land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,066,254) --
Reduction in buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . (39,956,697) --
Reduction in accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,142,743 --
Cash expended in disposition of investment property . . . . . . . . . . . . . . . . . . . . (1,014) --
Venture partners share of gain on disposition of investment property. . . . . . . . . . . . (2,887,659) --
------------ -----------
Gain on sale of investment property and extinguishment of debt. . . . . . . . . . . . $ 18,364,792 --
============ ===========
Principal balance due on mortgages payable. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,696,126 --
Payment on long-term debt from sale of investment properties. . . . . . . . . . . . . . . . . . (8,700,000) --
------------ -----------
Extraordinary items - non-cash gain recognized on forgiveness of indebtedness . . . . $ 996,126 --
============ ===========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1994 AND 1993

(UNAUDITED)

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1993,
which are included in the Partnership's 1993 Annual Report, on Form 10-K (File
No. 0-12791) filed on March 28, 1994 (the "Annual Report"), as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.

(1) BASIS OF ACCOUNTING

The accompanying consolidated financial statements include the accounts
of the Partnership and its consolidated ventures (note 2) - Copley Place
Associates ("Copley Place"), Gables Corporate Plaza Associates ("Gables"),
Carrollwood Station Associates, Ltd. ("Carrollwood"), Jacksonville Cove I
Associates, Ltd. ("Glades") and Sherry Lane Associates ("Sherry Lane"). The
effect of all transactions between the Partnership and the ventures has been
eliminated.

The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's interests
in Orchard Associates (Note 2(d)) and Carlyle-XIII Associates, L.P., which has
an interest in JMB/NYC Office Building Associates L.P. ("JMB/NYC") (note
2(b)).

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 adjustments
are not recorded on the records of the Partnership. The effect of these items
is summarized as follows for the six months ended June 30:

1994 1993
------------------------- -------------------------
GAAP Basis Tax Basis GAAP Basis Tax Basis
---------- --------- ---------- ---------

Net earnings
(loss) . . . . . . $6,407,372 357,077 (14,925,364) (7,756,392)
Net earnings/
(loss) per
limited partner-
ship interest. . . $ 18.39 5.15 (38.78) (19.57)
========== ========= ========== ==========

The net earnings/(loss) per limited partnership interest is based upon
the limited partnership interests outstanding at the end of each period.
Deficit capital accounts will result, through the duration of the Partnership,
in gain for financial reporting and Federal income tax purposes.

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 at cost, which approximates market. Therefore, for the

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

purposes of these statements, the Partnership's policy is to consider all such
amounts held with original maturities of three months or less (approximately
$1,214,000 and none at June 30, 1994 and December 31, 1993, respectively) as
cash equivalents with any remaining amounts (generally with original
maturities of one year or less) reflected as short-term investments being held
to maturity.

As more fully discussed in note 2(b), due to the potential sale of the 2
Broadway building at a sales price significantly below its net carrying value
and due to discussions with the O & Y affiliates regarding the reallocation of
the unpaid first mortgage indebtedness currently allocated to 2 Broadway, the
2 Broadway venture has made a provision for value impairment on such
investment property of $192,627,560 in 1993. Such provision for value
impairment was allocated $136,534,366 and $56,093,194 to the O & Y affiliates
and to JMB/NYC, respectively. The provision for value impairment has been
allocated to the partners to reflect their respective ownership percentages
before the effect of the non-recourse promissory notes, including the related
accrued interest.

(2) VENTURE AGREEMENTS

(a) General

The Partnership at June 30, 1994 is a party to seven operating joint
venture agreements. Pursuant to such agreements, the Partnership made initial
capital contributions of approximately $152,831,130 (before legal and other
acquisition costs and its share of operating deficits as discussed below). In
general, the joint venture partners, who are either the sellers (or their
affiliates) of the property investments acquired, or parties which have
contributed an interest in the property developed, or were subsequently
admitted to the ventures, made no cash contributions to the ventures, but
their retention of an interest in the property, through the joint venture, was
taken into account in determining the purchase price of the Partnership's
interest, which was determined by arm's-length negotiations. Under certain
circumstances, either pursuant to the venture agreements or due to the
Partnership's obligations as a general partner, the Partnership may be
required to make additional cash contributions to the ventures.

The Partnership has acquired, through the above ventures, two apartment
complexes, four office buildings and a multi-use complex. The joint venture
partners (who in many instances were primarily responsible for constructing
the properties) contributed any excess of cost over the aggregate amount
available from the Partnership contributions and financing and, to the extent
such funds exceeded the aggregate costs, were to retain such excesses.
Certain of the venture properties have been financed under various long-term
debt arrangements as described in note 3.

The Partnership generally has a cumulative preferred interest in net cash
receipts (as defined) from the properties. Such preferential interest relates
to a negotiated rate of return on contributions made by the Partnership.
After the Partnership receives its preferential return, the venture partner is
generally entitled to a non-cumulative return on its interest in the venture;
net cash receipts are generally shared in a ratio relating to the various
ownership interests of the Partnership and its venture partners. During the
six months ended June 30, 1994, three of the ventures' properties produced net
cash receipts. In addition, the Partnership generally has preferred positions
(related to the Partnership's cash investment in the ventures) with respect to
distribution of sale or refinancing proceeds from the ventures. In general,
operating profits and losses are shared in the same ratio as net cash
receipts; however, if there are no net cash receipts, substantially all
profits or losses are allocated to the partners in accordance with their
respective economic interest.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Physical management of the properties generally was performed by
affiliates of the venture partners during the development period and initial
rent-up period. The managers were responsible for cash flow deficits (after
debt service requirements). Compensation to the managers during such periods
for management and leasing was limited to specified payments made by the
ventures, plus any excess net cash receipts generated by the properties during
the periods. Thereafter, the management agreements generally provide for an
extended term during which the management fee is calculated as a percentage of
certain types of cash income from the property. The management terms are in
the extended term for all of the ventures.

There are certain risks associated with the Partnership's investments
made through joint ventures, including the possibility that the Partnership's
joint venture partners in an investment might become unable or unwilling to
fulfill their financial or other obligations, or that such joint venture
partners may have economic or business interests or goals that are
inconsistent with those of the Partnership.

The terms of the significant venture agreements are summarized as
follows:

(b) JMB/NYC

The Partnership owns indirectly through Carlyle-XIII Associates, L.P. and
JMB/NYC an interest in (i) the 237 Park Avenue Associates venture which owns
an existing 23-story office building, (ii) the 1290 Associates venture which
owns an existing 44-story office building, and (iii) the 2 Broadway Associates
and 2 Broadway Land Co. ventures which own an existing 32-story office
building (together "Three Joint Ventures" and individually a "Joint Venture").

All of the buildings are located in New York, New York. In addition to
JMB/NYC, the partners of the Three Joint Ventures include O&Y Equity Company,
L.P. and O&Y NY Building Corp. (hereinafter sometimes referred to as the
"Olympia & York affiliates"), both of which are affiliates of Olympia and York
Developments, Ltd. (hereinafter sometimes referred to as "O&Y").

JMB/NYC is a joint venture among Carlyle-XIII Associates, L.P. (of which
the Partnership holds a 99% limited partnership interest), Carlyle-XIV
Associates, L.P. and Property Partners, L.P. as limited partners and Carlyle
Managers, Inc. as the sole general partner. Effective March 25, 1993, the
Partnership became a 20% shareholder of Carlyle Managers, Inc. Related to
this investment, the Partnership has an obligation to fund, on demand,
$600,000 of additional paid-in capital to Carlyle Managers, Inc. (reflected in
amounts due to affiliates in the accompanying financial statements). The
terms of the JMB/NYC venture agreement generally provide that JMB/NYC's share
of the Three Joint Ventures' annual cash flow, sale or refinancing proceeds,
operating and capital costs (to the extent not covered by cash flow from a
property) and profit and loss will be distributed to, contributed by or
allocated to the Partnership in proportion to its (indirect) share of capital
contributions to JMB/NYC. In March 1993, JMB/NYC, originally a general
partnership, was converted to a limited partnership, and the Partnership's
interest in JMB/NYC, which previously had been held directly, was contributed
to Carlyle-XIII Associates, L.P. As a result of these transactions, the
Partnership currently holds, indirectly as a limited partner of Carlyle-XIII
Associates, L.P., an approximate 25% limited partnership interest in JMB/NYC.
The sole general partner of Carlyle-XIII Associates, L.P. is Carlyle
Investors, Inc., of which the Partnership became a 20% shareholder effective
March 25, 1993. Related to this investment, the Partnership has an obligation
to fund, on demand, $600,000 of additional paid-in capital (reflected in
amounts due to affiliates in the accompanying financial statements). The
general partner in each of JMB/NYC and Carlyle-XIII Associates, L.P. is an
affiliate of the Partnership. For financial reporting purposes, the
allocation of profits and losses of JMB/NYC to the Partnership is 25%.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

There are certain risks and uncertainties associated with the
Partnership's investments made through joint ventures, including the
possibility that the Partnership's joint venture partners might become unable
or unwilling to fulfill their financial or other obligations (as discussed
below), or that such joint venture partners may have economic or business
interests or goals that are inconsistent with those of the Partnership.

JMB/NYC purchased a 46.5% interest in each of the Three Joint Ventures
for approximately $173,600,000, subject to a long-term first mortgage loan
which has been allocated among the individual Joint Ventures. A portion of
the purchase price is represented by four 12-3/4% promissory notes (the
"Purchase Notes") which have an aggregate outstanding principal balance of
$34,158,225 at June 30, 1994 and December 31, 1993. Such Purchase Notes,
which contain cross-default provisions, and are non-recourse to JMB/NYC, are
secured by JMB/NYC's interests in the Three Joint Ventures, and such Purchase
Note relating to the purchase of the interest in the ventures owning the 2
Broadway Building is additionally secured by JMB/NYC's interest in $19,000,000
of distributable sale proceeds from the other two Joint Ventures. A default
under the Purchase Notes would include, among other things, a failure by
JMB/NYC to repay a Purchase Note upon acceleration of the maturity, and could
cause an immediate acceleration of the Purchase Notes for the other ventures.
Beginning in 1992, the Purchase Notes provide for monthly interest only
payments on the principal and accrued interest based upon the level of
distributions payable to JMB/NYC discussed below. If there are no
distributions payable to JMB/NYC or if the distributions are insufficient to
cover monthly interest on the Purchase Notes, then the shortfall interest (as
defined) accrues and compounds monthly. Interest accruals total $85,987,889
at June 30, 1994. During 1993 and for the six months ended June 30, 1994, no
payments were made on any of the Purchase Notes. All of the principal and
accrued interest on the Purchase Notes is due in 1999 or, if earlier, on the
sale or refinancing of the related property. As discussed more fully below,
the Olympia & York affiliates have informed JMB/NYC that they have received a
sales contract for the sale of the 2 Broadway Building at a price which will
not provide any proceeds to JMB/NYC to repay the related Purchase Notes.
Consequently, if the proposed sale is finalized, $19,000,000 of the 2 Broadway
Purchase notes will be re-allocated and will be payable out of JMB/NYC's share
of distributable sale proceeds from the other two joint ventures.

Prior to 1992, operating profits (excluding depreciation and
amortization) were allocated 30% to JMB/NYC and 70% to the Olympia & York
affiliates, and operating losses (excluding depreciation and amortization)
were allocated 96% to JMB/NYC and 4% to the Olympia & York affiliates.
Depreciation and amortization were allocated 46.5% to JMB/NYC and 53.5% to the
Olympia & York affiliates. Subsequent to 1991, pursuant to the agreement
between JMB/NYC and the Olympia & York affiliates, for the period January 1,
1992 to June 30, 1993, as discussed below, gross income was allocable to the
Olympia & York affiliates to the extent of the distributions of excess monthly
cash flow received for the period with the balance of operating profits or
losses allocable 46.5% to JMB/NYC and 53.5% to the Olympia & York affiliates.
Beginning July 1, 1993, operating profits or losses, in general, are allocated
46.5% to JMB/NYC and 53.5% to the Olympia & York affiliates.

The Three Joint Ventures agreements further provide that, in general,
upon sale or refinancing of the properties, net sale or refinancing proceeds
will be distributable 46.5% to JMB/NYC and 53.5% to the Olympia & York
affiliates subject to, as described above, repayment by JMB/NYC of its
Purchase Notes.

Under the terms of the Three Joint Ventures agreements, JMB/NYC was
entitled to a preferred return of annual cash flow, with any additional cash
flow distributable 99% to the Olympia & York affiliates and 1% to JMB/NYC,
through 1991. The Olympia & York affiliates were obligated to make capital

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

contributions to the Three Joint Ventures to pay any operating deficits (as
defined) and to pay JMB/NYC's preferred return through December 31, 1991.
JMB/NYC did not receive its preferred return for the fourth quarter 1991.
Subsequent to 1991, capital contributions to pay for property operating
deficits and other requirements that may be called for under the Three Joint
Ventures agreements are required to be shared 46.5% by JMB/NYC and 53.5% by
the Olympia & York affiliates. Pursuant to the Three Joint Ventures
agreements between the Olympia & York affiliates and JMB/NYC, the effective
rate of interest with reference to the first mortgage loan for calculating
JMB/NYC's share of operating cash flow or deficits through 1991 was as though
the rate were fixed at 12-3/4% per annum (versus the short-term U.S. Treasury
obligation rate plus 1-3/4% per annum (with a minimum 7%) payable on the first
mortgage loan). JMB/NYC believes that, commencing in 1992, the Three Joint
Ventures' agreements require an effective rate of interest with reference to
the first mortgage loan, based upon each Joint Venture's allocable share of
the loan, to be 1-3/4% over the short-term U.S. Treasury obligation rate plus
any excess monthly operating cash flow after capital costs of each of the
Three Joint Ventures, such sum not to be less than a 7% nor exceed a 12-3/4%
per annum interest rate, rather than the 12-3/4% per annum fixed rate that
applied prior to 1992. The Olympia & York affiliates disputed this
calculation of interest expense and contended that the 12-3/4% per annum fixed
rate applied after 1991.

During the quarter ended March 31, 1993, an agreement was reached between
JMB/NYC and the Olympia & York affiliates which rescinded default notices
previously received by JMB/NYC alleging defaults for failing to make capital
contributions and eliminated the alleged operating deficit funding obligation
of JMB/NYC for the period January 1, 1992 through June 30, 1993. Pursuant to
this agreement, during this period, JMB/NYC recorded interest expense at 1-
3/4% over the short-term U.S. Treasury obligation rate (subject to a minimum
rate of 7% per annum), which is the interest rate on the underlying first
mortgage loan. Under the terms of this agreement, during this period, the
amount of capital contributions that the Olympia & York affiliates and JMB/NYC
would have been required to make to the Three Joint Ventures as if the first
mortgage loan bore interest at a rate of 12.75% per annum (the Olympia & York
affiliates' interpretation), became a priority distribution level to the
Olympia & York affiliates from the Three Joint Ventures' annual cash flow or
net sale or refinancing proceeds. The agreement also entitles the Olympia &
York affiliates to a 7% per annum return on such unpaid priority distribution
level. It was also agreed that during this period the excess available
operating cash flow after the payment of the priority distribution level
discussed above from any of the Three Joint Ventures will be advanced in the
form of loans to pay operating deficits and/or unpaid priority distribution
level amounts of any of the Three Joint Ventures. Such loans will bear a
market rate of interest, have a final maturity of ten years from the date when
made and are repayable only out of first available annual cash flow or net
sale or refinancing proceeds. The agreement also provides that except as
specifically agreed otherwise, the parties each reserves all rights and claims
with respect to each of the Three Joint Ventures and each of the partners
thereof, including, without limitation, the interpretation of or rights under
each of the joint venture partnership agreements for the Three Joint Ventures.

As a result of the above noted agreement with the Olympia & York affiliates,
the cumulative priority distribution level payable to the Olympia & York
affiliates at June 30, 1994 is $48,522,601. The term of the agreement expired
on June 30, 1993. Therefore, effective July 1, 1993, JMB/NYC is recording
interest expense at 1-3/4% over the short-term U.S. Treasury obligation rate
plus any excess operating cash flow after capital costs of the Three Joint
Ventures, such sum not to be less than 7% nor exceed a 12-3/4% per annum
interest rate. The Olympia & York affiliates continue to dispute this
calculation for the period commencing July 1, 1993 and contend that the 12-
3/4% per annum fixed rate applies. Based upon the Olympia & York affiliates'
interpretation, interest expense for the Three Joint Ventures for the six

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

months ended June 30, 1994 was $58,720,786. Based upon the amount of interest
determined by JMB/NYC for the six months ended June 30, 1994, interest expense
for the Three Joint Ventures was $41,873,661. The effect of recording the
interest expense calculated by JMB/NYC is to reduce the losses of the Three
Joint Ventures by $16,847,125 (of which the Partnership's share is $1,958,478)
for the six months ended June 30, 1994 and to correspondingly reduce what
would otherwise be JMB/NYC's funding obligation with respect to the Three
Joint Ventures.

O & Y and certain of its affiliates have been involved in bankruptcy
proceedings in the United States and Canada and similar proceedings in
England. The Olympia & York affiliates have not been directly involved in
these proceedings. During the quarter ended March 31, 1993, O & Y emerged
from bankruptcy protection in the Canadian proceedings. In addition, a
reorganization of the management of the company's United States operations has
been completed, and affiliates of O & Y are in the process of renegotiating or
restructuring a number of loans affecting various properties in the United
States in which they have an interest. The Partnership is unable to assess
and cannot presently determine to what extent these events may adversely
affect the willingness and ability of the Olympia & York affiliates either to
meet their own obligations to the Three Joint Ventures and JMB/NYC or to
negotiate a restructuring of the joint venture agreements, or otherwise reach
an understanding with JMB/NYC regarding any future funding obligation of
JMB/NYC.

During the fourth quarter of 1992, the Joint Ventures received a notice
from the first mortgage lender alleging a default for failure to meet certain
reporting requirements of the Olympia & York affiliates contained in the first
mortgage loan documents. No monetary default has been alleged. The Olympia &
York affiliates have responded to the lender that the Joint Ventures are not
in default. JMB/NYC has been unable to determine if the Three Joint Ventures
are in default. There have not been any further notices from the first
mortgage lender. However, on June 30, 1994 the Olympia & York affiliates, on
behalf of the Three Joint Ventures, signed a letter of intent with
representatives of the lender (consisting of a steering committee of holders
of notes evidencing the mortgage loan), to restructure certain terms of the
existing mortgage loan. The proposed restructuring would change the interest
rate on the notes from a floating rate equal to 1.75% over the rate on three
months U.S. treasury bills to a fixed rate of 9% with a pay rate of 7%.
Unpaid interest will accrue at 9% and unless previously paid out of excess
property cash flow will be payable at maturity. There is no assurance that a
restructuring of the loan will be obtained under these or any other terms. In
conjunction with negotiations held prior to June 30, 1994, the Olympia & York
affiliates reached an agreement with the first mortgage lender whereby
effective January 1, 1993, the Olympia & York affiliates are limited to taking
distributions of $250,000 on a monthly basis from the Three Joint Ventures
reserving the remaining excess cash flow in a separate interest-bearing
account to be used exclusively to meet the obligations of the Three Joint
Ventures as approved by the lender. Interest on the first mortgage loan is
currently calculated based upon a variable rate related to the short-term U.S.
Treasury obligation rate, subject to a minimum rate on the loan of 7% per
annum. An increase in the short-term U.S. Treasury obligation rate could
result in increased interest payable on the first mortgage loan by the Three
Joint Ventures.

During 1992, the Olympia & York affiliates and certain other affiliates
of O & Y reached an agreement with the City of New York to defer the payment
of real estate taxes on properties in which O&Y affiliates have an ownership
interest, including the 237 Park Avenue, 1290 Avenue of the Americas and 2
Broadway buildings, whereby, payment of the July real estate taxes are made in
six equal monthly installments from July through December and payment of the
December real estate taxes are made in six equal installments from January
through June. This agreement has been extended through December 1994. As of

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

the date of this report, 237 Park Avenue and 1290 Avenue of the Americas are
current in their payments to the City of New York. However, the August 1994
real estate tax installment payment related to the 2 Broadway building has not
been paid and there is uncertainty regarding the remittance of future
installment payments related to the building.

If JMB/NYC is successful in its negotiations to restructure the joint
venture agreements and retains an interest in one or more of these investment
properties, there would nevertheless need to be a significant improvement in
current market and property operating conditions resulting in a significant
increase in value of the 237 Park and 1290 Avenue of the Americas properties
before JMB/NYC would receive any share of future net sale or refinancing
proceeds. The 2 Broadway building is in need of a major renovation. The
Joint Ventures that own the 2 Broadway building and land have no plans for a
renovation of the property because of a potential sale of the property
discussed below and because the effective rents that could be obtained under
the current office market conditions may not be sufficient to justify the
costs of the renovation.

The O & Y affiliates have informed JMB/NYC that they have received a
contract for the sale of 2 Broadway for a net purchase price of $15,000,000.
The first mortgage lender has preliminarily agreed in the loan restructuring
proposal discussed above to the sale of the building according to the terms of
the 2 Broadway sales contract. A sale pursuant to the contract received by
the O & Y affiliates would be subject to, among other things, the approval of
the first mortgage lender as well as JMB/NYC. While there can be no assurance
that a sale would occur pursuant to such contract or any other contract, if
this contract were to be accepted by or consented to by all required parties
and the sale completed pursuant thereto, and if discussions with the O & Y
affiliates relating to the contract were finalized to allocate the unpaid
first mortgage indebtedness currently allocated to 2 Broadway to 237 Park and
1290 Avenue of the Americas after completion of the sale, then the 2 Broadway
Joint Ventures would incur a significant loss for financial reporting purposes
and federal income tax purposes. Accordingly, a provision for value
impairment was recorded at December 31, 1993 for financial reporting purposes
for $192,627,560, net of the non-recourse portion of the Purchase Notes
including related accrued interest related to the 2 Broadway Joint Venture
interests that are payable by JMB/NYC to the O & Y affiliates in the amount of
$46,646,810. The provision for value impairment has been allocated
$136,534,366 and $56,093,194 to the O & Y affiliates and to JMB/NYC,

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

respectively. Such provision was allocated to the partners to reflect their
respective ownership percentages before the effect of the non-recourse
promissory notes, including related accrued interest.

In the event of a dissolution and liquidation of a Joint Venture, the
terms of the joint venture partnership agreements between the Olympia & York
affiliates and JMB/NYC for the Three Joint Ventures provide that if there is a
deficit balance in the tax basis capital account of JMB/NYC, after the
allocation of profits or losses and the distribution of all liquidation
proceeds, then JMB/NYC generally would be required to contribute cash to the
Joint Venture in the amount of its deficit capital account balance. Taxable
gain arising from the sale or other disposition of a Joint Venture's property
generally would be allocated to the joint venture partner or partners then
having a deficit balance in its or their respective capital accounts in
accordance with the terms of the joint venture partnership agreement.
However, if such taxable gain is insufficient to eliminate the deficit balance
in its account in connection with a liquidation of a Joint Venture, JMB/NYC
would be required to contribute funds to the Joint Venture (regardless of
whether any proceeds were received by JMB/NYC from the disposition of the
Joint Venture's property) to eliminate any remaining deficit capital account
balance.

The Partnership's liability for such contribution, if any, would be its
share, if any, of the liability of JMB/NYC and would depend upon, among other
things, the amounts of JMB/NYC's and the Olympia & York affiliates' respective
capital accounts at the time of a sale or other disposition of Joint Venture
property, the amount of JMB/NYC's share of the taxable gain attributable to
such sale or other disposition of the Joint Venture property and the timing of
the dissolution and liquidation of the Joint Venture. In such event, the
Partnership could be required to sell or dispose of its other assets in order
to satisfy any obligation attributable to it as a partner of JMB/NYC to make
such contribution. Although the amount of such liability could be material,
the Limited Partners of the Partnership would not be required to make
additional contributions of capital to satisfy such obligation, if any, of the
Partnership. The Partnership's deficit investment balance in JMB/NYC as
reflected in the balance sheet (aggregating $73,353,098 at June 30, 1994) does
not necessarily represent the amount, if any, the Partnership would be
required to pay to satisfy its deficit restoration obligation.

The properties are being managed by an affiliate of the Olympia & York
affiliates under a long-term agreement for a management fee equal to 1% of
gross receipts. An affiliate of the Olympia & York affiliates performs
certain maintenance and repair work and construction of certain tenant
improvements at the investment properties. Additionally, the Olympia & York
affiliates have lease agreements and occupy approximately 95,000 square feet
of space at 237 Park Avenue at rental rates which approximate market.

The Partnership acquired in 1983, through a joint venture with the
developer, an interest in a portion of Copley Place, a multi-use complex in
Boston, Massachusetts.

Initially, the Partnership purchased an interest in the complex from the
developer for a purchase price of $20,000,000 which was paid by giving a
purchase price note to the developer. Subsequently, the Partnership and the
developer formed Copley Place Associates which purchased the balance of the
office and retail portion of the complex from the developer for $245,000,000.
The Partnership contributed its previously acquired interest in the property
and made total cash contributions of $60,000,000 for its interest in Copley
Place Associates.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

In December 1984, an affiliate of the Corporate General Partner of the
Partnership acquired ownership of the joint venture partner.

The joint venture agreement provides that, in general, from 1985 through
1989, the Partnership was entitled to a guaranteed return of annual cash flow
of $3,600,000 increasing to $4,800,000. The joint venture partner was
obligated to fund (through capital contributions and loans, as defined) any
deficiency in the Partnership's guaranteed return and any operating deficits
(as defined). Commencing January 1, 1990, the Partnership was entitled to a
preferred return of $6,000,000 per year through December 31, 1991 of any
available cash flow. The joint venture partner was obligated through December
31, 1991 to loan amounts to pay for any operating deficits (as defined). The
joint venture partner has loaned approximately $13,398,000 through June 30,
1994 to fund its required obligation. The loan accrues interest at the
contract rate based on the joint venture partner's line of credit. The line
of credit bears interest at a floating rate (currently averaging 5.79% per
annum at June 30, 1994). The loan is to be repaid from future available cash
flow (as defined). In addition, the Partnership and the joint venture partner
were obligated to contribute equally to tenant improvement and other capital
costs beginning in 1990. Commencing January 1, 1992, the Partnership and the
venture partner are required to equally fund all cash deficits of the
property. In addition, annual cash flow (as defined), after repayment to the
joint venture partner of operating deficit loans and funding requirements, is
to be allocated equally between the Partnership and joint venture partner. In
addition, in March 1994, the venture partner and the Partnership each
contributed $424,980 for the payment of previously deferred management fees.

Operating profits and losses of the joint venture are 50% to the
Partnership and 50% to the joint venture partner.

The joint venture agreement further provides that, in general, upon any
sale or refinancing of the complex, the first $60,000,000 of net proceeds will
be distributed equally between the Partnership and the joint venture partner.
The Partnership will then be entitled to receive an amount equal to any
cumulative deficiencies of its annual preferred return of cash flow for 1990
and 1991 (balance at June 30, 1994 is $12,000,000). The Partnership will then
be entitled to receive the next $190,000,000 plus an amount equal to certain
interest which has been paid or is payable to the developer on its $20,000,000
purchase price note. The joint venture partner will then be entitled to
receive the next $190,000,000 plus an amount equal to certain interest paid to
it on the $20,000,000 purchase price note, with any remaining proceeds
distributable equally to the Partnership and the joint venture partner.
Reference is made to Note 3(h) for a discussion of the modification of the
mortgage loan (effective March 1, 1992) for the property.

An affiliate of the Partnership and joint venture partner manages the
portion of the complex owned by the joint venture, pursuant to an agreement
which provides for a fee calculated as a percentage of certain types of income
from the property.

(d) Orchard Associates

The Partnership's interest in Old Orchard shopping center (through
Orchard Associates and Old Orchard Urban Venture ("OOUV")) was sold in
September 1993, as described below.

At sale, OOUV and an unaffiliated third party contributed the Old Orchard
shopping center and $60,366,572 in cash (before closing costs and prorations),
respectively, to a newly formed limited partnership. Immediately at closing,
the new partnership distributed to OOUV $60,366,572 in cash (before closing
costs and prorations) in redemption of approximately 89.5833% of OOUV's
interest in the new partnership. OOUV, the limited partner, has retained a

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.4167% interest in the new limited partnership after such redemption. OOUV
is also entitled to receive up to an additional $4,300,000 based upon certain
events (as defined) and may earn up to an additional $3,400,000 based upon
certain future earnings of the property (as defined), none of which has been
earned or received as of the date of this report.

Contemporaneously with the formation of the new limited partnership, OOUV
redeemed Orchard Associates' ("Orchard") interest in OOUV for $56,689,747
(before closing costs and prorations). This transaction has resulted in
Orchard having no ownership interest in the property as of the effective date
of the redemption agreement. Orchard recognized a gain of $15,797,454 for
financial reporting purposes ($7,898,727 allocable to the Partnership) and
recognized a gain for Federal income tax reporting purposes of $32,492,776,
($16,246,388 allocable to the Partnership) in 1993.

OOUV and Orchard have also entered into a contribution agreement whereby
they have agreed to share future gains and losses which may arise with respect
to potential revenues and liabilities from events which predated the
contribution of the property to the new venture (including, without
limitation, potential future distributions to OOUV of $4,300,000 and
$3,400,000 as described above) in accordance with their pre-contribution
percentage interests. Upon receipt of all or a portion of these contingent
amounts, Orchard and the Partnership would expect to recognize additional gain
for Federal income tax and financial reporting purposes in the year of such
receipts. However, there can be no assurance that any portion of these
contingent amounts will be received.

(3) LONG-TERM DEBT MODIFICATIONS AND REFINANCINGS

(a) General

As described below and in response to operating deficits incurred at
certain properties, the Partnership or its ventures are seeking and/or has
received mortgage note modifications on certain properties. Certain of the
modifications received have expired and others expire on various dates
commencing October 1996. In addition, certain properties have loans with
scheduled maturities commencing November 1994. Upon expiration of such
modifications or at maturity, should the Partnership or its ventures be unable
to secure new or additional modifications to the loans, based upon current and
anticipated future market conditions, the Partnership may decide not to commit
any significant additional amounts to these properties. This generally would
result in the Partnership no longer having an ownership interest in such
properties and may result in a gain for financial reporting purposes and
Federal income tax purposes without any net distributable proceeds. Such
decisions would be made on a property-by-property basis.

(b) Rio Cancion Apartments

The mortgage note secured by the Rio Cancion apartments located in
Tucson, Arizona and related deferred interest was satisfied on March 31, 1993
upon sale of the property (see note 7(b)). The first mortgage loan was
modified, effective November 1, 1987, to lower the interest payable for a
period of two years. The Partnership reached an agreement to remodify the
first mortgage loan effective upon the expiration of the first modification
agreement. During 1992, the Partnership reached an agreement for an
additional modification to the first mortgage loan whereby on January 1, 1993,
the contract rate of 12.25% per annum and the pay rate of 10.25% per annum was
permanently lowered to 10%. The additional modification also extended the
maturity date to January 1, 1997. In return, the lender was entitled to, as
additional interest, a minority residual participation of 25% of net sales
proceeds (as defined) after the Partnership recovered its investment (as
defined). The lender received approximately $317,000 as its 25% minority

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

residual participation upon sale of the property in March, 1993 as discussed
in note 7(b).

The Partnership transferred title to the property to the lender on
November 1, 1993, as discussed below.

The long-term mortgage note secured by the 1001 Fourth Avenue Plaza
office building located in Seattle, Washington was modified effective June 16,
1987 to lower both the contract and payment interest rates. The contract
interest rate had been reduced to 9% per annum for the period from June 16,
1987 through December 15, 1992, to 10% per annum for the period from December
16, 1992 through May 15, 1994 and to 12% per annum for the period from May 16,
1994 through May 15, 1995. In addition, the interest payment rate had been
reduced to 7% per annum from June 16, 1987 through May 15, 1989, to 8% per
annum from May 16, 1989 through December 15, 1992 and to 9% per annum from
December 16, 1992 through May 15, 1995. The difference between the contract
rate and the interest paid was deferred and bore interest at 9% per annum. In
addition, any Net Cash Flow (as defined) from the property was escrowed for
future capital improvements. On May 16, 1995, the note was to revert to its
original terms. In addition, upon the subsequent sale of the property, the
lender would have been entitled to a minority residual participation beginning
at 30% and decreasing to 15% of Net Proceeds (as defined) from such sale or
refinancing.

The Partnership continued to maintain a $2,000,000 letter of credit as
additional security for the lender for the modification of interest rates,
repayment schedule and other terms of the original loan. The letter of credit
was secured by the Partnership's investments in U.S. government obligations in
an equal amount. The letter of credit was to be renewed annually until the
earlier of June 15, 1995 or the date on which Operating Income (as defined)
from the property equaled at least 1.2 times the original debt service for a
twelve month period. In October 1992, the Partnership notified the lender of
its intent not to renew the letter of credit based on the property generating
sufficient Operating Income (as defined) to meet the calculation requirement
described above. As a result, the lender subsequently notified the
Partnership that the Partnership was in default for non-submittal of Net Cash
Flow (as defined). As previously reported, the Partnership was attempting to
obtain an additional, loan modification from the mortgage lender. Such
negotiations proved to be unsuccessful, and in November 1993 the Partnership
transferred title to the property in full satisfaction of the Partnership's
mortgage obligation. As part of the agreement to transfer title, the lender
agreed to the return of the Partnership's letter of credit. The transfer of
the Partnership's ownership interest resulted in a net gain of $6,771,760 for
financial reporting and a gain of $27,567,458 for Federal income tax purposes
with no corresponding distributable proceeds in 1993.

(d) Eastridge Apartments

In August 1990, the Partnership reached an agreement to remodify the
mortgage note effective July 1, 1989 to lower both the contract rate (as
defined) and interest payment rates for a thirty-six month period. The
contract interest rate was based on a floating index tied to the weighted
average cost of funds to members of the Federal Home Loan Bank of San
Francisco, as defined, which is adjusted on the first of each month. Interest
only was payable at 7.54% per annum from August 1, 1989 through July 1, 1990,
at 7.78% per annum from August 1, 1990 through July 1, 1991, and at 8.29% per
annum from August 1, 1991 through July 1, 1992. The difference between the
contract rate and the interest paid was deferred and bore interest when added
to the outstanding principal balance of the note on July 1, 1992. Thereafter,
monthly installments, payable at 10.34% per annum, of principal and interest
were due (amortized on a 30 year term) until maturity of the loan in March

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1995. The Partnership had been negotiating with the first mortgage lender
regarding an additional modification or refinancing of the first mortgage
loan. As of August 1992, the Partnership had remitted debt service payments
under the previously remodified terms. However, the Partnership was notified
that the loan had been sold to a third party. The Partnership continued its
negotiations with the new lender and reached an agreement for another
modification on the existing loan. The remodification extended the maturity
date to May 1, 1998 and adjusted the contract rate to 8% per annum. The
remodification became effective May 1, 1993 and the Partnership was required
to submit equal payments of principal and interest (amortized over
approximately 22 years) until maturity when all outstanding principal and
interest was due. The remodification established release prices for the
mortgage obligation (as defined), upon execution until May 1, 1995.

In April 1994, the Partnership exercised its option, under the latest
loan modification, for a discounted payoff of its mortgage obligation secured
by the Eastridge Apartments. The loan balance of approximately $9,696,000 was
fully satisfied with a payment of approximately $8,700,000. As a result of
this transaction, the Partnership will recognize an extraordinary gain of
$996,126 for financial reporting purposes and expects to recognize a gain for
Federal income tax purposes in 1994. The Partnership determined that
exercising its option for the early payoff was necessary in order to maximize
its return upon sale of the property which occurred on June 30, 1994 (see note
7(d)).

(e) University Park Office Building

Effective July 1989, the Partnership remodified the note such that the
interest payment rate was reduced to 10% per annum for a period of two years,
at which time the loan was to be due and payable. The difference between the
contract rate and the interest paid was deferred and was accruing at 12.5% per
annum. In July 1991, the Partnership exercised its option to extend the
maturity date from July 1991 to maturity in July 1993, during which time
interest only payments were due at a rate of 10.66% per annum.

In April 1993, the Partnership had began submitting cash flow debt
service payments to the lender due to the move-out of the building's primary
tenant. The Partnership's discussions with the first mortgage lender to
further modify the note were unsuccessful. As a result, on January 10, 1994,
the Partnership transferred to the lender title to the property. This
resulted in the Partnership's no longer having an ownership interest in the
property, has resulted in a gain of approximately $5,676,000 for financial
reporting purposes. The Partnership also expects to recognize a gain for
Federal income tax purposes of approximately $6,897,000 in 1994. There were
no corresponding distributable proceeds as a result of the transfer of title.

(f) Gables Corporate Plaza

Effective March 1, 1989, the Gables venture reached an agreement to
modify the long-term first mortgage note secured by Gables Corporate Plaza
located in Coral Gables, Florida. The contract rate had been permanently
lowered from 12.8% to 10.75% per annum and from January 1, 1989 through
December 31, 1993, interest only payments were due at a rate of 7% per annum.
The difference between the interest paid and the contract rate was deferred
and was accrued at the contract rate. Deferred interest was due monthly from
cash flow or upon maturity of the note. From April 1, 1994 through maturity
in 1996, interest only payments were due at the contract rate.

In addition, the Partnership agreed with the joint venture partner to
defer interest payments on its second and third mortgage notes for the same
five year period. The interest rate had been permanently lowered for the five
years from 12.9% per annum to 11.99% per annum. The Partnership also agreed
with the joint venture partner to reduce the second and third mortgage notes

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

by $230,000 and treat this amount as a capital contribution by the joint
venture partner. The Partnership agreed to pay operating deficits at the
property of up to $1,200,000 from January 1, 1989 through December 31, 1993.

Gables venture had negotiated for an additional modification or
refinancing of the first mortgage loan. Since January 1991, interest only
payments were remitted at a 5% pay rate instead of the required 7% rate to the
extent of available property cash flow. Negotiations with the lender were
unsuccessful and the Partnership on behalf of the venture decided to not
commit any significant additional amounts to the property. On May 3, 1993,
the lender appointed a receiver and took possession and control of the
property. In addition, the venture entered into an agreement with the lender
whereby the venture would transfer title to the lender in January, 1994.
During this period, the venture attempted to sell the property. The venture
was unable to sell the property during the allotted time. On January 5, 1994,
the venture transferred title of the property to the lender in accordance with
its previous agreement. This resulted in the venture no longer having an
ownership interest in the property and has resulted in a gain to the venture
in 1994 of approximately $10,565,000 for financial reporting purposes (of
which the Partnership's share is approximately $7,667,500). The venture also
expects to recognize a gain in 1994 of approximately $12,464,000 for Federal
income tax purposes (of which the Partnership's share is approximately
$3,793,000) in 1994. There were no corresponding distributable proceeds as a
result of the transfer of title.

(g) Greenwood Creek II Apartments

The Partnership had been negotiating for modification of the long-term
mortgage note secured by Greenwood Creek II Apartments located in Benbrook
(Fort Worth), Texas. The Partnership had reached an agreement in principle
with the lender to submit the monthly cash flow as debt service payments
beginning April 1, 1991 while continuing to negotiate for the modification.
However, the Partnership was notified that the loan had been sold to a third
party. The Partnership was not successful in securing a modification. On
April 6, 1993, the Partnership transferred title to the property to the lender
for a transfer price of $100,000 (before selling costs and prorations) in
excess of the existing mortgage balance. The Partnership recognized a gain of
$1,787,073 for financial reporting and recognized a gain for Federal income
tax purposes of $1,823,988 in 1993 (see note 7(c)).

(h) Copley Place

The joint venture modified the existing first mortgage note effective
March 1, 1992. The modification lowered the pay rate from 12% to 9% per annum
through August 1993 and, at that time, further reduced it to 7-1/2% per annum
through August 1998. The contract rate has been lowered to 10% per annum
through August 1993 and, at that time, further reduced it to 8-1/2% per annum
through August 1998. After each monthly payment, the difference between the
contract interest rate on the outstanding principal balance on the loan,
including deferred interest and interest paid at the applicable pay rate, (as
defined), will be added to the principal balance and will accrue interest at
the contract interest rate. All outstanding principal, including the unpaid
deferred interest, is due and payable on August 31, 1998. In return, the
lender will be entitled to receive, as additional interest, a minority
residual participation of 10% of net proceeds (if any, as defined) from a sale
or refinancing after the Partnership and its joint venture partner have
recovered their investments (as defined). Any cash flow from the property,
after all capital and leasing expenditures, will be escrowed for the purpose
of paying for future capital and leasing requirements. As a result of the
debt modification, the property produced cash flow in 1993. This cash flow
has been escrowed for future potential leasing requirements as set forth in
the loan modification. The property is expected to experience a significant
loss of rental income in 1994 due to the expiration of a major tenant's lease.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Based on this fact, the joint venture has initiated discussions with the first
mortgage lender regarding an additional modification of the loan. There can
be no assurances such additional modification will be consummated. If the
joint venture is unable to secure such remodification, it may decide not to
commit any significant additional amounts to the property. This would result
in the joint venture no longer having an ownership interest in the property
and would result in a net gain for financial reporting and Federal income tax
purposes with no corresponding distributable proceeds. The joint venture is
aggressively marketing the recently vacated space.

(i) Sherry Lane Place

The existing long-term note secured by the Sherry Lane Place office
building located in Dallas, Texas was modified effective February 1, 1988 to
lower both the contract and payment interest rates. The contract interest
rate was reduced to 9% per annum for the period from March 1, 1988 through
February 28, 1993 and to 10% per annum for the period from March 1, 1993
through April 1, 1998. Interest only was to be payable at 6.5% per annum from
February 1, 1988 through July 31, 1991, at 8% per annum from August 1, 1991
through July 31, 1994 and at 10% per annum from August 1, 1994 through March
1, 1998. The difference between the contract rate and the interest paid was
to be deferred and to bear interest at 13.125% per annum from February 1, 1988
through February 28, 1988, at 9% per annum from March 1, 1988 through February
28, 1993 and at 10% per annum from March 1, 1993 through April 1, 1998. In
addition, upon the earlier of the subsequent sale of the property or maturity
of the note, the lender is entitled to a residual participation equal to 40%
of the applicable value (as defined). In connection with the modification,
the Partnership prepaid $1,665,000 of principal without a prepayment penalty,
and paid a loan modification fee of $2,335,000.

In November 1993, the Partnership reached an agreement with the current
lender to further modify the existing long-term non-recourse mortgage note
secured by the property. Under the terms of the remodification, the existing
mortgage balance was divided into two notes. The first note of $22,000,000
bears a contract interest rate of 8% per annum for the period retroactive from
January 1, 1993 through December 31, 1994, increasing to 8.5% per annum for
the period from January 1, 1995 through April 1, 1998. Interest only is
payable on the first note at 5.75% per annum for the period retroactive to
January 1, 1993 through December 31, 1993, at 8% per annum from January 1,
1994 through December 31, 1994 and at 8.5% per annum from January 1, 1995
through April 1, 1998. The second note, consisting of the remaining unpaid
principal and accrued interest in the aggregate amount of approximately
$18,526,000, has a zero pay and accrual rate and is due and payable April 1,
1998. All excess cash flow above debt service on the first note is to be
applied first against accrued interest on the first note and then as
contingent interest on the second note (as defined).

(j) Marshall's Aurora Plaza

The long-term note secured by the Marshall's Aurora Plaza shopping center
located in Aurora, Colorado reached its scheduled maturity in June 1993. The
Partnership had continued remitting debt service under the original terms of
the loans until January 1994, when the Partnership reached an agreement with
the current lender to modify and extend the existing long-term note. The
modification, which became effective in November 1993, lowered the pay and
accrual rates from 12.75% per annum to 8.375% per annum and extended the loan
for a three year period to October 1996. Concurrent with the closing of the
modification, the Partnership paid down the existing mortgage balance in the
amount of $250,000.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(k) Carrollwood Apartments

In September 1993, the venture refinanced with a third party lender the
existing underlying mortgage loan with a balance of approximately $7,200,000
payable at 12 3/4% per annum due in 1995. The new loan is in the amount of
$7,455,000. The loan is payable in monthly installments of principal and
interest and bears interest at 7.45% per annum for a five year period until
maturity. The venture paid a prepayment penalty relating to the original
mortgage of approximately $143,200 in connection with the refinancing. The
Partnership recognized its share of approximately $141,700 as an extraordinary
loss for financial reporting purposes in 1993. In addition, the venture was
obligated to establish an escrow account for future capital improvements. The
escrow account was initially funded by the Partnership's capital contribution
to the venture and is subsequently funded by the operations of the venture.
As of the date of this report, no amounts have been withdrawn.

(l) Long Beach Plaza

The long-term mortgage note, secured by Long Beach Plaza, matured in June
1994. The Partnership has initiated and continues to hold discussions with
the first mortgage lender regarding a modification and extension of the
mortgage loan. There can be no assurance that any modification agreement will
be executed. If the Partnership is unable to secure such modification and
extension, it may decide not to commit any significant additional amounts to
the property. This would result in the Partnership no longer having an
ownership interest in the property and would result in a net gain for
financial reporting and Federal income tax purposes with no corresponding
distributable proceeds. The Partnership has not remitted all of the scheduled
debt service payments since June 1993. The combined balances of the mortgage
note and related accrued interest of approximately $37,642,000 are in arrears
at June 30, 1994 and are classified as current liabilities in the accompanying
consolidated financial statements.

(4) MANAGEMENT AGREEMENTS

The Partnership has entered into agreements for the operation and
management of the investment properties. Such agreements are summarized as
follows:

The Partnership entered into an agreement with an affiliate of the seller
for the operation and management of Marshall's Aurora Plaza, Aurora, Colorado
for a management fee calculated at a percentage of certain types of cash
income from the property.

The Long Beach Plaza in Long Beach, California, Plaza Tower office
building in Knoxville, Tennessee, Greenwood Creek II Apartments in Benbrook,
Texas, (prior to its sale in April 1993), Rio Cancion Apartments in Tucson,
Arizona, (prior to its sale in March 1993), Eastridge Apartments in Tucson,
Arizona, (prior to its sale in June 1994), University Park office building in
Sacramento, California (prior to transferring title to the lender in January
1994), 1001 Fourth Avenue Plaza office building in Seattle, Washington (prior
to transferring title to the lender in November 1993), Sherry Lane Place
office building in Dallas, Texas, and Gables Corporate Plaza in Coral Gables,
Florida (prior to the lender appointing a receiver in May 1993), are or were
managed by an affiliate of the Corporate General Partner for a fee equal to a
percentage of defined gross income from the property.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(5) TRANSACTIONS WITH AFFILIATES

Fees, commissions and other expenses required to be paid by the Partner-
ship or the Partnership's consolidated ventures to the General Partners and
their affiliates as of June 30, 1994 and for the six months ended June 30,
1994 and 1993 are as follows:

Unpaid at
1994 1993 June 30, 1994
-------- --------- -------------
Property management
and leasing fees . . . . . $929,166 2,129,903 12,820,722
Insurance commissions . . . 56,465 151,849 --
Management fees to
corporate general
partner. . . . . . . . . . -- -- --
Reimbursement (at cost)
for out-of-pocket
expenses . . . . . . . . . 1,318 31,153 301
-------- --------- ----------

$986,494 2,312,905 12,821,023
======== ========= ==========

Payment of certain property management and leasing fees payable under the
terms of the management agreements ($12,820,722, approximately $35 per $1,000
interest at June 30, 1994) have been deferred.

The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries of employees and direct expenses of officers and
employees of the Corporate General Partner relating to the administration of
the Partnership and operation of the properties. Such costs were $179,093 and
$65,348 for December 31, 1993 and June 30, 1994, respectively, of which
$67,166 of the costs were unpaid as of June 30, 1994.

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 investment properties of the Partnership. Such
acquisition had no effect on the fees payable by the Partnership's
consolidated venture under any existing agreements with such company. The
fees earned by such company from the Partnership for the six months ending
June 30, 1994 were $33,408.

(6) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION

Summary income statement information for JMB/NYC venture for the six
months ended June 30, 1994 and 1993 is as follows:

1994 1993
----------- ----------
Total income from properties
(unconsolidated) . . . . . . . . . . . . $82,903,293 85,650,046
=========== ==========
Operating loss of ventures . . . . . . . . $16,291,710 22,552,634
=========== ==========
Partnership's share of loss. . . . . . . . $ 2,806,780 3,464,202
=========== ==========

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(7) SALE OF INVESTMENT PROPERTY

(a) Allied Automotive Center

On October 10, 1990, the Partnership sold the land, building, and related
improvements of the Allied Automotive Center located in Southfield, Michigan
for $19,613,121 (in cash before prorations and cost of sale).

The sale included the adjacent undeveloped land, building and
improvements owned by two other partnerships affiliated with the Corporate
General Partner. The Partnership has retained title to a defined 1.9 acre
piece of land (the "Parcel"). During the buyer's due diligence investigation,
the buyer found traces of contamination located on a portion of the Parcel as
well as on a portion of the land owned by the two affiliated selling entities.
It was subsequently determined that such contamination was most likely the
result of certain activities of the previous owner. As a result, the purchase
price was reduced by approximately $682,000 for the Partnership's excluded
parcel. The parcel may be purchased by the buyer after the environmental
clean-up is completed. As a condition of the sale, the Partnership has agreed
to conduct investigations to determine all contaminants and to conduct clean-
up of any such contaminants. The Partnership was also required to indemnify
the buyer from specified potential clean-up related liabilities. If the
clean-up is successful, the buyer will purchase the parcel for $682,000, the
purchase price adjustment. In addition, the Partnership has reached an
agreement with the previous owner of the Allied Automotive Center, who has
agreed to cause such investigation and clean-up to be done at the previous
owner's expense. The previous owner has also indemnified the Partnership from
specified potential clean-up related liabilities. The Partnership, in
cooperation with the previous owner, has approved a plan to clean up the
parcel, and the previous owner has undertaken the clean up and is paying the
costs thereof. The cost of clean up remaining to be performed are not
estimated to be material. The gain associated with this Parcel, approximately
$543,000, will be recognized when the closing occurs, (currently estimated to
be in mid 1995). There can be no assurance that the sale of this Parcel will
be consummated on these or any other terms.

(b) Rio Cancion Apartments

On March 31, 1993, the Partnership sold the land, related improvements,
and personal property of the Rio Cancion Apartments, located in Tucson,
Arizona for $13,700,000 (before selling costs and prorations) which was paid
in cash at closing. In conjunction with the sale, the mortgage note and
related accrued interest with a balance of approximately $12,157,000 was
satisfied in full. The lender received, as its 25% minority residual
participation (as defined), approximately $317,000 (see note 3(b)). The
Partnership received net sales proceeds of approximately $809,000. The
Partnership recognized a gain from this transaction in 1993 of $2,524,958 for
financial reporting purposes and recognized a gain of $7,865,633 for Federal
income tax purposes in 1993.

On April 6, 1993, the Partnership transferred to the existing lender
title to the land, related improvements, and personal property of the
Greenwood Creek II Apartments, located in Benbrook, (Fort Worth) Texas for a
transfer price of $100,000 (before selling costs and prorations) in excess of
the existing mortgage balance of approximately $3,747,000 (see note 3(g)).
The Partnership recognized a gain for financial reporting purposes in 1993 of
$1,787,073 and recognized a gain of $1,823,988 for Federal income tax purposes
in 1993.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED

(d) Eastridge Apartments

On June 30, 1994, the Partnership sold the land, related improvements,
and personal property of the Eastridge Apartments, located in Tucson Arizona
for $12,000,000 (before selling costs and prorations) which was paid in cash
at closing. The mortgage note was satisfied in full prior to the sale date
(see note 3(d)). The Partnership recognized a gain of $5,010,871 for
financial reporting purposes and expects to recognize a gain of approximately
$7,877,000 for federal income tax purposes in 1994.

(8) ADJUSTMENTS

In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments and adjustments to reflect
the treatment given certain transactions in the Partnership's 1993 Annual
Report) necessary for a fair presentation have been made to the accompanying
figures as of June 30, 1994 and for the three and six months ended June 30,
1994 and 1993. <PAGE>
PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.

At June 30, 1994, the Partnership and its consolidated ventures had cash
and cash equivalents of approximately $17,652,000. Such funds and short-term
investments of approximately $10,565,000 are available for distributions to
partners, leasing and capital improvement costs and/or operating deficits at
Long Beach Plaza, and the Plaza Tower Office Building, for funding
requirements at Copley Place for its share of management fees, for working
capital requirements, including potential future operating deficits, and for
significant leasing and tenant improvement costs at certain of the
Partnership's other investment properties. The Partnership and its
consolidated ventures have currently budgeted in 1994 approximately $7,789,000
for tenant improvements and other capital expenditures. The Partnership's
share of such items and its share of such similar items for its unconsolidated
ventures in 1994 is currently budgeted to be approximately $6,152,000. Actual
amounts expended in 1994 may vary depending on a number of factors including
actual leasing activity, results of property operations, liquidity
considerations and other market conditions over the course of the year. The
source of capital for such items and for both short-term and long-term future
liquidity and distributions is expected to be through the net cash generated
by the Partnership's investment properties and through the sale or refinancing
of such investments as well as the cash and short-term investments currently
held by the Partnership and its ventures. The Partnership's and its ventures'
mortgage obligations are generally non-recourse and therefore, the Partnership
and its ventures generally are not personally obligated to pay such mortgage
indebtedness.

Many of the Partnership's investment properties currently operate in
overbuilt markets which are characterized by lower than normal occupancies
and/or reduced rent levels. Such competitive conditions have resulted in the
operating deficits described above.

As described more fully below and/or in Note 3, the Partnership has
received (certain of which have expired and others of which expire at various
dates commencing October, 1996) or is negotiating mortgage note modifications
or refinancing on the Sherry Lane Place office building, Glades Apartments,
Long Beach Plaza, Carrollwood Apartments, Marshall's Aurora Plaza, Plaza Tower
office building and Copley Place multi-use complex. The Partnership was
unsuccessful in its efforts to obtain modifications of the loans secured by
the 1001 Fourth Avenue office building, University Park office building and
the Gables Corporate Plaza, as further discussed below and in Note 3. The
Partnership has not remitted the required debt service payments pursuant to
the loan agreement on the Long Beach Plaza which matured in June 1994. The
corresponding balance of its mortgage note and related deferred accrued
interest thereon has been classified as a current liability in the
accompanying Consolidated Financial Statements. In January 1994, the
Partnership or its venture transferred title to Gables Corporate Plaza and to
the University Park office buildings to their respective lenders and the
related mortgage loans were fully discharged by each. (Reference is made to
Notes 3(f) and (e)). In April 1994, the Partnership exercised its option to
fully satisfy its obligation with respect to the Eastridge Apartment mortgage
loan at the previously agreed upon release price. The loan balance of
approximately $9,696,000 was fully satisfied with a payment of approximately
$8,700,000, which was paid out of the Partnership's cash and cash equivalents
and proceeds from the sale of short term investments. (See Notes 3(d) and
7(d)). For those investment properties where modifications are being sought,
or with expired modifications or short-term modifications, if the Partnership
is unable to secure new or additional modifications to the loans, based upon
current and anticipated market conditions, the Partnership may decide not to
commit any significant additional amounts to any of the properties which are
incurring, or in the future do incur, operating deficits. This would result
in the Partnership no longer having an ownership interest in such properties
and would result in gain for financial reporting and Federal income tax
purposes to the Partnership with no corresponding distributable proceeds.
Such decisions would be made on a property-by-property basis.

The indebtedness on certain other of the Partnership's investment
properties matures and is due and payable commencing in 1994 and subsequent
years (Reference is made to Note 3). The source of repayment is expected to
be from proceeds from the sale or refinancing of such properties, or extension
of such indebtedness. However, there can be no assurance that any such sales,
refinancings or extensions will occur.

Copley Place

The Boston office market remains very competitive due to the large supply
of available space and to the prevalence of concessions being offered to
attract and retain tenants.

Commencing January 1, 1992, cash deficits and funding requirements are
allocated equally between the Partnership and the joint venture partner. The
joint venture has obtained a modification of the existing first mortgage note
effective March 1, 1992. The modification lowered the pay rate from 12% to 9%
per annum through August 1993, and at that time, further reduced it to 7-1/2%
per annum through August 1998. The contract rate has been lowered to 10% per
annum through August 1993 and at that time further reduced to 8-1/2% per annum
through August 1998. After each monthly payment, the difference between the
contract interest rate on the outstanding principal balance of the loan,
including deferred interest, and interest paid at the applicable pay rate (as
defined) will be added to the principal balance and will accrue interest at
the contract interest rate. The outstanding principal balance, including the
unpaid deferred interest, is due and payable on August 31, 1998. In return,
the lender will be entitled to receive, as additional interest, a minority
residual participation of 10% of net proceeds (as defined) from a sale or
refinancing after the Partnership and its joint venture partner have recovered
their investments (as defined). Any cash flow from the property, after all
capital and leasing expenditures, will be escrowed for the purpose of paying
for future capital and leasing requirements. As a result of the debt
modification, the property produced cash flow in 1993, which has been escrowed
for future potential leasing requirements as set forth in the current loan
modification.

In 1994, the property has experienced a significant loss in rental income
in connection with the expiration of the IBM lease (279,432 square feet in
April 1994) representing 23% of the leasable office space in the aggregate.
Although the structure of the modification of the first mortgage loan took
into account the potential downsizing of IBM, it was originally anticipated
that IBM would renew approximately 80,000 square feet. However, IBM has
renewed only 8,398 square feet. In addition, the John Hancock Property and
Casualty Co. (which leases 97,180 square feet representing 11.5% of the
leaseable office space) has indicated that they will vacate their space upon
their lease expiring in October 1994. Therefore, the property's operations
will be insufficient to pay the modified debt service. The joint venture has
initiated discussions with the first mortgage lender regarding an additional
modification of the loan. There can be no assurances such remodification will
be consummated. If the joint venture is unable to secure such remodification,
the joint venture may decide not to commit any significant additional amounts
to the property. This could result in the joint venture no longer having an
ownership interest in the property, which would result in a gain for financial
reporting and Federal income tax purposes with no corresponding distributable
proceeds. The joint venture is aggressively marketing IBM's vacant space and
currently has numerous prospective replacements for the space, although
replacement cannot be assured. The joint venture partners decided to pay
previously deferred management fees for 1993 and to end the deferment of any
subsequent fees incurred. As a result, the venture partners have made
contributions of $608,460 as of June 30, 1994 and will continue to make
capital contributions for the payment of the above mentioned fees.

Old Orchard

On September 2, 1993, effective August 30, 1993, Orchard Associates, in
which the Partnership and an affiliated partnership sponsored by the Corporate
General Partner each had a 50% interest, sold its interest in the Old Orchard
Shopping Center. At sale, OOUV and an unaffiliated third party contributed
the Old Orchard shopping center and $60,366,572 in cash (before closing costs
and prorations), respectively, to a newly formed limited partnership.
Immediately at closing, the new partnership distributed to OOUV $60,366,572 in
cash (before closing costs and prorations) in redemption of approximately
89.5833% of OOUV's interest in the new partnership. OOUV, the limited
partner, has retained a 10.4167% interest in the new limited partnership after
such redemption. OOUV is also entitled to receive up to an additional
$4,300,000 based upon certain events (as defined) and may earn up to an
additional $3,400,000 based upon certain future earnings of the property (as
defined), none of which has been earned or received as of the date of this
report. The Partnership is currently retaining its share of the net proceeds
from the sale for working capital purposes. Reference is made to Note 2(d).

JMB/NYC

At the 2 Broadway Building, occupancy during the quarter decreased to
19%, down from 30% in the previous quarter due to Bear Stearns Co. vacating
its space in April 1994 upon the expiration of its lease. Kidder Peabody &
Co. (71,994 square feet or approximately 4.5% of the building's leasable
space) whose lease was to expire December 1993 extended their lease to
December 31, 1995. The remaining tenant roster at the property includes
several other major financial service companies whose leases expire in 1994.
Most of these companies maintain back office support operations in the
building which can be easily consolidated or moved. In addition to the
competition for tenants in the Downtown Manhattan market from other buildings
in the area, there is ever increasing competition from less expensive
alternatives to Manhattan, such as locations in New Jersey and Brooklyn, which
are also experiencing high vacancy levels. Rental rates in the Downtown
market continue to be at depressed levels and this can be expected to continue
while the large amount of vacant space is gradually absorbed. Little, if any,
new construction is planned for Downtown over the next couple years. It is
expected that 2 Broadway will continue to be adversely affected by a high
vacancy rate and the low effective rental rates achieved upon re-leasing of
space under existing leases which expire over the next few years. In
addition, the property is in need of a major renovation in order to compete in
the office leasing market. However, there are currently no plans for a
renovation because of the potential sale of the property discussed below and
because the effective rents that could be obtained under current market
conditions likely are not sufficient to justify the costs of the renovation.
As more fully discussed below, the Olympia & York affiliates have informed
JMB/NYC that they have received a written proposal for the sale of the 2
Broadway building.

Occupancy at 1290 Avenue of the Americas increased slightly to 91%, up
from 90% in the previous quarter. It is expected that the property will
continue to be adversely affected by low effective rental rates achieved upon
releasing of space under existing leases which expire over the next few years
and may be adversely affected by an increased vacancy rate over the next few
years. Although approximately 20% of the building's space under tenant leases
will expire by the end of 1995, negotiations are currently being conducted
with a number of prospective tenants in the financial services industry to
lease a significant portion of the current and anticipated vacant space.
There can be no assurances that such negotiations will be successful. John
Blair & Co. (which had leased 253,193 square feet or approximately 13% of the
building's leasable space) filed for Chapter 11 bankruptcy protection in 1993.

Because much of the John Blair space had been subleased, the joint venture had
been collecting approximately 70% of the monthly rent due from John Blair from
the subtenants. Due to the uncertainty regarding the collection of the
balance of the monthly rents from Blair, a provision for doubtful accounts
related to rents and other receivables and accrued rents receivable
aggregating $7,659,366 was recorded at December 31, 1993 related to this
tenant. During the quarter a settlement was reached whereby the joint venture
received a $7,000,000 lease termination fee which included settlement of past
due amounts. In conjunction with the settlement, effective July 1, 1994 John
Blair is released from all future lease obligations and the joint venture now
has direct leases with the original Blair subtenants. Such subtenants occupy
228,398 square feet or approximately 11% of the building's leasable space. As
a result of the settlement, the provision for doubtful accounts related to
Blair is $0 at June 30, 1994.

Occupancy at 237 Park Avenue during the quarter remained at 98%. It is
expected that the property will be adversely affected by the low effective
rental rates achieved upon re-leasing of space under existing leases which
expire over the next few years and may be adversely affected by an increased
vacancy rate over the next few years.

JMB/NYC has had a dispute with the unaffiliated venture partners who are
affiliates (hereinafter sometimes referred to as the "Olympia & York
affiliates") of Olympia & York Developments, Ltd. (hereinafter sometimes
referred to as "O&Y") over the calculation of the effective interest rate with
reference to the first mortgage loan, which covers all three properties, for
the purpose of determining JMB/NYC's deficit funding obligation, as described
more fully in Note 2(b). Under JMB/NYC's interpretation of the calculation of
the effective rate of interest payable, only 2 Broadway operated at a deficit
for the six months ended June 30, 1994. During the first quarter of 1993, an
agreement was reached between JMB/NYC and the Olympia & York affiliates which
rescinded the default notices previously received by JMB/NYC and eliminated
the operating deficit funding obligation of JMB/NYC for the period January 1,
1992 through June 30, 1993. Pursuant to this agreement, during this period,
JMB/NYC recorded interest expense at 1-3/4% over the short-term U.S. Treasury
obligation rate (subject to a minimum rate of 7% per annum), which is the
interest rate on the underlying first mortgage loan. Under the terms of this
agreement, during this period, the amount of capital contributions that the
Olympia & York affiliates and JMB/NYC would have been required to make to the
Joint Ventures if the first mortgage loan bore interest at a rate of 12-3/4%
per annum (the Olympia & York affiliates' interpretation), became a priority
distribution level to the Olympia & York affiliates from the Joint Ventures'
annual cash flow or net sale or refinancing proceeds. The agreement also
entitles the Olympia & York affiliates to a 7% per annum return on such unpaid
priority distribution level amount. It was also agreed that during this
period, the excess available operating cash flow after the payment of the
priority distribution level discussed above from any of the Three Joint
Ventures would be advanced in the form of loans to pay operating deficits
and/or unpaid priority distribution level amounts of any of the other Three
Joint Ventures. Such loans bear a market rate of interest, have a final
maturity of ten years from the date when made and are repayable only out of
first available annual cash flow or net sale or refinancing proceeds. The
agreement also provides that except as specifically agreed otherwise, the
parties each reserve all rights and claims with respect to each of the Three
Joint Ventures and each of the partners thereof, including, without
limitation, the interpretation of or rights under each of the joint venture
partnership agreements for the Three Joint Ventures. The term of the
agreement expired on June 30, 1993. Therefore, effective July 1, 1993,
JMB/NYC is recording interest expense at 1-3/4% over the short-term U.S.
Treasury obligation rate plus any excess operating cash flow after capital
costs of each of the Three Joint Ventures, such sum not to be less than 7% nor
exceed a 12-3/4% per annum interest rate. The Olympia & York affiliates
continue to dispute this calculation after the period commencing July 1, 1993
and contend that the 12-3/4% per annum fixed rate applies.

JMB/NYC continues to seek, among other things, a restructuring of the
joint venture partnership agreements or otherwise to reach an acceptable
understanding regarding its funding obligations. If JMB/NYC is unable to
achieve this, based upon current and anticipated market conditions mentioned
above, JMB/NYC may decide not to commit any additional amounts to the Three
Joint Ventures. In addition, it is possible that JMB/NYC may determine to
litigate these issues with the Olympia & York affiliates. A decision not to
commit any additional funds or an adverse litigation result could, under
certain circumstances, result in the loss of the interest in the related
ventures. The loss of an interest in a particular venture could, under
certain circumstances, permit an acceleration of the maturity of the related
Purchase Note (each Purchase Note is secured by JMB/NYC's interest in the
related venture). The failure to repay a Purchase Note could, under certain
circumstances, constitute a default that would permit an immediate
acceleration of the maturity of the Purchase Notes for the other ventures. In
such event, JMB/NYC may decide not to repay, or may not have sufficient funds
to repay, any of the Purchase Notes and accrued interest thereon. This could
result in JMB/NYC no longer having an interest in any of the related ventures,
which would result in net gain for financial reporting and Federal income tax
purposes to JMB/NYC (and through JMB/NYC and the Partnership, to the Limited
Partners) with no distributable proceeds. As discussed more fully below, the
Olympia & York affiliates have informed JMB/NYC that they have received a
sales contract for the sale of the 2 Broadway Building at a price which will
not provide any proceeds to JMB/NYC to repay the related Purchase Notes.
Consequently, if the proposed sale is finalized, $19,000,000 of the 2 Broadway
Purchase notes will be re-allocated and will be payable out of JMB/NYC's share
of distributable sale proceeds from the other two joint ventures. In
addition, as discussed more fully in Note 2(b), under certain circumstances,
JMB/NYC may be required to make additional capital contributions to the Joint
Ventures in order to fund a deficit restoration obligation associated with a
deficit balance in its capital account, and the Partnership could be required
bear a share of such capital contributions obligation.

If JMB/NYC is successful in its negotiations to restructure the Three
Joint Ventures agreements and retains an interest in one or more of these
investment properties, there would nevertheless need to be a significant
improvement in current market and property operating conditions (including a
major renovation of the 2 Broadway building) resulting in a significant
increase in value of the properties before JMB/NYC would receive any share of
future net sale or refinancing proceeds. The Joint Ventures that own the 2
Broadway building and land have no plans for a renovation of the property
because of the potential sale of the property discussed below and because the
effective rents that could be obtained under the current office market
conditions are not sufficient to justify the costs of the renovation.

The Olympia & York affiliates have informed JMB/NYC that they have
received a contract for the sale of 2 Broadway for a net purchase price of $15
million. The first mortgage lender has preliminarily agreed in the loan
restructuring proposal discussed below to the sale of the building according
to the terms of the 2 Broadway sales contract. A sale pursuant to the
contract received by the Olympia & York affiliates would be subject to, among
other things, the approval of the first mortgage lender as well as JMB/NYC.
While there can be no assurance that a sale would occur pursuant to such
contract or any other contract, if this contract were to be accepted by or
consented to by all required parties and the sale completed pursuant thereto,
and if discussions with the Olympia & York affiliates relating to the contract
were finalized to allocate the unpaid first mortgage indebtedness currently
allocated to 2 Broadway to 237 Park and 1290 Avenue of the Americas after
completion of the sale, then the 2 Broadway Joint Ventures would incur a
significant loss for financial reporting purposes. Accordingly, a provision
for value impairment was recorded at December 31, 1993 for financial reporting
purposes for $192,627,560, net of the non-recourse portion of the Purchase
Notes including related accrued interest related to the 2 Broadway Joint
Venture interests that are payable by JMB/NYC to the Olympia & York affiliates
in the amount of $46,646,810. The provision for value impairment has been
allocated $136,534,366 and $56,093,194 to the Olympia & York affiliates and
JMB/NYC, respectively. Such provision has been allocated to the partners to
reflect their respective ownership percentages before the effect of the non-
recourse promissory notes including related accrued interest.

O & Y and certain of its affiliates have been involved in bankruptcy
proceedings in the United States and Canada and similar proceedings in
England. The Olympia & York affiliates have not been directly involved in
these proceedings. In addition, a reorganization of the management of the
company's United States operations has been completed, and affiliates of O & Y
are in the process of renegotiating or restructuring a number of loans
affecting various properties in the United States in which they have an
interest. The Partnership is unable to assess and cannot presently determine
to what extent these events may adversely affect the willingness and ability
of the Olympia & York affiliates either to meet their own obligations to the
joint ventures and JMB/NYC or to negotiate a restructuring of the joint
venture agreements, or otherwise reach an understanding with JMB/NYC regarding
any funding obligation of JMB/NYC. However, the financial difficulties of
Olympia & York and its affiliates may be adversely affecting the Three Joint
Ventures' efforts to restructure the mortgage loan and to re-lease vacant
space in the buildings.

During the fourth quarter 1992, the Joint Ventures received a notice from
the first mortgage lender alleging a default for failure to meet certain
reporting requirements of the Olympia & York affiliates contained in the first
mortgage loan documents. No monetary default has been alleged. The Olympia &
York affiliates have responded to the lender that the Joint Ventures are not
in default. JMB/NYC is unable to determine if the Joint Ventures are in
default. There have not been any further notices from the first mortgage
lender. However, on June 30, 1994 the Olympia & York affiliates, on behalf of
the Three Joint Ventures, signed a letter of intent with representatives of
the lender (consisting of a steering committee of holders of notes evidencing
the mortgage loan) to restructure certain terms of the existing mortgage loan.

The proposed restructuring would change the interest rate on the notes from a
floating rate equal to 1.75% over the rate on three months U.S. treasury bills
to a fixed rate of 9% with a pay rate of 7%. Unpaid interest will accrue at
9% and unless previously paid out of excess property cash flow will be payable
at maturity. There is no assurance that a restructuring of the loan will be
obtained under these or any other terms. In conjunction with negotiations
held prior to June 30, 1994, the Olympia & York affiliates reached an
agreement with the first mortgage lender whereby effective January 1, 1993,
the Olympia & York affiliates are limited to taking distributions of $250,000
on a monthly basis from the Three Joint Ventures reserving the remaining
excess cash flow in a separate interest-bearing account to be used exclusively
to meet the obligations of the Three Joint Ventures as approved by the lender.

Interest on the first mortgage loan is currently calculated based upon a
variable rate related to the short-term U.S. Treasury obligation rate, subject
to a minimum rate on the loan of 7% per annum. An increase in the short-term
U.S. Treasury obligation rate could result in increased interest payable on
the first mortgage loan by the Three Joint Ventures.

Long Beach Plaza

In March 1993, the Partnership completed a settlement of its litigation
with Australian Ventures, Inc. ("AVI") involving a long-term ground and
improvement lease for approximately 144,000 square feet at the shopping
center. Under the terms of the settlement, AVI paid the Partnership $550,000,
and the parties terminated the ground and improvement lease. As a result, the
gross leasable area owned by the Partnership increased by 144,000 square feet.

In addition, both parties dismissed their respective claims in the lawsuit
with prejudice. The Partnership has paid the $550,000 received from AVI to
the mortgage lender for the property as scheduled debt service due for April
and part of May 1993 on the loan secured by the property. The Partnership is
seeking a replacement tenant for the vacated space. In January 1994, the
Partnership received a letter of intent from Ross Dress for Less to lease
approximately 27,200 square feet of the first floor of the vacated Buffum's
building. In addition, Gold's Gym has offered to lease approximately 34,000
square feet of the third floor of the vacated Buffum's building and relocate
from their current 9,813 square foot space on Pine Avenue. The Partnership
has several prospects for the smaller Gold's Gym space. There can be no
assurance these leases will be consummated. The Partnership had discussions
with several tenants regarding their requests for temporary rent relief
commencing in 1992. The tenants indicated that, due to the poor sales levels
of their stores at the mall, such relief was necessary if they were to
continue to operate. After review of those tenants requesting relief, the
Partnership decided to grant temporary relief (approximately 50% of their
minimum rent) to certain tenants through December 31, 1992. The Partnership
had re-evaluated each tenant's sales level and financial situation for 1993.
Additional relief was granted for 1993 and may be granted in 1994. As a
result of the foregoing, the Partnership has initiated and continues to hold
discussions with the first mortgage lender regarding a modification of its
mortgage loan secured by the property which matured in June 1994. Due to
declining retail sales at the center along with one of the center's anchor
tenants vacating its space in 1991, the Partnership has not remitted all of
the scheduled debt service payments since June 1993. There can be no
assurance that such modification will be consummated (reference is made to
Note 3(l)).

University Park

University Park office building's major tenant, California Vision
Services, vacated its space of 70,697 square feet (59% of the building) upon
the expiration of its lease in April 1993. The tenant's anticipated space
requirements over the next several years were expected to grow to over 200,000
square feet, which the property was unable to accommodate. The Partnership
had been actively marketing the vacated space. As a result of Cal-Vision's
move out, the Partnership was unable to remit the full debt service payment
from property operations and had submitted cash flow from the property through
May, 1993. In addition, the Partnership's discussions with the first mortgage
lender to further modify the note were unsuccessful. The Partnership decided
not to commit any additional capital to the property. Given the current
vacancy level of the building and the current and projected market conditions,
the likelihood of recovering any additional cash investment necessary to
retain ownership of the building would have been remote. As a result, on
January 10, 1994, the Partnership transferred to the lender title to the
property. This resulted in the Partnership recognizing a gain of
approximately $5,676,000 for financial reporting, and it expects to recognize
a gain of approximately $6,897,000 for Federal income tax purposes with no
distributable proceeds in 1994. (See Note 3(e)).

1001 Fourth Avenue

In recent years, the Seattle, Washington office market has been very
competitive due to significant overbuilding, especially in the Central
Business District where 1001 Fourth Avenue Plaza is located. Current vacancy
rates exceed 15%, and rental rates remain significantly depressed. In
addition, a substantial amount of sublease space had become available in the
immediate downtown area. Given the current and projected market conditions,
the likelihood of recovering the additional cash investment necessary to fund
anticipated operating deficits for 1001 Fourth Avenue Plaza would have been
remote.

In addition, certain disputes had arisen between the Partnership and the
lender regarding a $2,000,000 letter of credit maintained by the Partnership
as additional security for the lender in connection with the existing loan
modification. As a result of defaults alleged by the lender, the lender
attempted to draw on the $2,000,000 letter of credit prior to its expiration
in November 1992. Subsequent negotiations with the lender for a loan
modification were unsuccessful. On November 1, 1993, the Partnership
transferred title to the 1001 Fourth Avenue Plaza office building in full
satisfaction of the Partnership's mortgage obligation (which had an
outstanding balance, including accrued interest, of approximately
$102,607,000). In exchange for the transfer of title, the lender agreed to
return the Partnership's bond and letter of credit. This transfer has
resulted in the Partnership no longer having an ownership interest in the
property. Reference is made to Note 3(c).

Eastridge Apartments

In April 1994, the Partnership exercised its option for a discounted
payoff of its mortgage obligation secured by the Eastridge Apartments (see
Note 3(d)). On June 30, 1994, the Partnership sold the land, building and
related improvements of the Eastridge Apartments, located in Tucson, Arizona.
See Note 7(d).

Plaza Tower Office Building

The mortgage loan on the Plaza Tower office building, which has an
outstanding principal balance at June 30, 1994 of approximately $17,923,000,
matures in November, 1994. The Partnership is exploring a short term loan
extension and/or refinancing upon its maturity, however, there can be no
assurance that an extension and/or refinancing can be obtained.

General

The affiliates of the Corporate General Partner have deferred certain
property management and leasing fees payable to them under the terms of the
management agreements in an aggregate amount of approximately $12,821,000
(approximately $35 per interest) through June 30, 1994. The amounts do not
bear interest and are payable in future periods. Reference is made to Note 5.

A number of the Partnership's investments have been made through joint
ventures. There are certain risks associated with these investments,
including the possibility that the Partnership's joint venture partners in an
investment might become unable or unwilling to fulfill their financial or
other obligations or, that such joint venture partners may have economic or
business interests or goals that are inconsistent with those of the
Partnership.

Due to the factors discussed above and the general lack of buyers of real
estate today, it is likely that the Partnership may hold some of its
investment properties longer than originally anticipated in order to maximize
the recovery of its investments and any potential return thereon. However, in
light of the current severely depressed real estate markets, it currently
appears that the Partnership's goal of capital appreciation will not be
achieved. Although the Partnership expects to distribute from sale proceeds
some portion of the Limited Partners' original capital, without a dramatic
improvement in market conditions, the Limited Partners will receive
substantially less than half their original investment. It should be noted,
however, that in connection with sales or other dispositions (including
transfers to lenders) of properties (or interests therein) owned by the
Partnership or its joint ventures, the Limited Partners may be allocated
substantial gain for Federal income tax purposes even though the Partnership
would not be able to return a substantial amount of the Limited Partners'
original capital from such sales or other dispositions.

RESULTS OF OPERATIONS

The decreases in cash and equivalents, short-term investments, amounts
due to affiliates and accrued interest, and the increase in escrow deposits,
are due primarily to (a) funding of the capital improvement escrow of
approximately $1,635,000 pursuant to the terms of the Copley Place loan
modification as more fully described in Note 3(h), to (b) the payment of
approximately $850,000 of previously deferred management fees and accrued
interest of approximately $2,747,000 related to the deficit loans at the
Copley Place multi-use complex, and to (c) the payoff of the mortgage for
$8,700,000 secured by the Eastridge Apartments (see note 3(d)). The net
decrease in cash and cash equivalents and short-term investments were
partially offset by the net sales proceeds of $11,781,988 from the sale of the
Eastridge Apartments (see note 7(d)). As of the date of this report, no
amounts have been withdrawn from the capital improvement escrow.

The decreases in rents and other receivables, prepaid expenses, land and
leasehold interest, buildings and improvements, accumulated depreciation,
deferred expenses, current portion of long-term debt, tenant security deposits
and long-term debt less current portion at June 30, 1994 as compared to
December 31, 1993 and the corresponding decreases in rental income, mortgage
and other interest, depreciation and property operating expenses for the three
and six months ended June 30, 1994 as compared to June 30, 1993 are due
primarily to the lender taking title to the Gables Corporate Plaza and
University Park office buildings and to the sale of the Eastridge Apartments
in 1994, and to the sales of the Rio Cancion and Greenwood Creek II apartments
and to the lender taking title to the 1001 Fourth Avenue office building in
1993. Reference is made to Notes 3(c), 3(e), 3(f), 3(g), 7(b), 7(c) and 7(d),
respectively.

The decrease in venture partners' deficits in ventures at June 30, 1994
as compared to December 31, 1993 and the corresponding increase in venture
partner's share of earnings from ventures operations for the six months ended
June 30, 1994 as compared to June 30, 1993 is due primarily to the venture
partner's realization of its share of gain on the disposition of the Gables
Corporate Plaza office building in January 1994 (as more fully discussed in
Note 3(f)) offset by the venture partner's contribution of its share of funds
used for the payment of deferred management fees at the Copley Place multi-use
complex in 1994.

The decrease in accrued real estate taxes at June 30, 1994 as compared to
December 31, 1993 is due primarily to the timing of real estate tax payments
at certain of the Partnership's investment properties.

The increase in interest income for the three and six months ended June
30, 1994 as compared to June 30, 1993 is due primarily to higher average
balances of investments in U.S. Government Obligations primarily as a result
of the investment of proceeds retained from the sale of the Old Orchard
Shopping Center in September 1993 (see Note 2(d)).

The decrease in the Partnership's share of loss from unconsolidated
ventures for the three and six months ended June 30, 1994 as compared to June
30, 1993 is due primarily to the sale of the Partnership's interest in the Old
Orchard shopping center in September 1993 (as more fully discussed in Note
2(d)). The decrease is also attributable to JMB/NYC recording a $192,627,560
provision for value impairment at 2 Broadway at December 31, 1993, which
reduced the subsequent depreciation expense related to that investment
property.

The net gain of $18,364,792 on sale or disposition of investment property
for the six months ended June 30, 1994 consists of a gain of $5,676,413 on the
transfer of the University Park office building, a gain (net of the venture
partner's share) of $7,677,508 on the transfer of Gables Corporate Plaza
office building, and a gain of $5,010,871 related to the sale of the Eastridge
Apartments (as more fully discussed in Notes 3(e), 3(f), and 7(d)).

The net gain of $4,141,628 on sale disposition of investment property for
the six months ended June 30, 1994 consists primarily of a gain of $2,524,958
from the sale of the Rio Cancion apartments and a gain of $1,787,073 from the
transfer of the Greenwood Creek Apartments (as more fully discussed in Notes
7(b) and (c)).

The extraordinary item of $996,126 for the six months ended June 30, 1994
is due to the discounted payoff of the mortgage note which secured the
Eastridge Apartments (see Note 3(d)).

PART II. OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Reference is made to Notes 2(b) (eleventh paragraph), and 3(l) of the
Notes to Consolidated Financial Statements and Liquidity and Capital Resources
section of Management's Discussion and Analysis of Financial Condition and
Results of Operations filed with this report for discussions of defaults (or
alleged defaults) under, and/or current attempts to obtain refinancing,
modification or extension of, mortgage loans secured by the 237 Park Avenue,
1290 Avenue of the Americas, and 2 Broadway office buildings, and Long Beach
Plaza, which discussions are hereby incorporated by reference.
<TABLE>
PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

OCCUPANCY

The following is a listing of approximate occupancy levels by quarter for the Partnership's investment properties.

<CAPTION>
1993 1994
----------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Greenwood Creek II Apartments
Benbrook (Forth Worth), Texas. . . . . . . . . . . . . 93% N/A N/A N/A N/A N/A

2. Marshall's Aurora Plaza shopping center
Aurora (Denver), Colorado. . . . . . . . . . . . . . . 90% 91% 88% 91% 89% 89%
3. Carrollwood Station Apartments
Tampa, Florida . . . . . . . . . . . . . . . . . . . . 94% 95% 96% 98% 98% 97%
4. Long Beach Plaza shopping center
Long Beach, California (A) . . . . . . . . . . . . . . 64% 60% 60% 60% 57% 54%
5. The Glades Apartments
Jacksonville, Florida. . . . . . . . . . . . . . . . . 94% 93% 98% 96% 94% 96%
6. Gables Corporate Plaza office building
Coral Gables, . . . . . . . . . . . . . . . . . . . . 85% 83% 83% 83% N/A N/A
7. Sherry Lane Place office building
Dallas, Texas. . . . . . . . . . . . . . . . . . . . . 93% 90% 95% 96% 98% 97%
8. Eastridge Apartments
Tucson, Arizona. . . . . . . . . . . . . . . . . . . . 96% 89% 95% 95% 97% N/A
9. Copley Place multi-use complex
Boston, Massachusetts . . . . . . . . . . . . . . . . 87% 94% 94% 93% 93% 96%
10. Old Orchard Shopping Center
Skokie (Chicago), Illinois . . . . . . . . . . . . . . 62% 53% N/A N/A N/A N/A
11. 1001 Fourth Avenue Plaza office building
Seattle, Washington. . . . . . . . . . . . . . . . . . 95% 92% 69% N/A N/A N/A
12. Plaza Tower office building
Knoxville, Tennessee . . . . . . . . . . . . . . . . . 91% 92% 92% 91% 91% 91%
13. University Park office building
Sacramento, California (B) . . . . . . . . . . . . . . 98% 52% 65% 65% N/A N/A
14. 237 Park Avenue Building
New York, New York . . . . . . . . . . . . . . . . . . 100% 99% 99% 98% 98% 98%
15. 1290 Avenue of the Americas Building
New York, New York . . . . . . . . . . . . . . . . . . 97% 95% 95% 98% 90% 91%
16. 2 Broadway Building
New York, New York (C) . . . . . . . . . . . . . . . . 59% 59% 29% 30% 30% 19%
<FN>
- - ----------

An "N/A" indicates that the property was sold or was not owned by the
Partnership at the end of the quarter.

(A) Long Beach Plaza 1993 occupancy figures were restated to reflect the
additional 144,000 square feet of gross leasable area acquired in the Buffum's
settlement in March 1993. Reference is made to Management Discussion and
Analysis of Financial Condition regarding the Long Beach Plaza.

(B) University Park office building's major tenant, California Vision
Services vacated its space of 70,697 square feet (59% of the building) upon
expiration of its lease in April 1993.

(C) 2 Broadway Building's major tenant, Merrill Lynch, Pierce, Fenner &
Smith, Incorporated vacated its space of approximately 497,000 square feet
(30% of the building) upon expiration of its lease in August 1993.

</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

4-A. Documents relating to the mortgage loan secured by the 1001
Fourth Avenue Plaza in Seattle, Washington are also hereby incorporated herein
by reference to Post-Effective Amendment No. 2 in the Partnership's
Registration Statement on Form S-11 (File No. 2-81125) dated June 9, 1983.

4-B. Documents relating to the mortgage loan secured by the Copley
Place multi-use complex, in Boston Massachusetts, are also hereby incorporated
herein by reference to Post-Effective Amendment No. 2 in the Partnership's
Registration Statement on Form S-11 (File No. 2-81125) dated June 9, 1983.

4-C. Documents relating to the modification of the mortgage loan
secured by 1001 Fourth Avenue Plaza are hereby incorporated by reference to
the Partnership's report for December 31, 1992 on Form 10-K (File No. 0-12791)
dated March 29, 1993.

4-D. Documents relating to the modification of the mortgage loan
secured by the Copley Place multi-use complex are hereby incorporated by
reference to the Partnership's report for December 31, 1992 on Form 10-K (File
No. 0-12791) dated March 29, 1993.

10-A. Acquisition documents relating to the purchase by the
Partnership of an interest in the 1001 Fourth Avenue Plaza in Seattle,
Washington, are hereby incorporated herein by reference to Post-Effective
Amendment No. 2 to the Partnership's Registration Statement on Form S-11 (File
No. 2-81125) dated June 9, 1983.

10-B. Acquisition documents relating to the purchase by the
Partnership of an interest in the Copley Place multi-use complex in Boston,
Massachusetts, are hereby incorporated herein by reference to Post-Effective
Amendment No. 2 to the Partnership's Registration Statement on Form S-11 (File
No. 2-81125) dated June 9, 1983.

10-C. Documents relating to the sale by the Partnership of an
interest in the Allied Automotive Center, in Southfield, Michigan, are hereby
incorporated herein by reference to the Partnership's Report on Form 8-K (File
No. 0-12791) for October 10, 1990, dated October 30, 1990.

10-D. Documents describing the transferred title of the
Partnership's interest in the Commercial Union Office Building to the second
mortgage lender, are hereby incorporated herein by reference to the
Partnership's Report on Form 8-K (File No. 0-12791) for August 15, 1991, dated
September 18, 1991.

10-E. Agreement dated March 25, 1993 between JMB/NYC and the
Olympia & York affiliates regarding JMB/NYC's deficit funding obligations from
January 1, 1992 through June 30, 1993 are hereby incorporated by reference to
the Partnership's report for December 31, 1992 on Form 10-K (File No. 0-12791)
dated March 29, 1993.

10-F. Agreement of Limited Partnership of Carlyle - XIII Associates
L.P. is hereby incorporated by reference to the Partnership's Report on Form
10-Q (File No. 0-12791) dated May 14, 1993.

10-G. Documents relating to the sale by the Partnership of its
interest in the Rio Cancion Apartments in Tucson, Arizona, are herein
incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-
12791) for March 31, 1993, dated May 14, 1992.

10-H. Documents relating to the sale by the Partnership of its
interest in the Old Orchard Urban Venture are herein incorporated by reference
to the Partnership's Report on Form 8-K (File No. 0-12791) for August 30,
1993, dated November 12, 1993.

10-I. Documents describing the transferred title of the
Partnership's interest in the 1001 Fourth Avenue Office Building to the first
mortgage lender, are hereby incorporated herein by reference to the
Partnership's report on Form 8-K (File No. 0-12791) for November 1, 1993,
dated November 12, 1993.

10-J. Second Amended and Restated Articles of Partnership of
JMB/NYC Office Building Associates, are herein incorporated by reference to
the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-12791)
dated March 28, 1994.

10-K. Amended and Restated Certificate of Incorporation of Carlyle-
XIV Managers, Inc., are herein incorporated by reference to
the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-12791)
dated March 28, 1994.

10-L. Amended and Restated Certificate of Incorporation of Carlyle-
XIII Managers, Inc., are herein incorporated by reference to
the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-12791)
dated March 28, 1994.

10-M. $600,000 demand note between Carlyle-XIII Associates, L.P.
and Carlyle Managers, Inc., are herein incorporated by reference to the
Partnership's report for December 31, 1993 on Form 10-K (File No. 0-12791)
dated March 28, 1994.

10-N. $600,000 demand note between Carlyle-XIII Associates, L.P.
and Carlyle Investors, Inc., are herein incorporated by reference to the
Partnership's report for December 31, 1993 on Form 10-K (File No. 0-12791)
dated March 28, 1994.

10-O. Settlement Agreement between Gables Corporate Plaza
Associates and Aetna Life Insurance Company, are herein incorporated by
reference to the Partnership's report for December 31, 1993 on Form 10-K (File
No. 0-12791) dated March 28, 1994.

10-P. Bill of Sale and Grant Deed related to the University Park
Office Building between Carlyle Real Estate Limited Partnership - XIII and
California Federal Bank, are herein incorporated by reference to the
Partnership's report for December 31, 1993 on Form 10K (File No. 0-12791)
dated May 11, 1994.

10-Q. Documents relating to the sale by the Partnership of its
interest in the Eastridge Apartments in Tucson, Arizona, are herein
incorporated by reference to the Partnership's report for August 12, 1994 on
Form 8-K (File No. 0-12791) dated August 12, 1994.

Although certain additional long-term debt instruments of the
Registrant have been excluded from Exhibit 4 above, pursuant to Rule 601(b)
(4) (iii), the Registrant commits to provide copies of such agreements to the
SEC upon request.

(b) No Reports on Form 8-K have been filed for the quarter
covered by this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII

BY: JMB Realty Corporation
(Corporate General Partner)

By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: August 12, 1994

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person in the capacity and on
the date indicated.

GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: August 12, 1994