CARLYLE REAL ESTATE LTD PARTNERSHIP XIII, 10-Q, 1995-08-14

CARLYLE REAL ESTATE LTD PARTNERSHIP XIII
10-Q, 1995-08-14
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, 1995 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. . . . . . . . . . . . . . . . . . . . . 29

PART II OTHER INFORMATION

Item 3. Defaults Upon Senior Securities . . . . . . . . . . 38

Item 5. Other Information . . . . . . . . . . . . . . . . . 39

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 40

<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, 1995 AND DECEMBER 31, 1994

(UNAUDITED)

ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1). . . . . . . . . . . . . . . . . . . . $ 3,617,480 9,551,909
Short-term investments (note 1) . . . . . . . . . . . . . . . . . . . . . 2,039,172 18,959,986
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,883 484,234
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . . 605,339 3,115,173
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 318,336
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,438,375 6,064,754
------------- ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . 12,901,249 38,494,392
------------- ------------
Investment properties, at cost:
Land and leasehold interests. . . . . . . . . . . . . . . . . . . . . . 20,935,810 20,935,810
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . 410,575,506 409,040,913
------------- ------------
431,511,316 429,976,723
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . 156,307,563 149,525,406
------------- ------------
Total investment properties, net of
accumulated depreciation. . . . . . . . . . . . . . . . . . . . . 275,203,753 280,451,317
------------- ------------
Investment in unconsolidated ventures,
at equity (notes 1, 2 and 6). . . . . . . . . . . . . . . . . . . . . . . 2,449,714 2,451,859
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,120,977 5,151,072
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 497,319 514,291
Venture partners' deficits in ventures. . . . . . . . . . . . . . . . . . . 8,890,560 6,514,971
------------- ------------
$ 305,063,572 333,577,902
============= ============

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,
1995 1994
------------- -----------
Current liabilities:
Current portion of long-term debt (note 3). . . . . . . . . . . . . . . . $ 49,262,623 52,006,208
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,336,718 2,018,276
Amounts due to affiliates (note 5). . . . . . . . . . . . . . . . . . . . 4,158,721 14,210,085
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,996 618,410
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,529,127 9,112,566
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . 991,161 1,755,290
-------------- ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 67,454,346 79,720,835
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . . 830,280 765,933
Investment in unconsolidated venture, at equity
(notes 1, 2 and 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,204,954 78,812,861
Long-term debt, less current portion (note 3) . . . . . . . . . . . . . . . 367,233,121 361,563,239
------------- ------------
Commitments and contingencies (notes 1, 2, 3 and 7)

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 517,722,701 520,862,868
Venture partners' subordinated equity in ventures . . . . . . . . . . . . . 329,680 329,785
Partners' capital accounts (deficits) (note 1):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . . . (21,065,795) (20,494,612)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . (1,149,967) (1,039,022)
------------- ------------
(22,214,762) (21,532,634)
------------- ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . . . . 326,224,167 326,224,167
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . . . (476,039,797) (462,331,395)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . (40,958,417) (29,974,889)
------------- ------------
(190,774,047) (166,082,117)
------------- ------------
Total partners' deficits. . . . . . . . . . . . . . . . . . . . . . (212,988,809) (187,614,751)
------------- ------------
$ 305,063,572 333,577,902
============= ============
<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, 1995 AND 1994

(UNAUDITED)

<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $14,545,427 15,608,890 31,711,971 33,934,399
Interest income . . . . . . . . . . . . . . . . . 120,965 140,565 444,737 395,558
----------- ---------- ----------- ----------
14,666,392 15,749,455 32,156,708 34,329,957
----------- ---------- ----------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . . 9,703,285 9,004,707 19,341,856 19,798,689
Depreciation. . . . . . . . . . . . . . . . . . . 3,391,078 3,468,757 6,782,157 6,956,393
Property operating expenses . . . . . . . . . . . 9,375,518 9,079,650 17,872,656 18,583,300
Professional services . . . . . . . . . . . . . . 411,132 218,722 423,016 388,858
Amortization of deferred expenses . . . . . . . . 309,355 285,904 618,711 848,512
General and administrative. . . . . . . . . . . . 216,718 192,261 379,353 289,782
----------- ---------- ----------- ----------
23,407,086 22,250,001 45,417,749 46,865,534
----------- ---------- ----------- ----------
Operating loss. . . . . . . . . . . . . . . (8,740,694) (6,500,546) (13,261,041) (12,535,577)
Partnership's share of gain (loss) from
operations of unconsolidated
ventures (notes 1, 2 and 6) . . . . . . . . . . . (1,398,335) (1,445,120) (3,392,093) (2,808,260)
Venture partners' share of earnings
from ventures' operations
(note 2). . . . . . . . . . . . . . . . . . . . . 2,106,920 1,161,512 2,373,550 2,390,291
----------- ---------- ----------- ----------
Net operating loss. . . . . . . . . . . . . (8,032,109) (6,784,154) (14,279,584) (12,953,546)
Gain on sale or disposition of
investment properties, net of
venture partners' share of
$2,887,659 in 1994 (notes 3(c)
and 7(b)). . . . . . . . . . . . . . . . . . . . -- 5,010,732 -- 18,364,792
----------- ---------- ----------- ----------

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

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- ----------

Net earnings (loss) before
extraordinary item. . . . . . . . . . . . (8,032,109) (1,773,422) (14,279,584) 5,411,246
Extraordinary item (note 7(b)). . . . . . . . . . . -- 996,126 -- 996,126
----------- ---------- ----------- ----------

Net earnings (loss) . . . . . . . . . . . . $(8,032,109) (777,296) (14,279,584) 6,407,372
=========== ========== =========== ==========

Net earnings (loss) per
limited partnership interest
(note 1):
Net operating loss. . . . . . . . . . . . $ (21.05) (17.79) (37.44) (33.96)
Gain on sale or disposition
of investment properties. . . . . . . . -- 13.55 -- 49.66
Extraordinary gain on early
extinguishment of debt
(note ) . . . . . . . . . . . . . . -- 2.69 -- 2.69
----------- ---------- ----------- ----------

Net earnings (loss) . . . . . . . . . $ (21.05) (1.55) (37.44) 18.39
=========== ========== =========== ==========

Cash distributions per
limited partnership
interest. . . . . . . . . . . . . . . . . $ -- -- (30.00) --
=========== ========== =========== ==========

<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, 1995 AND 1994

(UNAUDITED)

<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(14,279,584) 6,407,372
Items not requiring (providing) cash or
cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,782,157 6,956,393
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . . 618,711 848,512
Amortization of discount on long-term debt. . . . . . . . . . . . . . . . . 63,623 56,507
Partnership's share of loss from operations
of unconsolidated ventures. . . . . . . . . . . . . . . . . . . . . . . . 3,392,093 2,808,260
Venture partners' share of loss from ventures'
operations and gain on disposition of
investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,373,550) (2,390,291)
Long-term debt - deferred accrued interest. . . . . . . . . . . . . . . . . 5,830,078 5,328,189
Gain on sale or disposition of investment properties. . . . . . . . . . . . -- (18,364,792)
Extraordinary item. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (996,126)
Changes in:
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,351 --
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . . . 2,509,834 936,729
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318,336 389,934
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (373,621) (3,373,702)
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 16,972 13,602
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318,442 434,113
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . (10,051,364) (830,408)
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (442,414) 984,656
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,416,561 (1,313,437)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . (764,129) (425,981)
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . . 64,348 (142,513)
------------ -----------
Net cash used in operating activities . . . . . . . . . . . . . . . . . (6,670,156) (2,672,983)
------------ -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

1995 1994
------------ -----------
Cash flows from investing activities:
Net sales and maturities of short-term investments. . . . . . . . . . . . . . 16,920,814 12,531,264
Additions to investment properties. . . . . . . . . . . . . . . . . . . . . . (1,534,593) (367,119)
Cash sales proceeds from sale of investment properties,
net of selling expenses (note 7(b)) . . . . . . . . . . . . . . . . . . . . -- 11,781,988
Cash expended in disposition of investment
property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (1,014)
Partnership's contributions to unconsolidated
ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (10,000)
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . (588,616) (144,611)
------------ -----------
Net cash provided by investing activities . . . . . . . . . . . . . . . 14,797,605 23,790,508
------------ -----------
Cash flows from financing activities:
Cash distributions to limited partners. . . . . . . . . . . . . . . . . . . . (10,983,528) --
Cash distributions to general partners. . . . . . . . . . . . . . . . . . . . (110,945) --
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . . . (2,967,405) (9,436,173)
Ventures partners contribution to venture . . . . . . . . . . . . . . . . . . -- 608,461
------------ -----------
Net cash used in financing activities . . . . . . . . . . . . . . . . . (14,061,878) (8,827,712)
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . . . . (5,934,429) 12,289,813
Cash and cash equivalents, beginning of year. . . . . . . . . . . . . . 9,551,909 5,362,152
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . . . $ 3,617,480 17,651,965
============ ===========

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

1995 1994
------------ -----------

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . . . $ 12,061,602 12,112,956
============ ===========
Non-cash investing and financing activities:
Total sales price of investment property,
net of selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 11,781,988
Mortgage loan payable . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
------------ -----------
Cash sale proceeds from sale of investment
properties, net of selling expenses . . . . . . . . . . . . . . . . $ -- 11,781,988
============ ===========

Principal balance due on mortgages payable. . . . . . . . . . . . . . . . . $ -- 9,696,126
Payment on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . -- (8,700,000)
------------ -----------
Extraordinary items - non-cash gain recognized
on forgiveness of indebtedness (note 7(b)). . . . . . . . . . . . . $ -- 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, 1995 AND 1994

(UNAUDITED)

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1994,
which are included in the Partnership's 1994 Annual Report, on Form 10-K
(File No. 0-12791) filed on March 27, 1995, 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"), Eastridge Associates, Ltd., 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:

1995 1994
----------------------- ----------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net earnings
(loss) . . . . . . .$(14,279,584) (780,076) 6,407,372 357,077
Net earnings
(loss) per
limited
partnership
interest . . . . . .$ (37.44) (2.04) 18.39 5.15
============ ======== ========= =========

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 a 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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 purposes of these statements, the Partnership's
policy is to consider all such amounts held with original maturities of
three months or less (approximately $0 and $9,724,000 at June 30, 1995 and
December 31, 1994, 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.

Certain amounts in the 1994 consolidated financial statements have
been reclassified to conform with the 1995 presentation.

During March 1995, Statement of Financial Accounting Standards No. 121
("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued. SFAS 121, when effective,
will require that the Partnership record an impairment loss on its long-
lived assets (primarily its consolidated investments in land, buildings and
improvements) whenever their carrying value cannot be fully recovered
through estimated undiscounted future cash flows from operations and sale.
The amount of the impairment loss to be recognized would be the difference
between the long-lived asset's carrying value and the asset's estimated
fair value less costs to sell.

The amount of any impairment loss recognized by the Partnership under
its current accounting policy has been limited to the excess, if any, of
the property's carrying value over the outstanding balance of the
property's non-recourse indebtedness. An impairment loss under SFAS 121
would be determined without regard to the nature or the balance of such
non-recourse indebtedness. Upon the disposition of a property for which an
impairment loss has been recognized under SFAS 121, the Partnership would
recognize, at a minimum, a net gain for financial reporting purposes to the
extent of any excess of the then outstanding balance of the property's non-
recourse indebtedness over the then carrying value of the property,
including the effect of any reduction for impairment loss under SFAS 121.

The Partnership expects to adopt SFAS 121 no later than the first
quarter of 1996. Although the Partnership has not currently assessed the
full impact of adopting SFAS 121, the amount of any such required
impairment loss could be materially higher than the amounts that have been
recorded in the past or may be recorded in 1995 under the Partnership's
current impairment policy. In addition, upon the disposition of an
impaired property, the Partnership would generally recognize more net gain
for financial reporting purposes under SFAS 121 than it would have under
the Partnership's current impairment policy, without regard to the amount,
if any, of cash proceeds received by the Partnership in connection with the
disposition. Although implementation of this new accounting statement
could significantly impact the Partnership's reported earnings, there would
be no impact on cash flows. Further, any such impairment loss would not be
recognized for Federal income tax purposes.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(2) VENTURE AGREEMENTS

(a) General

The Partnership at June 30, 1995 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, 1995, two of the
ventures' properties (Carrollwood Station Apartments and the Glades
Apartments) 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.

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.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.,
Carlyle-XIV Associates, L.P. and Property Partners, L.P. as limited
partners and Carlyle Managers, Inc. as the sole general partner. The
Partnership is a 20% shareholder of Carlyle Managers, Inc. and related to
this investment, 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). JMB/NYC is 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. in exchange for its limited partnership interest in that
partnership. 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. 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%.

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. As
discussed below, an agreement with the Olympia & York affiliates, when
effective, would provide first for allocation of cash flow to the Olympia &
York affiliates to the level of certain Preference Amounts, as defined.
The agreement would also, among other things, provide for no further
allocation from the Three Joint Ventures of depreciation, amortization or

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

operating losses and the allocation of operating income from the Three
Joint Ventures only to the extent of cash flow distributions to JMB/NYC.

In October 1994, JMB/NYC entered into an agreement ("the Agreement")
with the Olympia and York affiliates to resolve certain disputes which are
more fully discussed below. Certain provisions of the Agreement are
immediately effective and, therefore, binding upon the partners, while
others become effective either upon certain conditions being met or upon
execution and delivery of final documentation. In general, the parties
have agreed to: (i) amend the Three Joint Ventures' agreements to
eliminate any funding obligation by JMB/NYC for any purpose in return for
JMB/NYC relinquishing its rights to approve almost all property management,
leasing, sale (certain rights to control a sale would be retained by
JMB/NYC through March 31, 2001) or refinancing decisions and the
establishment of a new preferential distribution level payable to the
Olympia & York affiliates from all future sources of cash, (ii) sell the 2
Broadway Building, and (iii) restructure the first mortgage loan on the
terms discussed below. A more detailed discussion of each of these items
is contained below. As part of the Agreement, in order to facilitate the
restructuring, JMB/NYC and the Olympia & York affiliates have agreed to
file for each of the Three Joint Ventures a pre-arranged bankruptcy plan
for reorganization under Chapter 11 of the Bankruptcy Code. In June 1995,
the 2 Broadway Joint Ventures filed their pre-arranged bankruptcy plans for
reorganization, and such plans are awaiting approval of the bankruptcy
court. Bankruptcy filings for the Joint Venture are expected to occur
later on in 1995. The reorganization plans are expected to incorporate the
proposed transactions contained in the Agreement. During the bankruptcy
proceedings, there exists a possibility that one or more of the proposed
transactions could be challenged by certain creditors resulting in the
elimination or changes to all or portions of the Agreement by the
bankruptcy court. Consequently, there are no assurances that the
transactions contemplated in the Agreement will be finalized. If the
transactions contemplated in the Agreement are finalized, there would
nevertheless need to be a significant improvement in current market and
property operating conditions resulting in a significant increase in the
value of the 237 Park Avenue and 1290 Avenue of the Americas properties
before JMB/NYC would receive any share of future net proceeds from
operations, sale or refinancing. The restructuring of the Three Joint
Ventures' agreements would include JMB/NYC converting from a general
partner to a limited partner in the Joint Ventures (or successor
partnerships) and the elimination of any funding obligation by JMB/NYC for
any purposes. Consequently, in such event, JMB/NYC would recognize, for
financial reporting purposes, a gain to the extent of the then current
deficit investment balance (which amount was $192,844,550 as of June 30,
1995). No significant net Federal income tax gain or any distributable
proceeds would result from the consummation of the reorganization plan.

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, 1995 and December 31, 1994. 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 Joint Ventures. Beginning in 1992, the
Purchase Notes provide for monthly interest only payments on the principal

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 $102,234,176 at June 30, 1995.
During 1994 and through June 30, 1995, 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. The Agreement with the Olympia & York affiliates, when
effective, would provide for a 5-year extension of the due dates on the
Purchase Notes to 2004. It further provides, upon the sale of the 2
Broadway Building, for the cancellation of indebtedness under the 2
Broadway Purchase Notes in excess of $19 million. As discussed more fully
below, the 2 Broadway Joint Ventures have entered into a contract with a
third party to sell 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 cash flow or sale proceeds, if any, 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 reached in March 1993 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 allocated 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 Agreement with the
Olympia & York affiliates, when effective, would provide for no further
allocation to JMB/NYC of depreciation, amortization or operating losses and
the allocation of operating income only to the extent of cash flow
distributions, if any, during the remaining term of the Joint Ventures.
There was no allocation of depreciation, amortization or operating income
or losses to JMB/NYC for Federal income tax purposes in 1994.

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 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 and the Olympia & York affiliates applied JMB/NYC's
preferred return to 1992 disputed interest calculations (see below).
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. The Olympia & York affiliates have
alleged that 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 the purpose of calculating
JMB/NYC's share of operating cash flow or deficits after 1991 is 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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 have 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 (the "1993 Agreement")
which rescinded the default notices previously received by JMB/NYC and
eliminated the alleged operating deficit funding obligation of JMB/NYC for
the period January 1, 1992 through June 30, 1993. Pursuant to the 1993
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 the 1993 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, 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 Three Joint Ventures'
annual cash flow or net sale or refinancing proceeds. The 1993 Agreement
also entitles the Olympia & York affiliates to a 7% per annum return on
such unpaid priority distribution level. 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 was
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 1993
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. 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, 1995 is approximately $50,000,000. The term of the 1993 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 and for the period commencing July 1, 1993 contend
that the 12-3/4% per annum fixed rate applies. Based upon this
interpretation, interest expense for the Three Joint Ventures for the six
months ended June 30, 1995 was $56,068,530. Based upon the amount of
interest determined by JMB/NYC for the six months ended June 30, 1995,
interest expense for the Three Joint Ventures was $32,713,156. The
cumulative effect of recording the interest expense calculated by JMB/NYC
is to reduce the losses of the Three Joint Ventures by $96,426,803 (of
which the Partnership's share is $11,209,616) for the period July 1, 1993
through June 30, 1995 and to correspondingly reduce what would otherwise be
JMB/NYC's funding obligation with respect to the Three Joint Ventures.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Certain provisions of the Agreement with the Olympia & York
affiliates, when effective, would resolve the funding obligation dispute.
In general, the priority distribution level created in the 1993 Agreement
and JMB/NYC's alleged funding obligation subsequent to June 30, 1993 would
be eliminated in return for the creation of a new preferential distribution
level to the Olympia & York affiliates payable from all sources of
available cash ("Preference Amount"). Such Preference Amount would be
$81.5 million for 1290 Avenue of the Americas and $38.5 million for 237
Park Avenue and both amounts would bear interest at 9% per annum,
compounded monthly, retroactively effective from May 1, 1994. Net proceeds
available, if any, after repayment of the Preference Amounts plus interest,
would then be distributable in accordance with the original terms of the
Three Joint Ventures' Agreements which provide for, in general, that net
proceeds from all sources will be distributable 46.5% to JMB/NYC and 53.3%
to the Olympia & York affiliates, subject to, as described above, repayment
by JMB/NYC of its Purchase Notes.

The terms of the current joint venture partnership agreements between
the Olympia & York affiliates and JMB/NYC for the Three Joint Ventures
provide, in the event of a dissolution and liquidation of a Joint Venture,
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 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 potential 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 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 $75,974,978 at June 30, 1995) does not
necessarily represent the amount, if any, the Partnership would be required
to pay to satisfy a deficit capital account restoration obligation. Under
the Agreement with the Olympia & York affiliates, subject to the
satisfaction of certain conditions, any deficit capital account funding
obligation of JMB/NYC to the Joint Ventures would be eliminated.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

All of the office buildings serve as collateral for the first mortgage
loan. The lender has asserted various defaults under the loan. On June
30, 1994, the Olympia & York affiliates, on behalf of the Three Joint
Ventures, signed a non-binding letter of intent with the lender (consisting
of a steering committee of holders of notes evidencing the mortgage loan)
to restructure certain terms of the existing mortgage loan. Certain terms
of the Agreement with the Olympia & York affiliates, when effective, would
provide for acceptance by JMB/NYC of this proposed restructuring. The
restructuring, as proposed, would change the annual interest rate on the
notes from a floating rate equal to 1.75% over the rate on three-month U.S.
treasury bills to a fixed rate of 9% per annum with periodic payments of
interest only at a pay rate of 7%. Unpaid interest would accrue at 9% per
annum and, unless previously paid out of excess property cash flow, would
be payable at maturity. There is no assurance that a restructuring of the
loan will be obtained under these or any other terms. In previous
negotiations, 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 and 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.

In August 1995, the 2 Broadway Joint Ventures entered into a contract
with a third party for the sale of 2 Broadway for a net purchase price,
after commissions and certain other payments, of approximately $18.3
million. The sale, which is expected to occur during the third quarter of
1995, is subject to, among other things, the approval of the bankruptcy
court as part of the plan of reorganization of the 2 Broadway Joint
Ventures that owns the building. In anticipation of this sale and in
accordance with the Agreement, the unpaid first mortgage indebtedness
previously allocated to 2 Broadway was allocated to 237 Park Avenue and
1290 Avenue of the Americas during 1994. While there can be no assurance
that a sale would occur pursuant to such contract or any other contract, if
the sale is completed, JMB/NYC would no longer have an ownership interest
in the 2 Broadway Joint Ventures. 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 given
to the Olympia & York affiliates as part of the consideration for JMB/NYC's
acquisition of its interests in the Three Joint Ventures, including accrued
interest related to the 2 Broadway Joint Venture interests payable by
JMB/NYC to the Olympia & York affiliates in the amount of $46,646,810. The
provision for value impairment was allocated $136,534,366 and $56,093,194
to the Olympia & York affiliates and to JMB/NYC, respectively. Such
provision was allocated to the partners to reflect their respective
ownership percentages before the effect of the non-recourse purchase notes
including accrued interest.

The properties are being managed by an affiliate of the Olympia & York
affiliates for a fee equal to 1% of gross receipts. An affiliate of the
Olympia & York affiliates performs certain maintenance and repair work and

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.

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 to date 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 Three Joint Ventures and JMB/NYC or to
finalize the transactions contemplated by the Agreement.

Should a restructuring of the joint venture partnership agreements
providing for the elimination of JMB/NYC's funding obligations in
accordance with the Agreement not be finalized, JMB/NYC may decide not to
commit any additional amounts to the Three Joint Ventures. In addition,
under these circumstances, 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 JMB/NYC's interest in the
related Joint Ventures. The loss of an interest in a particular Joint
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). Under certain circumstances,
the failure to repay a Purchase Note could constitute a default under, and
permit an immediate acceleration of, the maturity of the Purchase Notes for
the other Joint 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 Joint Ventures, which would result in
substantial 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. In such event, the
Partnership would then proceed to terminate its affairs.

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.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The joint venture partner was obligated to fund (through capital
contributions and loans, as defined) any deficiency in the Partnership's
guaranteed return to 1989 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,
1995, 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 9.25%
per annum at June 30, 1995). The outstanding principal and accrued
interest, if any, are to be repaid from future available cash flow (as
defined). The joint venture paid approximately $1,518,000 and $3,597,000
of accrued interest on these loans in 1995 and 1994, respectively. 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.
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 March 1994,
the venture partner and the Partnership each contributed $424,980 for the
payment of certain 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, after
repayment of the joint venture loans, 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, 1995 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(e) for a discussion of
the modification of the mortgage loan 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,

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

the limited partner, has retained a 10.4167% interest in the new limited
partnership after such redemption. OOUV was also entitled to receive up to
an additional $4,300,000 based upon certain events (as defined), all of
which was earned in 1993 and received in 1994. Upon receipt, OOUV
distributed the $4,300,000 to the respective partners, based upon their
pre-contribution percentage interests. OOUV still 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.

At the time of redemption, OOUV retained a portion of the Orchard
Associates redemption proceeds in order to fund certain contingent amounts
which may have been due in the future. In July 1995, OOUV distributed to
Orchard Associates their redemption holdback of $2,083,644. As a result,
the Partnership received its share of the holdback of $1,041,820. The
Partnership currently intends to retain these funds for working capital
purposes.

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, the distribution to OOUV of $4,300,000 and the
potential future distribution of $3,400,000 as described above) in
accordance with their pre-contribution percentage interests. In September
1994, Orchard received its share of the contingent $4,300,000 as discussed
above and distributed to each of the respective partners their fifty
percent share ($1,702,082) of such amount. The Partnership recognized a
gain of $1,702,082 for financial reporting and Federal income tax purposes
in 1994. Upon receipt of all or a portion of the remaining 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 the
remaining 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 have
received mortgage note modifications on certain properties. Certain of the
modifications received have expired and others expire on various dates
commencing November 1996. In addition, certain properties have loans with
scheduled maturities commencing August 1995. 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.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(b) 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
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 1995. The Partnership subsequently
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 would be 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 recognized an
extraordinary gain of $996,126 for financial reporting 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(b)).

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 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. The Partnership transferred
title to the property to the lender on January 10, 1994. This resulted in
the Partnership's no longer having an ownership interest in the property,
and resulted in a gain of approximately $5,676,000 for financial reporting
purposes. The Partnership also recognized 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.

(d) 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.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 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.

The 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 resulted
in a gain to the venture in 1994 of approximately $10,565,000 for financial
reporting purposes (of which the Partnership's share was approximately
$7,678,000). The venture also recognized a gain in 1994 of approximately
$12,464,000 for Federal income tax purposes (of which the Partnership's
share was approximately $3,793,000) in 1994. There were no corresponding
distributable proceeds as a result of the transfer of title.

(e) 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 the difference between 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, but before payment of a portion of the
property management fees, is 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 and 1994. This cash flow has been escrowed for future potential
leasing requirements as set forth in the loan modification. The property
experienced a significant loss of rental income in 1995 due to the
expiration of a major tenant's lease in 1994. Based on this fact, the

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

joint venture 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.

(f) 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 was
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
difference between the contract rate and the pay rate was added to the
principal balance. The second note, consisting of the remaining unpaid
principal and accrued interest has a zero pay and accrual rate and is due
and payable April 1, 1998. All excess cash flow after 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).

(g) 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 November
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

(h) Carrollwood Apartments

In September 1993, the venture refinanced with an unaffiliated third
party lender the existing mortgage loan (approximately $7,200,000). The
new loan was in the amount of $7,455,000. 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 plus interest. As of the date of this report, the escrow
account is approximately $129,883 and no amounts have been withdrawn.

(i) Long Beach Plaza

The Partnership initiated discussions with the first mortgage lender
regarding a modification of the mortgage loan secured by the Long Beach
Plaza located in Long Beach, California. In December 1994, the Partnership
reached an agreement with the lender whereby the loan term would be
extended through August 31, 1995. This extension required that the
Partnership commit to fund approximately $923,000 for future leasing costs.

The lender further agreed to fund $414,000 to be used for leasing and
tenant improvements by way of a second note bearing interest at 13% per
annum. No amounts have been drawn on this note as of June 30, 1995.
Payment of principal and interest on the second note is deferred until
August 31, 1995, at which time, principal and accrued interest are due in
full. The Partnership continues to seek a permanent modification of the
first and new second notes. There can be no assurance that any such
modification agreement will be executed. If the Partnership is unable to
secure such modification, 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. Prior to its most recent agreement,
the Partnership had 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 $42,028,000 at June 30, 1995 and
approximately $39,835,000 at December 31, 1994 have been classified as
current liabilities in the accompanying consolidated financial statements.
As of the date of this report, payments of principal and interest in
arrears are approximately $8,293,000.

(j) Plaza Tower

The first mortgage loan secured by the property matured on November 1,
1994. The Partnership reached an agreement for a short term extension
until January 1, 1995 and paid an extension fee of $15,000 to the existing
lender. During January 1995, the Partnership reached another agreement
with the existing lender for an additional extension until March 31, 1995
provided the Partnership pay down the principal balance by $1,500,000 and
find an alternative source of financing. The Partnership continued to
remit debt service payments during this period under the existing loan
terms.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

In April 1995, the Partnership agreed with a new third party lender to
refinance approximately $14,900,000 of the existing mortgage note. As
such, the Partnership paid down to the existing mortgage note another
$1,100,000 to the previous mortgage lender in order to further extend the
loan until the refinancing closed. The refinancing closed in April 1995
and there were no distributable proceeds available. The six year loan
bears an interest rate of 9.02% per annum. Interest only payments are
required to be remitted monthly until maturity in May 2001.

(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, Glades Apartments in
Jacksonville, Florida, Copley Place in Boston, Massachusetts, Plaza Tower
office building in Knoxville, Tennessee, 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), 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 until December 1994 for a fee equal to a
percentage of defined gross income from the property. In December 1994,
one of the affiliated property managers sold substantially all of its
assets and assigned its interest in its management contracts to an
unaffiliated third party. In addition, certain of the management personnel
of the property manager became management personnel of the purchaser and
its affiliates. The successor to the affiliated property manager's assets
is acting as the property manager of the Plaza Tower office building,
Glades Apartments, and the Sherry Lane office building on the same terms
that existed prior to the sale.

(5) TRANSACTIONS WITH AFFILIATES

Fees, commissions and other expenses required to be paid by the
Partnership or the Partnership's consolidated ventures to the General
Partners and their affiliates as of June 30, 1995 and for the six months
ended June 30, 1995 and 1994 are as follows:

Unpaid at
June 30,
1995 1994 1995
-------- ------- -------------
Property manage-
ment and leasing
fees . . . . . . . . . . . . . $501,973 929,166 2,919,353
Insurance commissions . . . . . 53,978 56,465 --
Reimbursement (at
cost) for out-of-
pocket expenses. . . . . . . . 923 1,318 --
-------- ------- ---------
$556,874 986,949 2,919,353
======== ======= =========

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Payment of certain pre-1993 property management and leasing fees
payable under the terms of the management agreements ($2,919,000
approximately $8 per $1,000 interest at June 30, 1995) has been deferred.
All property management fees and leasing fees are being paid currently. In
February 1995, the Partnership paid $10,000,000 of previously deferred
property management and leasing fees to an affiliate of the General
Partner.

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 and its affiliates relating to
the administration of the Partnership and operation of the properties.
Such costs were $116,403 and $241,136 for the six months ended June 30,
1995 and the year ended December 31, 1994, respectively, all of which were
paid as of June 30, 1995.

Subsequent to June 30, 1995, the Corporate General Partner of the
Partnership has determined to use an independent third party or parties to
perform certain of these administrative services beginning in late 1995.
Use of a third party, rather than reimbursement to the Corporate General
Partner and its affiliates, is not expected to have a material effect on
the operations of the Partnership.

(6) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION

Summary income statement information for JMB/NYC venture for the six
months ended June 30, 1995 and 1994 is as follows:

1995 1994
----------- ----------
Total income from
properties
(unconsolidated). . . . . . . $47,553,963 82,903,293
=========== ==========
Operating loss. . . . . . . . . $34,965,536 16,291,710
=========== ==========
Partnership's share
of loss . . . . . . . . . . . $ 3,392,093 2,806,780
=========== ==========

(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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED

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. Recently, the Partnership has been informed
that certain regulatory agencies have approved the clean-up of the site and
approved the shut down of the clean up operation. The gain associated with
this Parcel, approximately $543,000, will be recognized if and when the
closing occurs (currently estimated to be in the first quarter of 1996).
There can be no assurance that the sale of this Parcel will be consummated
on these or any other terms.

(b) 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(b)). The Partnership recognized a gain of
approximately $5,010,000 for financial reporting purposes and a gain of
approximately $7,081,000 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 1994
Annual Report) necessary for a fair presentation have been made to the
accompanying figures as of June 30, 1995 and for the three and six months
ended June 30, 1995 and 1994 (see note 1).

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, 1995, the Partnership and its consolidated ventures had
cash and cash equivalents of approximately $3,617,000. Such funds and
short-term investments of approximately $2,039,000 are available for
distributions to partners, leasing and capital improvement costs and 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 1995 approximately
$7,157,000 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 1995 is currently budgeted to be
approximately $5,138,000. The Partnership and joint ventures have revised
its current budgeted amounts since the first quarter of 1995. This is
primarily the result of unmet leasing activity and the postponement of
certain capital improvements at the Copley Place multi-use complex. Actual
amounts expended in 1995 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.
However, the Partnership does not consider the 2 Broadway, 1290 Avenue of
the Americas and 237 Park Avenue buildings as well as the Copley Place
multi-use complex to be significant sources of long-term liquidity. 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.

Based upon estimated operations of certain of the Partnership's
investment properties and on the anticipated requirements of the
Partnership to fund its share of potential leasing and capital improvement
costs at these properties, the Partnership suspended operating cash
distributions to the Limited and General Partners effective as of the first
quarter of 1992. However, in February 1995, the Partnership made a sales
distribution totalling $11,094,473 (approximately $30 per limited
partnership interest) out of net sale proceeds resulting primarily from the
sale of Old Orchard shopping center.

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 August 1995) or is negotiating mortgage note
modifications or refinancings for 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 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 for the
loan on the Long Beach Plaza, which matures August 1995. 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 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(d) and (c)). 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 and maturity of short term investments. (See Notes
3(b) and 7(b)). For those investment properties where modifications are
being sought, or with expired 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 generally 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 1995 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 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 current capital
and leasing expenditures, but before payment of a portion of the property
management fees, 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 and 1994, which has been escrowed
for future potential leasing requirements as set forth in the current loan
modification.

In 1994, the property 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 leased 97,180 square feet representing 11.5% of the
leasable office space) vacated its space upon the expiration of its lease
in October 1994. Currently, as leases at the office portion of Copley
Place expire, lease renewals and new leases are likely to be at rental
rates less than the rates on existing leases. Although the previous
decline in rental rates appeared to have been stabilized in 1994 and
leasing activity has increased, the supply of office space has caused
increased competition for tenants, a corresponding decline in rental rates
and a corresponding increase in time required to release tenant space in
these markets. In addition, new leases will likely require expenditures
for lease commissions and tenant improvements prior to tenant occupancy.
This anticipated decline in rental rates, the anticipated increase in
releasing time and the costs upon releasing will result in a decrease in
cash flow from operations over the near term. Therefore, the property's
operations may be insufficient to pay the modified debt service through the
end of 1995. 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
and John Hancock's vacant space and currently has several possible
replacements for the space, although replacement cannot be assured.

The joint venture partners decided to pay previously deferred property
management fees owed to an affiliate for 1993 and to end the deferment of
any subsequent fees incurred. As a result, the venture partners have made
contributions of $1,569,447 in 1994, of which the Partnership's share was
$784,724, for the payment of the above mentioned fees. As of June 30,
1995, the aggregate amount of such deferred management fees was
approximately $335,000.

On March 31, 1995, the joint venture received $1,517,994 from a tenant
for rental amounts due from previous years. The joint venture used this
amount to pay a portion of the accrued interest on the outstanding loan
from the joint venture partner, as more fully discussed in Note 2(c).

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 have a 50% interest, sold its interest in
the Old Orchard shopping center (reference is made to Note 2(d)).

At the time of redemption, OOUV retained a portion of the Orchard
Associates redemption proceeds in order to fund certain contingent amounts
which may have been due in the future. In July 1995, OOUV distributed to
Orchard Associates its redemption holdback of $2,083,644. As a result, the
Partnership received its share of the holdback of $1,041,820. The
Partnership currently intends to retain these funds for working capital
purposes.

JMB/NYC

At the 2 Broadway Building, occupancy during the quarter remained at
18%. The Downtown Manhattan office leasing market remains depressed due to
the significant supply of, and the relatively weak demand for, tenant
space. 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. In addition, the property is
in need of a major renovation in order to compete in the office leasing
market. In August 1995, the 2 Broadway Joint Ventures entered into a
contract with a third party for the sale of the 2 Broadway Building, as
discussed below.

Occupancy at 1290 Avenue of the Americas remained at 94% during the
quarter. A new lease with Alex Brown (78,000 square feet, or approximately
4% of the building's leasable space) was executed during the third quarter
of 1994. The lease has an eighteen year term. 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. Approximately 21% of the building's
space under tenant leases will expire by the end of 1995. The Joint
Venture that owns the building is currently finalizing arrangements with a
major insurance company for a lease of approximately 506,000 square feet of
space in the building, for a fifteen year term. During the fourth quarter
of 1994, the Joint Venture that owns the building negotiated an amendment
with a tenant, Deutsche Bank Financial Products Corporation, under which
the tenant will surrender space on the twelfth and thirteenth floors
(137,568 square feet or approximately 7% of the buildings leasable space)
on or before June 30, 1996. The original lease (as amended) was to
terminate on December 31, 2003. The amendment also added space on the
eighth and ninth floors (44,360 square feet or approximately 2% of the
buildings leasable space) which will expire on or before December 31, 1997.

In consideration for this amendment, the tenant paid an early termination
fee of $29,000,000 to the Joint Venture on December 1, 1994. 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. During the second quarter of 1994 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 was
released from all future lease obligations and the Joint Venture now has
direct leases with the original John Blair subtenants. Such subtenants
occupy 228,398 square feet or approximately 11% of the building's leasable
space.

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 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.

In October 1994, JMB/NYC entered into an agreement (the "Agreement")
with the affiliates (the "Olympia & York affiliates") of Olympia & York
Developments, Ltd. ("O&Y") who are the venture partners in the Joint
Ventures to resolve certain disputes which are more fully discussed below.
Certain provisions of the Agreement are immediately effective and,
therefore, binding upon the partners, while others become effective either
upon certain conditions being met or upon execution and delivery of final
documentation. In general, the parties have agreed to: (i) amend the
Three Joint Ventures' agreements to eliminate any funding obligation by
JMB/NYC for any purpose in return for JMB/NYC relinquishing its rights to
approve almost all property management, leasing, sale (certain rights to
control a sale would be retained by JMB/NYC through March 31, 2001) or
refinancing decisions and the establishment of a new preferential
distribution level payable to the Olympia & York affiliates from all future
sources of cash, (ii) sell the 2 Broadway Building, and (iii) restructure
the first mortgage loan on the terms discussed below. A more detailed
discussion of each of these items is contained below and in Note 2. As
part of the Agreement, in order to facilitate the restructuring, JMB/NYC
and the Olympia & York affiliates have agreed to file for each of the Three
Joint Ventures a pre-arranged bankruptcy plan for reorganization under
Chapter 11 of the Bankruptcy Code. In June 1995, the 2 Broadway Joint
Ventures filed their pre-arranged bankruptcy plans for reorganization, and
such plans are awaiting approval of the bankruptcy court. Bankruptcy
filings for the other Joint Ventures are expected to occur later on in
1995. The reorganization plans are expected to incorporate the proposed
transactions contained in the Agreement. During the bankruptcy
proceedings, there exists a possibility that one or more of the proposed
transactions could be challenged by certain creditors resulting in the
elimination or changes to all or portions of the Agreement by the
bankruptcy court. Consequently, there are no assurances that the
transactions contemplated in the Agreement will be finalized. If the
transactions contemplated in the Agreement are finalized, there would
nevertheless need to be a significant improvement in current market and
property operating conditions resulting in a significant increase in the
value of the 237 Park Avenue and 1290 Avenue of the Americas properties
before JMB/NYC would receive any share of future net proceeds from
operations, sale or refinancing. The restructuring of the Three Joint
Ventures' agreements would include JMB/NYC converting from a general
partner to a limited partner in the Joint Ventures (or successor
Partnerships) and the elimination of any funding obligation by JMB/NYC for
any purpose. Consequently, in such event, JMB/NYC would recognize, for
financial reporting purposes, a gain to the extent of the then current
deficit investment balance (which amount was $192,844,550 as of June 30,
1995). No significant net Federal income tax gain or any distributable
proceeds would result from the consummation of the reorganization plan.

JMB/NYC has had a dispute with the Olympia & York affiliates 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 of Notes to Financial Statements. During the quarter ended March
31, 1993, an agreement was reached between JMB/NYC and the Olympia & York
affiliates (the "1993 Agreement") 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 the 1993 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 the 1993
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, 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 Three Joint Ventures' annual cash flow or net sale or refinancing
proceeds. The 1993 Agreement also entitles the Olympia & York affiliates
to a 7% per annum return on such unpaid priority distribution level.
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 was 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 1993 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 1993 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 for the period commencing July 1, 1993, and contend that a 12-
3/4% per annum fixed rate applies. Certain provisions of the Agreement
with the Olympia & York affiliates, when effective, would resolve the
funding obligation dispute.

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 Three Joint Ventures and JMB/NYC or to finalize the
transactions contemplated by the Agreement.

All of the office buildings serve as collateral for the first mortgage
loan. The lender has asserted various defaults under the loan. On June
30, 1994, the Olympia & York affiliates, on behalf of the Three Joint
Ventures, signed a non-binding 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. Certain terms of the Agreement with the Olympia & York affiliates,
when effective, would provide for acceptance by JMB/NYC of this proposed
restructuring. The restructuring, as proposed, would change the interest
rate on the notes from a floating rate equal to 1.75% over the rate on
three-month U.S. treasury bills to a fixed rate of 9% per annum with
periodic payments of interest only at a pay rate of 7% per annum. Unpaid
interest would accrue at 9% per annum and unless previously paid out of
excess property cash flow would be payable at maturity. There is no
assurance that a restructuring of the loan will be obtained under these or
any other terms. In previous negotiations, 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. In the absence of the contemplated restructuring, 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.

In August 1995, the 2 Broadway Joint Ventures entered into a contract
with a third party for the sale of 2 Broadway for a net purchase price,
after commissions and certain other payments, of approximately $18.3
million. The sale, which is expected to occur during the third quarter of
1995, is subject to, among other things, the approval of the bankruptcy
court as part of the plan of reorganization of the 2 Broadway Joint
Ventures that owns the building. In anticipation of this sale and in
accordance with the Agreement, the unpaid first mortgage indebtedness
previously allocated to 2 Broadway was reallocated to 237 Park Avenue and
1290 Avenue of the Americas during 1994. While there can be no assurance
that a sale would occur pursuant to such contract or any other contract, if
the sale is completed, JMB/NYC would no longer have an ownership interest
in the 2 Broadway Joint Ventures. 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 given
to the Olympia & York affiliates as part of the consideration for JMB/NYC's
acquisition of its interests in the Three Joint Ventures, including accrued
interest related to the 2 Broadway Joint Venture interests payable by
JMB/NYC to the Olympia & York affiliates in the amount of $46,646,810. The
provision for value impairment was allocated $136,534,366 and $56,093,194
to the Olympia & York affiliates and JMB/NYC, respectively. Such provision
was allocated to the partners to reflect their respective ownership
percentages before the effect of the non-recourse purchase notes including
accrued interest.

Should a restructuring of the joint venture partnership agreements
providing for the elimination of JMB/NYC's funding obligations in
accordance with the Agreement not be finalized, JMB/NYC may decide not to
commit any additional amounts to the Three Joint Ventures. In addition,
under these circumstances, 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
Joint Ventures. The loss of an interest in a particular Joint 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 Joint Venture). Under certain circumstances, the
failure to repay a purchase note could constitute a default under, and
permit an immediate acceleration of, the maturity of the purchase notes for
the other Joint 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 Joint Ventures, which would result in
substantial 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. In such event, the
Partnership would then proceed to terminate its affairs.

Long Beach Plaza

During March 1995, Ross Dress for Less leased and took occupancy of
approximately 27,200 square feet of the first floor of the vacated Buffum's
building. In addition, Gold's Gym has leased approximately 34,000 square
feet of the third floor of the vacated Buffum's building and is expected to
relocate from its current 9,813 square foot space on Pine Avenue. The
Partnership has several prospects for the smaller Gold's Gym space. 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 has re-evaluated each tenant's sales
level and financial situation. Based on discussions with certain tenants,
additional relief continues to be granted. As a result of the foregoing,
the Partnership initiated and continues to hold discussions with the first
mortgage lender regarding a permanent modification of its mortgage loan
secured by the property. During December 1994, the lender agreed to extend
the maturity of the loan until August 1995. This extension required that
the Partnership commit to fund approximately $923,000 for future leasing
costs. The lender further agreed to fund $414,000 to be used for leasing
and tenant improvements by way of a second note bearing interest at 13% per
annum. No amounts have been drawn on this note as of June 30, 1995. 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. As of the date
of this report, payments of principal and interest in arrears are
approximately $8,293,000. There can be no assurance that such modification
will be consummated (reference is made to Note 3(i)).

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 then 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 for financial reporting and Federal
income tax purposes with no distributable proceeds in 1994. (See 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(b)). On June 30, 1994, the Partnership sold the land, building and
related improvements of the Eastridge Apartments, located in Tucson,
Arizona. See Note 7(b).

Plaza Tower Office Building

The mortgage loan secured by the Plaza Tower office building matured
November 1, 1994. Subsequently, the Partnership reached an agreement for a
short-term extension until January 1, 1995 upon paying a $15,000 extension
fee to the existing lender. During 1995, the Partnership reached two
agreements with the existing lender for extensions through April 1995
provided the Partnership pay down the principal balance and find an
alternative source of financing.

The Partnership made principal payments in the amounts of $1,500,000
and $1,100,000 to the existing lender during February and April 1995,
respectively, and reached an agreement with a new third party lender to
refinance the mortgage note. Reference is made to Note 3(j) for the terms
of the refinancing.

Glades

On December 1, 1994, the joint venture contracted with an affiliate of
the General Partner (prior to the sale of such affiliate in December 1994
(reference is made to Note 4)) to provide property management services for
the Glades Apartments. Fees for management services are equal to a
percentage of defined gross income from the property.

General

The affiliates of the Corporate General Partner have deferred certain
pre-1993 property management and leasing fees payable to them under the
terms of the management agreements in an aggregate amount of approximately
$2,919,000 (approximately $8 per interest) through June 30, 1995. The
Partnership paid $10,000,000 of previously deferred fees during February
1995. The current deferred 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.

While the real estate markets are recuperating, highly competitive
market conditions continue to exist in most locations. The Partnership's
approach has been to aggressively and creatively manage the Partnership's
real estate assets to attract and retain tenants. Net effective rents to
the landlord from renewal tenants are much more favorable than lease terms
which can be negotiated with new tenants. However, the Partnership's
capital resources must also be preserved and allocated in such a manner as
to maximize the total value of the portfolio. As a result of the real
estate market conditions discussed above, the Partnership continues to
conserve its working capital. All expenditures are carefully analyzed and
certain capital projects are deferred when appropriate. The Partnership
has also sought or is seeking additional loan modifications where
appropriate. By conserving working capital, the Partnership will be in a
better position to meet the future needs of its properties since outside
sources of capital may be limited.

As we have reported previously, due to these issues, it is likely that
the Partnership will hold certain of its investment properties longer than
originally anticipated in an effort to maximize the return to the Limited
Partners. Also, in light of the current severely depressed real estate
markets, it currently appears that the Partnership's goal of capital
appreciation will not be achieved. Although the Partnership expects to
distribute from sale proceeds some portion of the Limited Partners'
original capital, without a dramatic improvement in market conditions, the
Limited Partners will receive substantially less than half of their
original investment.

RESULTS OF OPERATIONS

The decreases in cash and cash equivalents, short-term investments and
restricted funds and the corresponding increase in buildings and
improvements and the decreases in the current portion of long-term debt,
amounts due to affiliates and partners' capital at June 30, 1995 as
compared to December 31, 1994 are due primarily to: (a) payment for tenant
improvement costs relating to the former Buffums' space at Long Beach Plaza
and the former IBM space at Copley Place multi-use complex, (b) principal
payments of $2,600,000 relating to the refinancing of the mortgage loan
secured by the Plaza Tower office building, (c) payment of $10,000,000 for
previously deferred property management and leasing fees and (d)
distributions to partners of previous sales proceeds of $11,094,473.
Reference is made to Notes 3(i), 3(j) and 5.

The decrease in rents and other receivables and unearned rents at June
30, 1995 as compared to December 31, 1994 is primarily due to the timing of
rental collections, primarily at Copley Place multi-use complex.

The decrease in prepaid expenses at June 30, 1995 as compared to
December 31, 1994 is due to the timing of insurance payments at certain of
the Partnership's investment properties.

The increase in venture partners' deficits in ventures at June 30,
1995 as compared to December 31, 1994 is due primarily to operating losses
being incurred at the Copley Place multi-use complex.

The decrease in accrued real estate taxes at June 30, 1995 as compared
to December 31, 1994 and the decreases in property operating expenses for
the six months ended June 30, 1995 as compared to the same period in 1994
are due primarily to the decrease in assessed property values for the
Copley Place multi-use complex and the Plaza Tower office building, which
lowered the related property tax liability for these investment properties
in 1995. The decrease in property operating expenses is also attributable
to the sale of Eastridge Apartments in June 1994 (see Note 7(b)).

The increase in accounts payable at June 30, 1995 as compared to
December 31, 1994 is primarily due to the timing of payment of operating
expenses at certain of the Partnership's investment properties.

The decrease in investment in unconsolidated ventures at June 30, 1995
as compared to December 31, 1994 and the Partnership's share of loss from
unconsolidated ventures for the three and six months ended June 30, 1995 as
compared to the same period in 1994 are attributable to the losses incurred
at JMB/NYC (see Note 2(b)).

The increase in accrued interest at June 30, 1995 as compared to
December 31, 1994 is primarily due to the suspension of debt service
payments in June 1993 on the long-term mortgage loan secured by Long Beach
Plaza (Note 3(i)).

The increase in long-term debt at June 30, 1995 as compared to
December 31, 1994 is due to the accrual of long-term deferred interest of
approximately $4,148,000 on the Copley Place purchase price note.

The decrease in rental income for the three and six months ended June
30, 1995 as compared to the same period in 1994 is primarily attributable
to the loss of IBM and John Hancock as tenants of the Copley Place multi-
use complex during April and October 1994, respectively.

The increase in interest income for the six months ended June 30, 1995
as compared to the same period in 1994 is due primarily to an increase in
the average balance of U.S. Government obligations held in the first
quarter of 1995 and higher yields earned on those investments.

The decreases in mortgage and other interest, depreciation and
amortization for the six months ended June 30, 1995 as compared to the same
periods in 1994 are due primarily to the sale of Eastridge Apartments in
June 1994 (see Note 7(b)). The decrease was partially offset by an
increase related to the suspension of debt service payments in June 1993 on
the long-term mortgage loan secured by Long Beach Plaza (Note 3(i)).

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 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(c),
3(d), and 7(b)).

The extraordinary item of $996,126 for the six months ended 1994 is
due to the April 1994 discounted payoff of the mortgage note secured by the
Eastridge Apartments (see Note 7(b)).

PART II. OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Reference is made to Notes 2(b), and 3(i) of the Notes to Consolidated
Financial Statements and to the 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 under
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 herein by reference.
<TABLE>
PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION
OCCUPANCY

The following is a listing of approximate physical occupancy levels by quarter for the Partnership's
investment properties owned as of June 30, 1995.

<CAPTION>
1994 1995
------------------------------------- ------------------------------
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. Marshall's Aurora Plaza
shopping center
Aurora (Denver), Colorado. . . 89% 89% 89% 96% 94% 94%
2. Carrollwood Station
Apartments
Tampa, Florida . . . . . . . . 98% 97% 98% 97% 99% 99%
3. Long Beach Plaza
shopping center
Long Beach, California . . . . 57% 54% 51% 51% 55% 53%
4. The Glades Apartments
Jacksonville, Florida. . . . . 94% 96% 97% 92% 87% 94%
5. Sherry Lane Place
office building
Dallas, Texas. . . . . . . . . 98% 97% 96% 99% 98% 99%
6. Copley Place
multi-use complex
Boston, Massachusetts. . . . . 93% 75% 78% 70% 73% 73%
7. Plaza Tower office building
Knoxville, Tennessee . . . . . 91% 91% 91% 92% 92% 92%
8. 237 Park Avenue Building
New York, New York . . . . . . 98% 98% 98% 98% 98% 98%
9. 1290 Avenue of the Americas
Building
New York, New York . . . . . . 90% 91% 91% 94% 94% 94%
10. 2 Broadway Building
New York, New York . . . . . . 30% 19% 19% 18% 18% 18%

</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 for March 31, 1993 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 10-K (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.

10-R. Proposed Restructure of Two Broadway, 1290 Avenue of the
Americas and 237 Park Avenue, New York, New York and Summary of Terms dated
October 14, 1994, is hereby incorporated by reference to the Partnership's
report for December 31, 1994 on Form 10-K (File No. 0-12791) dated March
27, 1995.

10-S. Assumption Agreements dated October 14, 1994 made by 237
Park Avenue Associates and by 1290 Associates in favor and for the benefit
of O&Y Equity Company, L.P., O&Y NY Building Corp. and JMB/NYC Office
Building Associates, L.P., are hereby incorporated by reference to the
Partnership's report for December 31, 1994 on Form 10-K (File No. 0-12791)
dated March 27, 1995.

10-T. Assumption Agreements dated October 14, 1994 made by O&Y
Equity Company, L.P., and by O&Y NY Building Corp. and by JMB/NYC Office
Building Associates, L.P. in favor and for the benefit of 2 Broadway
Associates and 2 Broadway Land Company, are hereby incorporated by
reference to the Partnership's report for December 31, 1994 on Form 10-K
(File No. 0-12791) dated March 27, 1995.

10-U. Amendment No. 1 to the Agreement of Limited Partnership of
Carlyle-XIII Associates, L.P. is hereby incorporated by reference to the
Partnership's report for March 31, 1995 on Form 10-Q (File No. 0-12791)
dated May 11, 1995.

10-V. Amendment No. 1 to the Second Amended and Restated
Articles of Partnership of JMB/NYC Office Building Associates, L.P. is
hereby incorporated by reference to the Partnership's report for March 31,
1995 on Form 10-Q (File No. 0-12791) dated May 11, 1995.

27. Financial Data Schedule of the Partnership for the period
ended June 30, 1995 is filed herewith.

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 Securities and Exchange Commission upon request.

(b) No reports on Form 8-K were filed since the beginning of
the last quarter of the period covered by this report.

SIGNATURES

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII

BY: JMB Realty Corporation
(Corporate General Partner)

By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: August 9, 1995

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 9, 1995

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<CIK> 0000711604
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995

<CASH> 3,617,480
<SECURITIES> 2,039,172
<RECEIVABLES> 7,244,597
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,901,249
<PP&E> 431,511,316
<DEPRECIATION> 156,307,563
<TOTAL-ASSETS> 305,063,572
<CURRENT-LIABILITIES> 67,454,346
<BONDS> 367,233,121
<COMMON> 0
0
0
<OTHER-SE> (212,988,809)
<TOTAL-LIABILITY-AND-EQUITY> 305,063,572
<SALES> 31,711,971
<TOTAL-REVENUES> 32,156,708
<CGS> 0
<TOTAL-COSTS> 25,273,524
<OTHER-EXPENSES> 802,369
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,341,856
<INCOME-PRETAX> (13,261,041)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,279,584)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,279,584)
<EPS-PRIMARY> (37.44)
<EPS-DILUTED> (37.44)

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