SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the fiscal year
ended December 31, 1994 Commission File Number 0-12791
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(Exact name of registrant as specified in its charter)
Illinois 36-3207212
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office)(Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Items incorporated by reference: None
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . 8
Item 3. Legal Proceedings . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . 11
PART II
Item 5. Market for the Partnership's Limited Partnership
Interests and Related Security Holder Matters11
Item 6. Selected Financial Data . . . . . . . . . . 12
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations23
Item 8. Financial Statements and Supplementary Data 36
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . .105
PART III
Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . .105
Item 11. Executive Compensation. . . . . . . . . . .109
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . .110
Item 13. Certain Relationships and Related Transactions111
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . .111
SIGNATURES . . . . . . . . . . . . . . . . . . . . . .115
i
PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report.
The registrant, Carlyle Real Estate Limited Partnership-XIII (the
"Partnership"), is a limited partnership formed in late 1982 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois to invest in improved income-producing commercial and residential
real property. The Partnership sold 366,177.57 limited partnership
interests (the "Interests") commencing on June 9, 1983, pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933
(Registration No. 2-81125 and No. 2-87033). A total of 366,177.57
Interests have been sold to the public at $1,000 per Interest. The
offering closed on May 22, 1984. No Limited Partner has made any
additional capital contribution after such date. The Limited Partners of
the Partnership share in their portion of the benefits of ownership of the
Partnership's real property investments according to the number of
Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or through
joint venture partnership interests. The Partnership's real estate
investments are located throughout the nation and it has no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding
of the Partnership's business taken as a whole. Pursuant to the
Partnership agreement, the Partnership is required to terminate on or
before December 31, 2033. Accordingly, the Partnership intends to hold the
real properties it acquires for investment purposes until such time as sale
or other disposition appears to be advantageous. Unless otherwise
described, the Partnership expects to hold its properties for long-term
investment. Due to certain market conditions, the Partnership is not able
to determine the holding period for its remaining properties. At sale of a
particular property, the net proceeds, if any, are generally distributed or
reinvested in existing properties rather than invested in acquiring
additional properties.
The Partnership has made the real property investments set forth in
the following table:
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Copley Place
multi-use complex
Boston,
Massachusetts . . 1,220,000 sq.ft.
n.r.a. 9/1/83 24% fee ownership of improve-
ments and leasehold
interest in air rights
(through joint venture
partnership) (c)(d)(g)
2. 1001 Fourth Avenue
Plaza
office building
Seattle,
Washington. . . . 678,000 sq.ft.
n.r.a. 9/1/83 11/1/93 fee ownership of land and
improvements (h)
3. Plaza Tower
office building
Knoxville,
Tennessee . . . . 418,000 sq.ft.
n.r.a. 10/26/83 4% fee ownership of land and
improvements
4. Gables Corporate
Plaza
office building
Coral Gables,
Florida . . . . . 106,000 sq.ft.
n.r.a. 11/15/83 1/5/94 fee ownership of land and
improvements (through joint
venture partnership) (c)(h)
5. University Park
office building
Sacramento,
California. . . . 120,000 sq.ft.
n.r.a. 1/16/84 1/10/94 fee ownership of land and
improvements (h)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
6. Sherry Lane Place
office building
Dallas, Texas . . 286,000 sq.ft.
n.r.a. 12/1/83 6% fee ownership of land and
improvements (through joint
venture partnerships) (c)
7. Allied Automotive
Center
Southfield,
Michigan. . . . . 192,000 sq.ft.
n.r.a. 3/30/84 10/10/90 fee ownership of land and
improvements (e)
8. Commercial Union
Building
Quincy,
Massachusetts . . 172,000 sq.ft.
n.r.a. 3/12/84 8/15/91 fee ownership of land and
improvements
9. 237 Park Avenue
Building
New York,
New York. . . . . 1,140,000 sq.ft.
n.r.a. 8/14/84 4% fee ownership of land and
improvements (through joint
venture partnerships)
(c)(g)
10. 1290 Avenue of
the Americas
Building
New York,
New York. . . . . 2,000,000 sq.ft.
n.r.a. 7/27/84 8% fee ownership of land and
improvements (through joint
venture partnerships)
(c)(g)
11. 2 Broadway
Building
New York,
New York. . . . . 1,600,000 sq.ft.
n.r.a. 8/14/84 5% fee ownership of land and
improvements (through joint
venture partnerships)
(c)(g)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
12. Long Beach Plaza
shopping center
Long Beach,
California. . . . 559,000 sq.ft.
g.l.a. 6/22/83 4% fee ownership of land and
improvements and leasehold
interest in the parking
structure (d)
13. Marshalls Aurora
Plaza
shopping center
Aurora (Denver),
Colorado. . . . . 123,000 sq.ft.
g.l.a. 4/1/83 1% fee ownership of land and
improvements
14. Old Orchard
shopping center
Skokie (Chicago),
Illinois. . . . . 843,000 sq.ft.
g.l.a. 4/1/84 8/30/93 fee ownership of land and
improvements (through a
joint venture partnership)
(c)(i)
15. Heritage Park-II
Apartments
Oklahoma City,
Oklahoma. . . . . 244 units 7/1/83 3/26/92 fee ownership of land and
improvements (through a
joint venture partnership)
(c)(e)
16. Quail Place
Apartments
Oklahoma City,
Oklahoma. . . . . 180 units 7/1/83 3/26/92 fee ownership of land and
improvements (through a
joint venture partnership)
(c)(e)
17. Lake Point
Apartments
Charlotte,
North Carolina. . 208 units 9/15/83 12/29/89 fee ownership of land and
improvements
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
18. Eastridge
Apartments
Tucson, Arizona . 456 units 8/23/83 6/30/94 fee ownership of land and
improvements (through a
joint venture partnership)
(c)(e)
19. Rio Cancion
Apartments
Tucson, Arizona . 380 units 8/18/83 3/31/93 fee ownership of land and
improvements (e)
20. Bridgeport
Apartments
Irving, Texas . . 312 units 9/30/83 4/2/92 fee ownership of land and
improvements (e)
21. Carrollwood Station
Apartments
Tampa, Florida. . 336 units 12/16/83 1% fee ownership of land and
improvements (through a
joint venture partnership)
(c)
22. Greenwood Creek II
Apartments
Benbrook
(Fort Worth),
Texas . . . . . . 152 units 3/30/84 4/6/93 fee ownership of land and
improvements (e)
23. The Glades
Apartments
Jacksonville,
Florida. . . . . 360 units 10/9/84 1% fee ownership of land and
improvements (through a
joint venture partnership)
(c)
<FN>
-----------------------
(a) The computation of this percentage for properties held at December
31, 1994 does not include amounts invested from sources other than the
original net proceeds of the public offering as described above and in Item
7.
(b) Reference is made to Note 4 and to Note 3 of the Combined
Financial Statements of JMB/NYC Office Building Associates and the Schedule
III's to the Consolidated Financial Statements and Combined Financial
Statements filed with this annual report for the current outstanding
principal balances and a description of the long-term mortgage indebtedness
secured by certain of the Partnership's real property investments.
(c) Reference is made to Note 3 for a description of the joint venture
partnership or partnerships through which the Partnership has made this
real property investment.
(d) Reference is made to Note 8(b) for a description of the leasehold
interest, under a ground lease or air-rights lease, in the land or
air-rights on which this real property investment is situated.
(e) This property has been sold. Reference is made to Note 7 for a
description of the sale of such real property investment.
(f) Reference is made to Item 8 - Schedule III to the Consolidated
Financial Statements and Combined Financial Statements filed with this
annual report for further information concerning real estate taxes and
depreciation.
(g) Reference is made to Item 6 - Selected Financial Data for
additional operating and lease expiration data concerning this investment
property.
(h) The Partnership transferred title to the lender via a deed in
lieu. Reference is made to Note 4(b).
(i) The venture sold its interest in the property. Reference is made
to Note 3(d).
</TABLE>
The Partnership's real property investments are subject to competi-
tion from similar types of properties (including in certain areas,
properties owned or advised by affiliates of the General Partners or
properties owned by certain of the joint venture partners) in the
respective vicinities in which they are located. Such competition is
generally for the retention of existing tenants. Additionally, the
Partnership is in competition for new tenants in markets where significant
vacancies are present. Reference is made to Item 7 below for a discussion
of competitive conditions and capital improvement plans of the Partnership
and certain of its significant investment properties. Approximate
occupancy levels for the properties are set forth in the table in Item 2
below to which reference is hereby made. The Partnership maintains the
suitability and competitiveness of its properties in its markets primarily
on the basis of effective rents, tenant allowances and services provided to
tenants. In the opinion of the Corporate General Partner of the
Partnership, all of the investment properties held at December 31, 1994 are
adequately insured. Although there is earthquake insurance coverage for a
portion of the value of the Partnership's investment properties, the
Corporate General Partner does not believe that such coverage for the
entire replacement cost of the investment properties is available on
economic terms.
In January 1994, the Partnership transferred title to the University
Park Office Building located in Sacramento, California. Reference is made
to Note 4(b)(6) for a further description of such transaction.
In January 1994, the Partnership transferred title to the Gables
Corporate Plaza Office Building located in Coral Gables, Florida.
Reference is made to Note 4(b)(7) for a further description of such
transaction.
In June 1994, the Partnership sold the land, related improvements and
personal property of the Eastridge Apartments located in Tucson, Arizona.
Reference is made to Note 7(g) for a further description of such
transaction.
Reference is made to Note 8(a) and to Note 4 of Notes to Combined
Financial Statements filed with this annual report for a schedule of
minimum lease payments to be received in each of the next five years, and
in the aggregate thereafter, under leases in effect at certain of the
Partnership's properties as of December 31, 1994.
At December 31, 1994, the Partnership had 79 full-time and 43 part-
time personnel, none of whom are officers or directors of the Corporate
General Partner of the Partnership. Such persons perform on-site duties at
certain of the Partnership's properties.
The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.
<TABLE>
ITEM 2. PROPERTIES
The Partnership owns directly or through joint venture partnerships the properties or interests in the
properties referred to under Item 1 above to which reference is hereby made for a description of said properties.
The following is a listing of principal businesses or occupations carried on in and approximate physical
occupancy levels by quarter during fiscal years 1994 and 1993 for the Partnership's investment properties owned
during 1994:
<CAPTION>
1993 1994
--------------------------------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Marshalls Aurora Plaza
shopping center
Aurora (Denver),
Colorado. . . . . . . . Retail 90% 91% 88% 91% 89% 89% 89% 96%
2. Carrollwood Station
Apartments
Tampa, Florida. . . . . Residential 94% 95% 96% 98% 98% 97% 98% 97%
3. Long Beach Plaza
shopping center
Long Beach,
California (a). . . . . Retail 64% 60% 60% 60% 57% 54% 51% 51%
4. The Glades Apartments
Jacksonville, Florida . Residential 94% 93% 98% 96% 94% 96% 97% 92%
5. Gables Corporate Plaza
office building
Coral Gables, Florida . Financial Services 85% 83% 83% 83% N/A N/A N/A N/A
6. Sherry Lane Place
office building
Dallas, Texas . . . . . Legal and
Financial Services 93% 90% 95% 96% 98% 97% 96% 99%
7. Eastridge Apartments
Tucson, Arizona . . . . Residential 96% 89% 95% 95% 97% N/A N/A N/A
8. Copley Place
multi-use complex
Boston, Massachusetts
(d) . . . . . . . . . . Retail/Business
Machines/Financial
Services 87% 94% 94% 93% 93% 75% 78% 70%
1993 1994
--------------------------------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
9. Plaza Tower
office building
Knoxville, Tennessee. . Financial Services 91% 92% 92% 91% 91% 91% 91% 92%
10. University Park
office building
Sacramento, California
(b) . . . . . . . . . . Engineering and
Financial Services 98% 52% 65% 65% N/A N/A N/A N/A
11. 237 Park Avenue
Building
New York, New York. . . Advertising/Insurance/
Paper/Real Estate
Investment 100% 99% 99% 98% 98% 98% 98% 98%
12. 1290 Avenue of the
Americas Building
New York, New York. . . Financial Services 97% 95% 95% 98% 90% 91% 91% 94%
13. 2 Broadway Building
New York, New York (c). Financial Services 59% 59% 29% 30% 30% 19% 19% 18%
<FN>
-----------------
Reference is made to Item 6, Item 7, Note 8 and to Note 4 of Notes to
Combined Financial Statements for further information regarding property
occupancy, competitive conditions and tenant leases at the Partnership's
investment properties.
An "N/A" indicates that the property was sold or disposed and was not
owned by the Partnership at the end of the period.
(a) Long Beach Plaza 1993 occupancy figures were restated to reflect
the additional 144,000 square feet of gross leasable area acquired in the
Buffum's settlement in March 1993.
(b) University Park office building's major tenant, California Vision
Services, vacated its space of 70,697 square feet (59% of the building)
upon expiration of its lease in April 1993.
(c) 2 Broadway Building's major tenant, Merrill Lynch, Pierce, Fenner
& Smith, Incorporated vacated its space of approximately 497,000 square
feet (30% of the building) upon expiration of its lease in August 1993.
Bear Sterns, another major tenant, vacated its space of 186,498 square feet
upon expiration of its lease in April 1994.
(d) Copley Place's major office tenant, International Business
Machines, vacated 279,432 square feet (23% of the office portion of the
complex) upon expiration of its lease in April 1994. Another major office
tenant, John Hancock vacated its space of approximately 97,180 square feet
(11.5% of the office portion of the complex) upon expiration of its lease
in October 1994.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
1993 and 1994.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1994, there were 36,194 record holders of Interests
in the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request,
the Corporate General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspects of the transaction, will be subject to negotiation by the
investor. There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Corporate General
Partner. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests. No transfer
will be effective until the first day of the next succeeding calendar
quarter after the requisite transfer from satisfactory to the Corporate
General Partner has been received by the Corporate General Partner. The
transferee consequently will not be entitled to receive any cash
distributions or any allocable share of profits or losses for tax purposes
until such next succeeding calendar quarter. Profits or losses from
operations of the Partnership for a calendar year in which a transfer
occurs will be allocated between the transferor and the transferee based
upon the number of quarterly periods in which each was recognized as the
holder of the Interests, without regard to the results of the Partnership's
operations during particular quarterly periods and without regard to
whether cash distributions were made to the transferor or transferee.
Profits or losses arising from the sale or other disposition of Partnership
properties will be allocated to the recognized holder of the Interests as
of the last day of the quarter in which the Partnership recognized such
profits or losses. Cash distributions to a holder of Interests arising
from the sale or other disposition of Partnership properties will be
distributed to the recognized holder of the Interests as of the last day of
the quarterly period with respect to which such distribution is made.
Reference is made to Item 6 below for a discussion of cash distribu-
tions made to the Limited Partners. Reference is made to Note 5 for a
description of the provisions of the Partnership Agreement relating to cash
distributions to the partners.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1994, 1993, 1992, 1991 AND 1990
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . $ 65,969,277 85,193,793 93,609,884 94,185,836 104,515,625
============ ============ ============ ============ ============
Operating loss . . . . . $ 25,410,848 30,620,211 37,939,335 35,902,441 39,193,788
Partnership's share of
loss from operations
of unconsolidated
ventures. . . . . . . . 6,271,489 22,416,922 8,007,990 13,356,918 11,982,325
Venture partners'
share of loss of
consolidated ventures'
operations. . . . . . . (5,659,744) (2,008,939) (3,376,600) (6,392,827) (6,198,135)
------------ ------------ ------------ ------------ ------------
Net operating loss . . . 26,022,593 51,028,194 42,570,725 42,866,532 44,977,978
Gain on sale or
disposition of
investment properties,
net . . . . . . . . . . (18,364,792) (11,083,791) (2,132,879) (1,476,395) (3,123,908)
Gain on sale of
interest in uncon-
solidated venture . . . (1,702,082) (7,898,727) -- -- --
Loss on venture
partner's relin-
quishment of interest
in investment property. -- -- -- 1,161,626 --
------------ ------------ ------------ ------------ ------------
Loss before extra-
ordinary items. . . . . 5,955,719 32,045,676 40,437,846 42,551,763 41,854,070
Extraordinary items. . . (996,126) 141,776 (7,139,936) -- --
------------ ------------ ------------ ------------ ------------
Net loss . . . . . . . . $ 4,959,593 32,187,452 33,297,910 42,551,763 41,854,070
============ ============ ============ ============ ============
1994 1993 1992 1991 1990
------------- ------------ ----------- ------------ ------------
Net loss per Interest
(b):
Net operating loss . . $ 68.22 133.78 111.62 112.38 113.76
Gain on sale or disposi-
tion of investment
properties, net . . . (49.66) (29.97) (5.77) (3.99) (4.15)
Gain on sale of
interest in uncon-
solidated venture . . (4.60) (21.35) -- -- --
Loss on venture
partner's relin-
quishment of interest
in investment
property. . . . . . . -- -- -- 3.14 --
Extraordinary items. . (2.69) .38 (19.31) -- --
------------ ------------ ------------ ------------ ------------
Net loss . . . . . . . $ 11.27 82.84 86.54 111.53 109.61
============ ============ ============ ============ ============
Total assets . . . . . . $333,577,902 374,787,300 489,687,072 530,051,709 558,756,999
Long-term debt . . . . . $361,563,239 360,881,897 464,855,926 501,003,779 518,197,289
Cash distributions
per Interest (b). . . . $ -- -- .50 4.25 13.50
============ ============ ============ ============ ============
<FN>
-------------
(a) The above selected financial data should be read in conjunction
with the consolidated financial statements and the related notes appearing
elsewhere in this annual report.
(b) Cash distributions to the Limited Partners since the inception of
the Partnership have not resulted in taxable income to such Limited
Partners and have therefore represented a return of capital. Each
Partner's taxable loss from the Partnership in each year is equal to his
allocable share of the taxable loss of the Partnership, without regard to
the cash generated or distributed by the Partnership.
</TABLE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1994
<CAPTION>
Property
--------
Copley Place
multi-use
complex a) The occupancy rate and average base rent per square foot
(excluding percentage rent) as of December 31 for each of
the last five years were as follows:
Avg. Annual
Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ --------------- ------------------
<S> <C> <C> <C>
1990 . . . . . 87% 29.85
1991 . . . . . 84% 26.09
1992 . . . . . 92% 25.00
1993 . . . . . 93% 25.00
1994 . . . . . 70% 29.84
<FN>
(1) Average annual base rent per square foot is based on rentable
square feet ("RF") occupied as of December 31 of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C>
Neiman Marcus 104,372 $1,043,3201/2014 N/A
(Department Store)
Bain & Company 116,763 3,543,7578/2004 N/A
(Investments)
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Copley Place multi-use complex:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring RF of Expiring of Expiring Base Rent
December 31, Leases Leases (1)(2) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 21 64,546 $1,552,199 6%
1996 5 16,601 496,966 2%
1997 13 72,036 1,624,653 6%
1998 6 39,599 932,050 4%
1999 14 132,016 2,792,391 11%
2000 30 221,170 5,424,883 21%
2001 12 103,361 2,882,345 11%
2002 11 90,088 2,670,856 11%
2003 6 41,269 1,406,099 6%
2004 14 145,003 5,708,250 22%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
(2) Includes anchors which lease space but not anchors which own space.
</TABLE>
<TABLE>
<CAPTION>
Property
--------
1290 Avenue of
the Americas
Office Building a) The occupancy rate of net rentable square feet (NRF)
and average base rent per square foot (excluding
percentage rent) as of December 31 for each of the
last five years were as follows:
Avg. Annual
NRF Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ --------------- ---------------
<S> <C> <C> <C>
1990 . . . . . 97% $36.11
1991 . . . . . 97% 36.25
1992 . . . . . 97% 36.94
1993 . . . . . 98% 35.78
1994 . . . . . 94% 36.93
<FN>
(1) Average annual base rent per square foot is based on NRF occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C>
None - No single tenant represents more than
10% of the gross leasable area of the building.
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring NRF of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 113 368,016 $14,288,064 21%
1996 10 207,283 4,873,060 7%
1997 6 100,250 3,545,310 4%
1998 17 332,992 15,554,607 22%
1999 8 78,538 2,843,196 4%
2000 3 5,940 118,800 --
2001 1 96,700 4,158,100 6%
2002 14 223,896 9,491,154 14%
2003 6 45,153 2,011,830 3%
2004 9 103,381 5,811,346 8%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with replacement
tenants have been executed as of March 27, 1995.
</TABLE>
<TABLE>
<CAPTION>
Property
--------
2 Broadway
Office Building a) The occupancy rate and net rentable square feet (NRF)
and average base rent per square foot (excluding
percentage rent) as of December 31 for each of the
last five years were as follows:
Avg. Annual
NRF Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ --------------- ---------------
<S> <C> <C> <C>
1990 . . . . . 68% 32.77
1991 . . . . . 59% 30.46
1992 . . . . . 59% 27.96
1993 . . . . . 30% 46.88
1994 . . . . . 18% 32.20
<FN>
(1) Average annual base rent per square foot is based on NRF occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C>
None - No single tenant represents more than
10% of the gross leasable area of the building.
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring NRF of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 1 -- $ 18,000 --
1996 12 123,926 2,765,237 30%
1997 3 24,822 501,984 5%
1998 3 29,411 1,013,645 11%
1999 1 -- 5,790 --
2000 -- -- -- --
2001 2 29,117 296,294 3%
2002 1 5,501 180,000 2%
2003 3 5,110 312,625 3%
2004 -- -- -- --
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with replacement
tenants have been executed as of March 27, 1995.
</TABLE>
<TABLE>
<CAPTION>
Property
--------
237 Park Avenue
Office Building a) The occupancy rate of net rentable square feet (NRF)
and average base rent per square foot (excluding
percentage rent) as of December 31 for each of the
last five years were as follows:
Avg. Annual
NRF Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ --------------- ---------------
<S> <C> <C> <C>
1990 . . . . . 100% 34.98
1991 . . . . . 100% 35.03
1992 . . . . . 98% 33.35
1993 . . . . . 98% 30.85
1994 . . . . . 98% 32.23
<FN>
(1) Average annual base rent per square foot is based on NRF occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C>
J. Walter Thompson 456,132 $ 9,529,966 8/2006 N/A
Company
(Advertising Agency)
North American 279,906 10,101,248 8/2001 N/A
Reinsurance Company
(Insurance Company)
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring NRF of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 2 900 $ 58,000 --
1996 2 5,700 407,640 1%
1997 1 27,110 1,355,500 4%
1998 - -- -- --
1999 5 120,406 6,081,701 17%
2000 1 3,450 196,650 1%
2001 9 283,001 10,283,327 29%
2002 - -- -- --
2003 2 21,641 873,430 2%
2004 4 9,693 337,260 1%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On June 9, 1983, the Partnership commenced an offering of $260,000,000
of Limited Partnership Interests pursuant to a Registration Statement on
Form S-11 under the Securities Act of 1933. On October 7, 1983, the
Partnership registered an additional $140,000,000 of Limited Partnership
Interests. A total of 366,177.57 Interests were sold to the public at
$1,000 per interest (fractional interests are due to the Distribution
Reinvestment Program) between June 9, 1983 and May 22, 1984 pursuant to a
public offering.
After deducting selling expenses and other offering costs, the
Partnership had approximately $326,000,000 with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such invest-
ments and to satisfy working capital requirements. A portion of the
proceeds was utilized to acquire the properties described in Item 1 above.
At December 31, 1994, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $9,552,000. Such funds and
short-term investments of approximately $18,960,000 are available for
distributions to partners, leasing and capital improvement costs and/or
operating deficits at Long Beach Plaza, Marshalls Aurora Plaza and the
Plaza Tower Office Building, for funding requirements at Copley Place for
its share of management fees and for working capital requirements and
potential future operating deficits and 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 $9,733,000 for tenant improvements and other
capital expenditures. The Partnership's share of such items in 1995 is
currently budgeted to be $6,701,000. 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 distribu-
tions is expected to be through the net cash generated by the Partnership's
investment properties and through the sale or refinancing of such
investments. In such regard, reference is made to the Partnership's
property specific discussions below and also to the Partnership's
disclosure of certain property lease expirations in Item 6. The
Partnership's and its ventures' mortgage obligations are generally non-
recourse and therefore the Partnership and its ventures generally are not
personally obligated to pay such mortgage indebtedness.
Many of the Partnership's investment properties currently operate in
overbuilt markets which are characterized by lower than normal occupancies
and/or reduced rent levels. Such competitive conditions have resulted in
the operating deficits described below. 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. As more fully described in Note 11(a),
the Partnership distributed a portion of the net sales proceeds related to
the sale of Old Orchard Shopping Center in March 1995.
As described more fully in Note 4, the Partnership has received or is
negotiating mortgage note modifications (certain of which have expired and
others of which expire at various dates commencing March 1995) on the
Sherry Lane Place office building, Glades Apartments, Plaza Tower office
building, Long Beach Plaza, Carrollwood Apartments, Marshall's Aurora Plaza
and Copley Place multi-use complex. The Partnership had been unsuccessful
in its efforts to obtain modifications of the loans secured by the 1001
Fourth Avenue office building, University Park office building and the
Gables Corporate Plaza, as further discussed below and in Note 4. The
Partnership has not remitted the required debt service payments pursuant to
the loan agreements on Long Beach Plaza which matures in August 1995 (see
note 4(b)(12)). In January 1994, the Partnership transferred title to the
University Park office building to the lender and the related mortgage loan
was discharged by the lender (reference is made to note 4(b)(6)). In
January 1994, the Partnership through Gables Corporate Plaza Associates
transferred title to the Gables Corporate Plaza office building to the
lender and the related mortgage loan was discharged by the lender
(reference is made to Note 4(b)(7)). 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 4(b)(5) and 7(g)). For those
investment properties where modifications are being sought, or with expired
modifications or short-term modifications, if the Partnership is unable to
secure new or additional modifications to the loans, based upon current and
anticipated market conditions, the Partnership may decide not to commit any
significant additional amounts to any of the properties which are
incurring, or in the future do incur, operating deficits. This would
result in the Partnership no longer having an ownership interest in such
property 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 underlying 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 4 and to Note 3 of Notes to the
Combined Financial Statements). The source of repayment is expected to be
from proceeds from sale or refinancing, or extension of such indebtedness.
However, there can be no assurance that any such sales, refinancings or
extensions will occur.
Copley Place
The Boston office market remains very competitive due to the large
supply of available space and to the prevalence of concessions being
offered to attract and retain tenants.
Commencing January 1, 1992, cash deficits and funding requirements are
allocated equally between the Partnership and the joint venture partner.
The joint venture has obtained a modification of the existing first
mortgage note effective March 1, 1992. The modification lowered the pay
rate from 12% to 9% per annum through August 1993, and at that time,
further reduced it to 7-1/2% per annum through August 1998. The contract
rate has been lowered to 10% per annum through August 1993 and at that time
further reduced to 8-1/2% per annum through August 1998. After each
monthly payment, the difference between the contract interest rate on the
outstanding principal balance of the loan, including deferred interest, and
interest paid at the applicable pay rate (as defined) will be added to the
principal balance and will accrue interest at the contract interest rate.
The outstanding principal balance, including the unpaid deferred interest,
is due and payable on August 31, 1998. In return, the lender will be
entitled to receive, as additional interest, a minority residual
participation of 10% of net proceeds (as defined) from a sale or
refinancing after the Partnership and its joint venture partner have
recovered their investments (as defined). Any cash flow from the property,
after all current capital and leasing expenditures, will be escrowed for
the purpose of paying for future capital and leasing requirements. As a
result of the debt modification, the property produced cash flow in 1993
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 8,398 square feet. In addition, 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 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 re-lease 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 re-leasing 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 will
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
assurance 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 and 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. 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 total contributions of $1,569,447 of which the
Partnership's share was $784,724 as of December 31, 1994 for the payment of
the above mentioned fees. As of December 31, 1994, the aggregate amount of
such deferred management fees was approximately $714,000 of which the
Partnership's share is approximately $357,000.
Orchard Associates
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 3(d)).
Reference is also made to note 11(a) regarding the distribution of a
portion of these net sale proceeds.
JMB/NYC
At the 2 Broadway Building, occupancy during the year decreased to
18%, down from 30% in the previous year due to Bear Stearns Co. vacating
its space in April 1994 upon the expiration of its lease. Kidder Peabody &
Co. (71,994 square feet or approximately 4.5% of the building's leasable
space) whose lease was to expire June 30, 1994 extended their lease to June
30, 1996. The Downtown Manhattan office leasing market remains depressed
due to the significant supply of, and 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. Little, if any, new
construction is planned for Downtown over the next few years. It is
expected that 2 Broadway will continue to be adversely affected by a high
vacancy rate and the low effective rental rates achieved upon releasing of
space under existing leases which expire over the next few years. In
addition, the property is in need of a major renovation in order to compete
in the office leasing market. However, there are currently no plans for a
renovation because of the potential sale of the property discussed below
and because the effective rents that could be obtained under current market
conditions likely are not sufficient to justify the costs of the
renovation. As more fully discussed below, the Olympia & York affiliates
have informed JMB/NYC that they have received a contract for the sale of
the 2 Broadway building.
Occupancy at 1290 Avenue of the Americas decreased to 94%, down from
98% in 1993 due to the move-out of various tenants upon lease expiration
including AC Nielson Company (59,347 square feet, or approximately 3% of
the buildings leasable space) and New York Telephone Co. (34,114 square
feet, or approximately 2% of the buildings leasable space), partially
offset by a new lease with Alex Brown (78,000 square feet, or approximately
4% of the building's leasable space) which 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. Although approximately 21% of the
building's space under tenant leases will expire by the end of 1995,
negotiations are currently being conducted with a number of prospective
tenants in the financial services industry to lease a significant portion
of the current and anticipated vacant space. There can be no assurances
that such negotiations will be successful. During the fourth quarter of
1994, the Joint Venture 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 on early termination fee of $29,000,000 to
the Joint Venture that owns 1290 Avenue of the Americas 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. Due to the
uncertainty regarding the collection of the balance of the monthly rents
from Blair, a provision for doubtful accounts related to rents and other
receivables and accrued rents receivable aggregating $7,659,366 was
recorded at December 31, 1993 related to this tenant. During the 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 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 year 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 upon
either 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 were 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 3. As
part of the Agreements, 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. Such filings are expected to occur in
1995. The reorganization plan is 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. As a further consequence of the
effectiveness of the reorganization plan, the restructuring of the Three
Joint Ventures' agreements would include JMB/NYC converting from a general
partner to a limited partner and the elimination of any funding obligation
by JMB/NYC for any purpose. Consequently, JMB/NYC would recognize, for
financial reporting purposes, a gain to the extent of the then current
deficit investment balance (which amount was $187,775,761 as of December
31, 1994). 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 unaffiliated venture partners who
are affiliates (hereinafter sometimes referred to as the "Olympia & York
affiliates") of Olympia & York Developments, Ltd. (hereinafter sometimes
referred to as "O&Y" over the calculation of the effective interest rate
with reference to the first mortgage loan, which covers all three
properties, for the purpose of determining JMB/NYC's deficit funding
obligation, as described more fully in Note 3 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 continued to dispute this calculation for the period commencing
July 1, 1993, contend that a 12-3/4% per annum fixed rate applies. 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. 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 will accrue
at 9% per annum and unless previously paid out of excess property cash flow
will be payable at maturity. There is no assurance that a restructuring of
the loan will be obtained under these or any other terms. In 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.
The Olympia & York affiliates have informed JMB/NYC that they have
received a contract for the sale of 2 Broadway for a net purchase price of
$15 million. The first mortgage lender has preliminarily agreed in the
loan restructuring proposal discussed above to the sale of the building
according to the terms of the 2 Broadway sales contract. A sale pursuant
to the contract received by the Olympia & York affiliates would be subject
to, among other things, the final approval of the first mortgage lender as
well as JMB/NYC, whose approval is incorporated into the Agreement.
Furthermore, in the event of the filing of a pre-arranged bankruptcy plan
for reorganization, such sale would be subject to the approval of the
bankruptcy court as part of the plan of reorganization of the Joint Venture
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 has been reallocated to 237 Park Avenue and 1290
Avenue of the Americas. While there can be no assurance that a sale would
occur pursuant to such contract or any other contract, if this contract
were to be accepted by or consented to by all required parties and the sale
completed pursuant thereto, 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 that are 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
JMB/NYC would then proceed to terminate its affairs.
The Partnership believes that the transactions proposed in the
Agreement, although subject to satisfaction of certain conditions, will be
completed, thereby eliminating any potential funding obligation of the
Partnership in the future (as more fully discussed in Note 3(c)).
Consequently, the Partnership believes that its working capital reserves
were in excess of the amount necessary for the future operations of the
Partnership. Therefore, the Partnership distributed its excess working
capital to the partners during February 1995, reference is made to Note
11(a).
Long Beach Plaza
In March 1993, the Partnership completed a settlement of its
litigation with Australian Ventures, Inc. ("AVI") involving a long-term
ground and improvement lease for approximately 144,000 square feet at the
shopping center. Under the terms of the settlement, AVI paid the
Partnership $550,000, and the parties terminated the ground and improvement
lease. As a result, the gross leasable area owned by the Partnership
increased by 144,000 square feet. In addition, both parties dismissed
their respective claims in the lawsuit with prejudice. The Partnership
paid the $550,000 received from AVI to the mortgage lender for the property
as scheduled debt service due for April and part of May 1993 on the loan
secured by the property. The Partnership has been aggressively marketing
the vacated space. In January 1994, the Partnership leased approximately
27,200 square feet of the first floor of the vacated Buffum's building to
Ross Dress for Less. The lease was scheduled to commence in April 1995,
however, the tenant took early possession in March 1995 and is open for
business as of the date of this report. In addition, Gold's Gym has
expressed an interest to lease approximately 34,000 square feet of the
third floor of the vacated Buffum's building and relocate from their
current 9,813 square foot space on Pine Avenue. The Partnership has
several prospects for the smaller Gold's Gym space. There can be no
assurance this lease will be consummated. The Partnership had discussions
with several other tenants regarding their requests for temporary rent
relief commencing in 1992. The tenants indicated that, due to the poor
sales levels of their stores at the mall, such relief was necessary if they
were to continue to operate. After review of those tenants requesting
relief, the Partnership decided to grant temporary relief (approximately
50% of their minimum rent) to certain tenants through December 31, 1992.
The Partnership had re-evaluated each tenant's sales level and financial
situation for 1993. Based on discussions with the tenants, additional
relief was granted for 1993 and has been granted in 1994. As a result of
the foregoing, the Partnership has initiated and continues to hold
discussions with the first mortgage lender regarding a modification of its
mortgage loan secured by the property. During December 1994, the lender
agreed to extend the maturity of the loan until August 31, 1995 (reference
is made to Note 4(b)(12)). 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. Payments of principal and interest in arrears as of the
date of this report are approximately $6,233,000. There can be no
assurance that such modification will be consummated (reference is made to
Note 4(b)(12)).
Greenwood Creek II
On April 6, 1993, the Partnership transferred title to the Greenwood
Creek II Apartments to the lender for a transfer price of $100,000 (before
selling costs and prorations) in excess of the existing mortgage balance.
The Partnership recognized a gain in 1993 for financial reporting and
Federal income tax purposes. Reference is made to Note 7(f).
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 over
200,000 square feet which the property was unable to accommodate. The
Partnership had actively marketed the vacated space. As a result of Cal-
Vision's move out, the Partnership was unable to remit the full debt
service payment and 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 had been unsuccessful. The Partnership
decided not to commit any additional capital to the property. Given the
current vacancy level of the building and the current and projected market
conditions, the likelihood of recovering any additional cash investment
necessary to retain ownership of the building would have been remote. As a
result, on January 10, 1994, the Partnership transferred title to the
property to the lender. This resulted in the Partnership recognizing a
gain for financial reporting and Federal income tax purposes in 1994 with
no corresponding distributable proceeds (reference is made to Note
4(b)(6)).
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
(Note (6)) to provide property management services for the Glades
Apartments. Fees for management services are not expected to change
significantly and are equal to a percentage of defined gross income from
the property.
Rio Cancion
On March 31, 1993, the Partnership sold the Rio Cancion Apartments.
The mortgage loan was satisfied in full from the sales proceeds (reference
is made to Note 7(e)).
Carrollwood
In September 1993, the venture refinanced the mortgage loan, secured
by the property, with a third party lender (reference is made to Note
4(b)(10)). The venture did not receive any significant net proceeds upon
refinancing.
1001 Fourth Avenue
In recent years, the Seattle, Washington office market has been very
competitive due to significant overbuilding, especially in the Central
Business District where 1001 Fourth Avenue Plaza is located. Vacancy rates
exceeded 15%, and rental rates remained significantly depressed. In
addition, a substantial amount of subleased space had become available in
the immediate downtown area. Given the current and projected market
conditions, the likelihood of recovering the additional cash investment
necessary to fund anticipated operating deficits for 1001 Fourth Avenue
Plaza would have been remote. As discussed more fully in Note 1, the
Partnership recorded a $6,409,039 provision at June 30, 1992, for value
impairment to reduce the net carrying value of the 1001 Fourth Avenue Plaza
office building to the then outstanding balance of the related non-recourse
financing due to the uncertainty of the Partnership's ability to recover
the net carrying value of the investment property through future operations
or sale.
In addition, certain disputes had arisen between the Partnership and
the lender regarding a $2,000,000 letter of credit maintained by the
Partnership as additional security for the lender in connection with the
existing loan modification. As a result of defaults alleged by the lender,
the lender attempted to draw on the $2,000,000 letter of credit prior to
its expiration in November 1992. Subsequent negotiations with the lender
for a loan modification were unsuccessful. On November 1, 1993, the
Partnership transferred title to the 1001 Fourth Avenue Plaza office
building in full satisfaction of the Partnership's mortgage obligation
(which had an outstanding balance, including accrued interest, of
approximately $102,607,000). In exchange for the transfer of title, the
lender had agreed to return the Partnership's bond and letter of credit.
This transfer has resulted in the Partnership no longer having an ownership
interest in the property. Reference is made to Note 4(b)(4).
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 4(b)(5)). On June 30, 1994, the Partnership sold the land, building
and related improvements of the Eastridge Apartments located in Tucson,
Arizona. See Note 7(g).
Gables Corporate Plaza
On January 5, 1994, the venture transferred title to the property to
the lender. Therefore, neither the venture nor the Partnership have an
ownership interest in the property. This transfer resulted in net gain for
financial reporting and Federal income tax purposes in 1994 with no
corresponding distributable proceeds. Reference is made to Note 4(b)(7).
Plaza Tower
The first mortgage loan secured by the property matured on November 1,
1994. Subsequently, the Partnership reached an agreement for a short-term
extension until January 1, 1995 upon paying $15,000 extension fee to the
existing lender. During January 1995, the Partnership reached another
agreement with the existing lender for an extension until March 31, 1995
provided the Partnership pay down the principal balance and find an
alternative source of financing.
During February 1995, the Partnership made a principal payment in the
amount of $1,500,000 to the existing lender and reached an agreement in
principle with a third-party lender to refinance the mortgage note. Under
the terms of the proposed refinancing, the Partnership would have to make
an additional principal payment of approximately $1,010,000 in order to
bring the total principal balance on the existing mortgage note to
$14,900,000. Reference is made to Note 4(b)(13). However, there can be no
assurance that the Partnership will be able to refinance the mortgage loan.
General
An affiliate of the General Partners that acted as the property
manager (prior to its sale in December 1994 (note 6)) at a number of the
Partnership's investment properties has deferred the receipt of pre-1993
property management and leasing fees. The cumulative amount of deferred
pre-1993 property management and leasing fees at December 31, 1994 was
approximately $12,915,000 (approximately $35 per $1,000 Interest). The
amounts do not bear interest and are payable in the future. In February
1995, the Partnership paid off approximately $10,000,000 of these deferred
property management and leasing fees to an affiliate of the General
Partner. Reference is made to notes 9 and 11(b).
A number of the Partnership's investments have been made through joint
venture investments. There are certain risks associated with the
Partnership's investments made through joint ventures including the
possibility that the Partnership's joint venture partners might become
unable or unwilling to fulfill their financial or other obligations or,
that such joint venture partners may have economic or business interests or
goals that are inconsistent with those of the Partnership.
Due to the market conditions and property specific factors discussed
above and the general lack of buyers of real estate today, it is likely
that the Partnership may hold some of its investment properties longer than
originally anticipated in order to maximize the recovery of its investments
and any potential return thereon. However, in light of the current
severely depressed real estate markets, it currently appears that the
Partnership's goal of capital appreciation will not be achieved. Although
the Partnership expects to distribute from sale proceeds some portion of
the Limited Partners' original capital, without a dramatic improvement in
market conditions, the Limited Partners will receive a substantially less
than half of their original investment.
RESULTS OF OPERATIONS
The increase in cash and cash equivalents and the corresponding
decrease in short-term investments at December 31, 1994 as compared to
December 31, 1993 is due primarily to the classification of approximately
$9,724,000 of the Partnership's investments in U.S. Government obligations
as cash equivalents at December 31, 1994, whereas none were so classified
at December 31, 1993.
The decreases in rents and other receivables, prepaid expenses, land
and leasehold interests, building and improvements, accumulated
depreciation, deferred expenses, current portion of long-term debt, accrued
real estate taxes, unearned rents and tenant security deposits at December
31, 1994 as compared to December 31, 1993 and the related decreases in
rental income, mortgage and other interest, depreciation, property
operating expenses, professional service expenses and amortization for the
year ended December 31, 1994 as compared to the year ended December 31,
1993 are due primarily to the lenders taking title to the Gables Corporate
Plaza and University Park office buildings and to the sale of the Eastridge
Apartments in 1994. The decrease in rental income is also attributable to
the expiration of the IBM and John Hancock leases in 1994 at Copley Place
multi-use complex, as discussed above.
The increase in venture partners' deficits in ventures at December 31,
1994 as compared to December 31, 1993 and the corresponding increase in
venture partners' share of losses from venture operations for the twelve
months ending December 31, 1994 as compared to December 31, 1993 is due
primarily to the venture partner's share of losses incurred at Copley Place
multi-use complex; as discussed above (see Note 3(b)) offset by the venture
partner's realization of its share of gain on the disposition of the Gables
Corporate Plaza office building in January 1994 (as more fully discussed in
Note 4(b)(7)).
The decrease in amounts due to affiliates and the increase in escrow
deposits are due primarily to (a) the payment of approximately $850,000 of
previously deferred management fees at Copley Place multi-use complex and
to (b) funding of the capital improvement escrow of approximately
$3,065,000 pursuant to the terms of the Copley Place loan modification as
more fully described in Note 4(b)(9).
The increase in the Partnership's deficit investment in unconsolidated
venture at equity at December 31, 1994 as compared to December 31, 1993 is
due primarily to the Partnership recognizing its share of losses for
JMB/NYC.
The decrease in rental income, mortgage and other interest,
depreciation, property operating expenses and general and administrative
expenses for the year ended December 31, 1993 as compared to the year ended
December 31, 1992 is due to the transfer of title to the 1001 Fourth Avenue
office building in November 1993 (reference is made to Note 4(b)(4)) and to
the sales of the Rio Cancion Apartments in March 1993 and the Greenwood
Creek II Apartments in April 1993 (reference is made to Notes 7(e) and
7(f)).
The increase in interest income for the year ended December 31, 1994
as compared to the year ended December 31, 1993 is due primarily to higher
yields and higher average balances held in interest bearing U.S. Government
obligations in the subsequent period as a result of proceeds retained from
the sale of Old Orchard Shopping Center in September 1993. The increase is
also attributable to interest earned on the capital improvement escrow at
Copley Place as discussed above. The decrease in interest income for the
year ended December 31, 1993 as compared to the year ended December 31,
1992 is due primarily to lower yields and lower average balances held in
interest bearing U.S. Government obligations in subsequent periods.
The provision for value impairment of $6,409,039 at December 31, 1992
is due primarily to the reduction of the net carrying value of the 1001
Fourth Avenue office building as of June 30, 1992. (See Note 1.)
The decrease in the Partnership's share of loss from operations of
unconsolidated ventures for the year ended December 31, 1994 as compared to
December 31, 1993 is due primarily to the sale of the Partnership's
interest in the Old Orchard shopping center in September 1993 (as more
fully discussed in Note 3(d)). The decrease is also attributable to
JMB/NYC recording a provision for value impairment at 2 Broadway at
December 31, 1993, which reduced the subsequent depreciation expense
related to that investment property, partially offset by a decrease in
rental income in 1994 at the 2 Broadway Building due to Bear Stearns
vacating its space (approximately 11% of the building's leasable space) in
April 1994 upon expiration of its lease.
The increase in the Partnership's share of the loss from operations of
unconsolidated ventures and the related increase in the Partnership's
deficit investment in unconsolidated venture for the year ended December
31, 1993 as compared to the year ended December 31, 1992 is due primarily
to (i) a $192,627,560 provision for value impairment recorded in 1993 for 2
Broadway due to the potential sale of the property at a sales price
significantly below its net carrying value, as more fully discussed above,
(ii) an $11,946,285 provision for doubtful accounts recorded by JMB/NYC in
1993 due to the uncertainty of collectibility of amounts due from the
Olympia & York affiliates to the Three Joint Ventures, (iii) an $11,551,049
provision for doubtful accounts recorded by JMB/NYC in 1993 due to the
uncertainty of collectibility of amounts due from tenants at the Three
Joint Ventures' real estate investment properties, and (iv) increased
aggregate interest accrued with reference to the Three Joint Ventures'
mortgage loan commencing July 1, 1993 as a result of the expiration of the
agreement with the Olympia & York affiliates, (as more fully discussed in
Note 3(c)) and due to a decrease in rental income in 1993 at the 2 Broadway
Building due to Merrill Lynch, Pierce, Fenner & Smith, Incorporated
vacating its space (approximately 13% of the building's leasable space)
upon lease expiration in August 1993.
The decrease in venture partners' share of loss from ventures
operations for the year ended December 31, 1993 as compared to the year
ended December 31, 1992 is due primarily to the decrease in operating
losses which resulted from the lower accrual rate on the loan modification
as well as higher occupancy at the Copley Place multi-use complex.
The net gain of $18,364,792 on sale or disposition of investment
property for the year ended December 31, 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 4(b)(6),
4(b)(7), and 7(g)).
The net gain of $11,083,791 for the year ended December 31, 1993
consists of a gain on the sale of the Rio Cancion Apartments of $2,524,958
(see Note 7(e)), a gain on the sale of the Greenwood Creek II Apartments of
$1,787,073 (see Note 7(f)), a gain on the transfer of title to the 1001
Fourth Avenue office building of $6,771,760 (see Note 4(b)(4)).
The net gain on sale in 1992 of $9,422,815 related to the sales of the
Quail Place and Heritage Park II Apartments in March 1992, and Bridgeport
Apartments in April 1992 has been reflected as a gain on sales of
$2,132,879, and an extraordinary gain of forgiveness of indebtedness of
$7,289,936 (as more fully discussed in Note 7). In addition, the
extraordinary item includes the Partnership's share of the prepayment
penalty (of $150,000) related to the refinancing of the original mortgage
note at the Glades Apartments (as more fully discussed in Note 4(b)(2)).
The gain on sale of interest in unconsolidated venture of $1,702,802
and $7,898,727 at December 31, 1994 and 1993, respectively, is due to the
Partnership selling its interest in the Old Orchard Shopping Center and the
receipt of certain contingent amounts resulting from the sale. Reference
is made to Note 3(d) for a discussion of these transactions.
The extraordinary item of $996,126 for 1994 is due to the discounted
payoff of the mortgage note secured by the Eastridge Apartments (see Note
4(b)(5)).
The extraordinary item for 1993 is the Partnership's share of
prepayment penalty of $141,776 relating to the refinancing of the original
mortgage note at the Carrollwood Apartments (see Note 4(b)(10)).
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
To the extent that inflation does have an adverse impact on property
operating expenses, the increased expense may be offset by amounts
recovered from tenants, as many long-term leases at the Partnership's
commercial properties have escalation clauses covering increases in the
cost of operating and maintaining the properties as well as real estate
taxes. Therefore, the effect on operating earnings generally will depend
upon whether properties remain substantially occupied. In addition,
substantially all of the leases at the Partnership's shopping center
investments contain provisions which entitle the property owner to
participate in gross receipts of tenants above fixed minimum amounts.
Future inflation may also tend to cause capital appreciation of the
Partnership's investment properties over a period of time as rental rates
and replacement costs of properties increase.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Operations, years ended December 31,
1994, 1993 and 1992
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows, years ended December 31,
1994, 1993 and 1992
Notes to Consolidated Financial Statements
SCHEDULE
--------
Consolidated Real Estate and Accumulated Depreciation III
SCHEDULES NOT FILED:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or related notes.
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Combined Balance Sheets, December 31, 1994 and 1993
Combined Statements of Operations, years ended December 31,
1994, 1993 and 1992
Combined Statements of Partners' Capital Accounts (Deficit),
years ended December 31, 1994, 1993 and 1992
Combined Statements of Cash Flows, years ended December 31,
1994, 1993 and 1992
Notes to Combined Financial Statements
SCHEDULE
--------
Combined Real Estate and Accumulated Depreciation III
SCHEDULES NOT FILED:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the combined financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII:
We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XIII, a limited partnership, (the
Partnership), and its consolidated ventures as listed in the accompanying
index. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule as listed
in the accompanying index. These consolidated financial statements and
financial statement schedule are the responsibility of the General Partners
of the Partnership. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
the Partnership and consolidated ventures at December 31, 1994 and 1993,
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
As discussed in Note 3(c) to the consolidated financial statements,
beginning July 1, 1993, the Partnership and its affiliated partners in
JMB/NYC Office Building Associates, L.P. (JMB/NYC) were in dispute with the
unaffiliated venture partners in the real estate ventures over the
calculation of the effective interest rate with reference to the first
mortgage loan, which covers the real estate owned through JMB/NYC's joint
ventures. The Partnership's share of disputed interest aggregated
$6,109,000 and $2,386,000 for the years ended December 31, 1994 and 1993,
respectively, and has not been included in Partnership's share of loss from
operations of unconsolidated ventures for 1994 or 1993 in the accompanying
consolidated financial statements. In October 1994, JMB/NYC entered into
an agreement (the Agreement) with the unaffiliated venture partners in the
real estate ventures which, when effective, would resolve this dispute by
providing for interest at the same rate as the first mortgage loan and
would eliminate any funding obligations by JMB/NYC. However, as discussed
in Note 3(c), there are no assurances that the Agreement will be finalized
(Continued)
and become effective. In addition, as described in Notes 3 and 4 of the
notes to the consolidated financial statements, the Partnership is in
dispute or negotiations with various lenders and venture partners in
connection with certain of its investment properties. Such disputes,
negotiations and discussions could result, under certain circumstances, in
the Partnership no longer having an ownership interest in these investment
properties. The ultimate outcome of these uncertainties cannot be
presently determined. The consolidated financial statements do not include
any adjustments that might result from these uncertainties.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 27, 1995
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . $ 9,551,909 5,362,152
Short-term investments (note 1). . . . . . . . . . . . . . . . . 18,959,986 23,095,901
Restricted funds . . . . . . . . . . . . . . . . . . . . . . . . 484,234 538,800
Rents and other receivables. . . . . . . . . . . . . . . . . . . 3,115,173 3,711,359
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . 318,336 397,109
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . 6,064,754 3,918,882
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . 38,494,392 37,024,203
Investment properties, at cost (notes 2, 3 and 4) - Schedule III:
Land and leasehold interests . . . . . . . . . . . . . . . . . 20,935,810 27,002,062
Buildings and improvements . . . . . . . . . . . . . . . . . . 409,040,913 447,201,128
------------ ------------
429,976,723 474,203,190
Less accumulated depreciation. . . . . . . . . . . . . . . . . 149,525,406 149,914,951
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . 280,451,317 324,288,239
------------ ------------
Investment in unconsolidated venture, at equity (notes 1 and 3). . 2,451,859 2,446,681
Deferred expenses (note 1) . . . . . . . . . . . . . . . . . . . . 5,151,072 5,983,034
Accrued rents receivable (note 1). . . . . . . . . . . . . . . . . 514,291 487,289
Venture partners' deficits in ventures (note 1). . . . . . . . . . 6,514,971 4,557,854
------------ ------------
$333,577,902 374,787,300
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . $ 52,006,208 94,086,630
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 2,018,276 2,397,159
Amounts due to affiliates (note 9) . . . . . . . . . . . . . . . 14,210,085 14,894,459
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . 618,410 770,237
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . 9,112,566 8,591,163
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . 1,755,290 2,064,479
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . 79,720,835 122,804,127
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . 765,933 880,056
Investment in unconsolidated venture, at equity (notes 1, 3 and 10) 78,812,861 72,546,193
Long-term debt, less current portion (note 4). . . . . . . . . . . 361,563,239 360,881,897
------------ ------------
Commitments and contingencies (notes 2, 3, 4, 7, 8 and 11)
Total liabilities. . . . . . . . . . . . . . . . . . . . 520,862,868 557,112,273
Venture partners' subordinated equity in venture (note 1). . . . . 329,785 330,185
Partners' capital accounts (deficits) (notes 1 and 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . (20,494,612) (19,664,338)
Cumulative cash distributions. . . . . . . . . . . . . . . . (1,039,022) (1,039,022)
------------ ------------
(21,532,634) (20,702,360)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . . . . 326,224,167 326,224,167
Cumulative net losses. . . . . . . . . . . . . . . . . . . . (462,331,395) (458,202,076)
Cumulative cash distributions. . . . . . . . . . . . . . . . (29,974,889) (29,974,889)
------------ ------------
(166,082,117) (161,952,798)
------------ ------------
Total partners' capital (deficits) . . . . . . . . . . . (187,614,751) (182,655,158)
------------ ------------
$333,577,902 374,787,300
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . $ 64,648,336 84,609,796 92,814,257
Interest income. . . . . . . . . . . . . . . . 1,320,941 583,997 795,627
------------ ------------ ------------
65,969,277 85,193,793 93,609,884
------------ ------------ ------------
Expenses:
Mortgage and other interest. . . . . . . . . . 37,651,732 50,753,647 57,574,370
Depreciation . . . . . . . . . . . . . . . . . 13,753,198 18,343,123 19,490,916
Property operating expenses. . . . . . . . . . 37,293,007 43,065,564 45,068,702
Professional services. . . . . . . . . . . . . 547,566 708,403 681,645
Amortization of deferred expenses. . . . . . . 1,525,373 2,410,540 1,671,011
Management fees to general partners. . . . . . -- -- 12,715
General and administrative . . . . . . . . . . 609,249 532,727 640,821
Provision for value impairment (note 1). . . . -- -- 6,409,039
------------ ------------ ------------
91,380,125 115,814,004 131,549,219
------------ ------------ ------------
Operating loss. . . . . . . . . . . . . . 25,410,848 30,620,211 37,939,335
Partnership's share of loss from operations
of unconsolidated ventures (notes 1 and 10). . 6,271,489 22,416,922 8,007,990
Venture partners' share of loss of
consolidated ventures' operations. . . . . . . (5,659,744) (2,008,939) (3,376,600)
------------ ------------ ------------
Net operating loss . . . . . . . . . . . 26,022,593 51,028,194 42,570,725
Gain on sale or disposition of investment
properties, net of venture partners'
share of $2,887,659 in 1994
(notes 4 and 7). . . . . . . . . . . . . . . . (18,364,792) (11,083,791) (2,132,879)
Gain on sale of interest in unconsolidated
venture (note 3(d)). . . . . . . . . . . . . . (1,702,082) (7,898,727) --
------------ ------------ ------------
Loss before extraordinary items. . . . . 5,955,719 32,045,676 40,437,846
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Extraordinary items (notes 4(b)(2),
4(b)(5), 7(b) and (c)) . . . . . . . . . . . . (996,126) 141,776 (7,139,936)
------------ ------------ ------------
Net loss. . . . . . . . . . . . . . . . . $ 4,959,593 32,187,452 33,297,910
============ ============ ============
Net loss per limited partnership interest
(note 1):
Net operating loss . . . . . . . . . . . . . $ 68.22 133.78 111.62
Gain on sale or disposition of
investment properties and
extinguishment of debt . . . . . . . . . . (49.66) (29.97) (5.77)
Gain on sale of interest in uncon-
solidated venture. . . . . . . . . . . . . (4.60) (21.35) --
Extraordinary items. . . . . . . . . . . . . (2.69) .38 (19.31)
------------ ------------ ------------
Net loss . . . . . . . . . . . . . . . . . $ 11.27 82.84 86.54
============ ============ ============
<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 PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ -----------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------------------ ------------ ------------ -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
Decem-
ber 31,
1991. . . . .$1,000(16,622,216) (1,031,393)(17,652,609) 326,224,167 (395,758,836) (29,791,797)(99,326,466)
Net loss . . . -- (1,610,101) -- (1,610,101) -- (31,687,809) -- (31,687,809)
Cash distri-
butions
($.50 per
limited
partnership
interest) . . -- -- (7,629) (7,629) -- -- (183,092) (183,092)
----------------- --------------------- ------------ ------------ -----------------------
Balance
(deficit)
Decem-
ber 31,
1992. . . . .1,000(18,232,317) (1,039,022)(19,270,339)326,224,167 (427,446,645) (29,974,889)(131,197,367)
Net loss . . . -- (1,432,021) -- (1,432,021) -- (30,755,431) -- (30,755,431)
Cash distri-
butions
($0 per
limited
partnership
interest) . . -- -- -- -- -- -- -- --
----------------- --------------------- ------------ ------------ -----------------------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ -----------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------------------ ------------ ------------ -------------------------
Balance
(deficit)
Decem-
ber 31,
1993. . . . .1,000(19,664,338) (1,039,022)(20,702,360)326,224,167 (458,202,076) (29,974,889)(161,952,798)
Net earn-
ings (loss) . -- (830,274) -- (830,274) -- (4,129,319) -- (4,129,319)
Cash distri-
butions
($0 per
limited
partnership
interest) . . -- -- -- -- -- -- -- --
------- ---------- ---------- ----------- ----------- ------------ ----------- ----------
Balance
(deficit)
Decem-
ber 31,
1994. . ...$1,000 (20,494,612) (1,039,022)(21,532,634) 326,224,167 (462,331,395) (29,974,889)(166,082,117)
================= ========== =========== =========== ============ =========== ============
<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
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . $ (4,959,593) (32,187,452) (33,297,910)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . 13,753,198 18,343,123 19,490,916
Amortization of deferred expenses. . . . . . 1,525,373 2,410,540 1,671,011
Amortization of discount on long-term debt . 116,398 103,298 91,671
Long-term debt - deferred accrued interest . 10,854,534 13,461,723 13,710,342
Partnership's share of loss from operations
of unconsolidated ventures . . . . . . . . 6,271,489 22,416,922 8,007,990
Venture partners' share of consolidated
ventures' operations . . . . . . . . . . . (5,659,744) (2,008,939) (3,376,600)
Gain on sale or disposition of investment
properties . . . . . . . . . . . . . . . . (18,364,792) (11,083,791) (2,132,879)
Provision for value impairment (note 1). . . -- -- 6,409,039
Extraordinary items. . . . . . . . . . . . . (996,126) 141,776 (7,139,936)
Gain on sale of interest in unconsolidated
venture. . . . . . . . . . . . . . . . . . (1,702,082) (7,898,727) --
Changes in:
Restricted funds . . . . . . . . . . . . . . 54,566 2,319,106 (272,906)
Rents and other receivables. . . . . . . . . 596,186 (430,632) 1,227,951
Prepaid expenses . . . . . . . . . . . . . . 78,773 100,997 50,122
Escrow deposits. . . . . . . . . . . . . . . (2,145,872) (634,588) (2,054,307)
Accrued rents receivable . . . . . . . . . . (27,002) 2,755,732 824,390
Accounts payable . . . . . . . . . . . . . . (378,883) 9,591 (1,224,442)
Unearned rents . . . . . . . . . . . . . . . (151,827) (357,915) (26,887)
Accrued interest . . . . . . . . . . . . . . 521,403 1,957,457 546,217
Accrued real estate taxes. . . . . . . . . . (309,189) 691,017 179,232
Amounts due to affiliates. . . . . . . . . . (684,374) 26,167 2,390,394
Tenant security deposits . . . . . . . . . . (114,123) (119,739) (305,083)
------------ ------------ ------------
Net cash provided by (used in)
operating activities . . . . . . . . (1,721,687) 10,015,666 4,768,325
------------ ------------ ------------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Cash flows from investing activities:
Cash proceeds from sale of investment
properties, net of selling expenses
(note 7) . . . . . . . . . . . . . . . . . . 11,781,988 1,220,737 338,196
Additions to investment properties . . . . . . (1,796,484) (3,188,425) (6,144,928)
Cash expended in disposition of
investment properties. . . . . . . . . . . . (1,014) (55,111) --
Net sales and maturities (purchases)
of short-term investments. . . . . . . . . . 4,135,915 (18,470,959) 3,311,641
Partnership's distributions from
unconsolidated ventures. . . . . . . . . . . 1,702,082 16,978,465 --
Partnership's contributions to
unconsolidated ventures. . . . . . . . . . . (10,000) (983,668) (1,796,723)
Payment of deferred expenses . . . . . . . . . (693,408) (1,030,569) (2,444,529)
------------ ------------ ------------
Net cash provided by (used in)
investing activities . . . . . . . . 15,119,079 (5,529,530) (6,736,343)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from refinancing of long-term debt. . -- 4,253 10,840,261
Retirement of long-term debt . . . . . . . . . -- -- (10,726,327)
Principal payments on long-term debt . . . . . (10,022,203) (1,789,503) (841,946)
Venture partners' contributions to ventures. . 814,568 33,746 158,931
Distributions to limited partners. . . . . . . -- -- (183,092)
Distributions to general partners. . . . . . . -- -- (7,629)
------------ ------------ ------------
Net cash used in
financing activities . . . . . . . . (9,207,635) (1,751,504) (759,802)
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . 4,189,757 2,734,632 (2,727,820)
Cash and cash equivalents,
beginning of year. . . . . . . . . . 5,362,152 2,627,520 5,355,340
------------ ------------ ------------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . $ 9,551,909 5,362,152 2,627,520
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . $ 26,150,776 35,628,310 43,340,504
============ ============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Non-cash investing and financing activities:
Total sales price of investment properties,
net of selling expenses. . . . . . . . . . . $ 11,781,988 18,479,297 18,442,566
Mortgage loan payable. . . . . . . . . . . . . -- (17,258,560) (18,104,370)
------------ ------------ ------------
Cash sales proceeds from sale of
investment properties, net of
selling expenses . . . . . . . . . . . . . $ 11,781,988 1,220,737 338,196
============ ============ ============
Proceeds from refinancing of long-term
debt (note 3(l)) . . . . . . . . . . . . . . $ -- 7,455,000 --
Payoff of long-term debt . . . . . . . . . . . -- (7,160,425) --
Prepayment penalty . . . . . . . . . . . . . . -- (141,776) --
Refinancing costs. . . . . . . . . . . . . . . -- (148,546) --
------------ ------------ ------------
Proceeds from refinancing of
long-term debt . . . . . . . . . . . $ -- 4,253 --
============ ============ ============
Contributions payable to unconsolidated
venture (note 3(c)) . . . . . . . . . . $ -- 1,200,000 --
============ ============ ============
Principal balance due on mortgages payable $ 9,696,126 -- 13,589,936
Payment on long-term debt . . . . . . . . (8,700,000) -- (6,300,000)
------------ ------------ ------------
Extraordinary items - non-cash gain
recognized on forgiveness of
indebtedness (notes 4(b)(2),
4(b)(5), 7(b) and 7(c)) . . . . . . . $ 996,126 -- 7,289,936
============ ============ ============
<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
DECEMBER 31, 1994, 1993 AND 1992
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated ventures (note 3) -
Partridge Place Limited Partnership ("Heritage"), Quail Springs Limited
Partnership ("Quail"), Eastridge Associates Limited Partnership
("Eastridge"), Copley Place Associates ("Copley Place"), Gables Corporate
Plaza Associates ("Gables"), Carrollwood Station Associates, Ltd.
("Carrollwood"), Jacksonville Cove I Associates, Ltd. ("Glades") and Sherry
Lane Associates ("Sherry Lane"). The effect of all transactions between
the Partnership and the ventures has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interests in Orchard Associates (note 3(d)) and the Partnership's indirect
interest in (through Carlyle-XIII Associates, L.P.) JMB/NYC Office Building
Associates, L.P. (("JMB/NYC") note 3(c))
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 for the years ended December 31,
1994 and 1993 is summarized as follows:
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
1994 1993
------------------------------ ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . $333,577,902 95,005,745 374,787,300 99,599,312
Partners' capital accounts
(deficits) (note 5):
General partners. . . . . . . (21,532,634) (30,855,292) (20,702,360) (34,839,564)
Limited partners. . . . . . . (166,082,117) (216,768,786) (161,952,798) (218,137,769)
Net earnings (loss) (note 5):
General partners. . . . . . . (830,274) 3,984,272 (1,432,021) 4,121,438
Limited partners. . . . . . . (4,129,319) 1,368,982 (30,755,431) 22,488,643
Net earnings (loss) per
limited partnership
interest . . . . . . . . . . . . (11.27) 3.73 (82.84) 61.41
============ ============ ============ ============
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The net loss per limited partnership interest is based upon the
limited partnership interests outstanding at the end of the period.
Deficit capital accounts will result, through the duration of the
Partnership, in net gain for financial reporting and Federal income tax
purposes.
Certain reclassifications have been made to the 1992 and 1993
financial statements in order to conform with the 1994 presentation.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations at cost, which approximates
market. 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 ($9,724,000 and none at December 31, 1994 and 1993, respectively)
as cash equivalents with any remaining amounts (generally with original
maturities of one year or less) reflected as short-term investments being
held to maturity.
In July 1992, the Partnership executed a lease with the 1001 Fourth
Avenue Plaza office building's largest tenant, Seattle-First National Bank,
for a renewal of a portion of their current space effective October 1993,
when its existing 259,000 square foot lease expired. The renewal resulted
in Seattle-First National Bank leasing 95,000 square feet for a ten year
period. The new lease, which included a significant free rent period for
the tenant, as well as considerable tenant improvement costs, had a
material negative impact on the cash flow from the property commencing in
late 1993 and placed the property in a position whereby the net operating
income would have been insufficient to cover both debt service payments and
leasing costs (see note 4(b)(4)). Due to the uncertainty of the
Partnership's ability to recover the net carrying value of the 1001 Fourth
Avenue office building investment property through future operations and
sales, as of June 30, 1992, the Partnership recorded, as a matter of
prudent accounting practice, a provision for value impairment of such
investment property of $6,409,039. Such provision was recorded to reduce
the net carrying value of the investment property to the then outstanding
balance of the related non-recourse financing.
Due to the extreme softness of the Seattle, Washington office market
and other factors, the Partnership decided not to commit any significant
additional capital to this property (see note 4(b)(4)). In November 1993,
the Partnership agreed with the mortgage lender to transfer title to the
1001 Fourth Avenue Office Building to the lender. This has resulted in
1993 in the Partnership no longer having an ownership interest in the
property and has resulted in a net gain to the Partnership of approximately
$6,772,000 for financial reporting purposes and gain of approximately
$27,567,000 for Federal income tax purposes with no corresponding
distributable proceeds.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
As more fully discussed in note 3(c), in 1993, due to the potential
sale of the 2 Broadway building at a sales price significantly below its
net carrying value and due to discussions (subsequently resulting in an
agreement) with the O & Y affiliates regarding the reallocation of the
unpaid first mortgage indebtedness currently allocated to 2 Broadway, the 2
Broadway venture has made a provision for value impairment on such
investment property of $192,627,560 as of December 31, 1993. The provision
for value impairment has been allocated to the partners to reflect their
respective ownership percentages before the effect of the non-recourse
promissory notes, in the amounts of $136,534,366 and $56,093,194 to the O &
Y affiliates and to JMB/NYC, respectively.
Due to the uncertainty of the 1290 Associates venture's ability to
recover the net carrying value of the 1290 Avenue of the Americas Building
through future operations and sale, the 1290 Associates venture made a
provision for value impairment on such investment property of $51,423,084.
Such provision at September 30, 1992 was recorded to effectively reduce the
net carrying value of the investment property and the related deferred
expenses to the then outstanding balance of the related non-recourse
financing allocated to the joint venture and its property. This provision
was allocated to the unaffiliated venture partners in accordance with the
terms of the venture agreement and accordingly is not included in the
financial statements (see notes 1, 3 and 5 in Notes to Combined Financial
Statements).
Deferred expenses are comprised principally of leasing fees which are
amortized using the straight-line method over the terms stipulated in the
related agreements, and commitment fees which are amortized over the
related commitment periods.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
prorated rental income for the full period of occupancy on a straight-line
basis.
Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", requires entities with total
assets exceeding $150 million at December 31, 1994 to disclose the SFAS 107
value of all financial assets and liabilities for which it is practicable
to estimate. Value is defined in the Statement as the amount at which the
instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership
believes the carrying amount of its financial instruments classified as
current assets and liabilities (excluding current portion of long-term
debt) approximates SFAS 107 value due to the relatively short maturity of
these instruments. There is no quoted market value available for any of
the Partnership's other instruments. The debt secured by the Long Beach
Plaza has been classified by the Partnership as a current liability at
December 31, 1994 (see note 4(b)(12)) because the resolution of the
negotiations with the lender for the Long Beach Plaza is uncertain and the
debt is now scheduled to mature in 1995. The Partnership considers the
disclosure of the SFAS 107 value of such long-term debt to be
impracticable. The remaining debt, with a carrying balance of
$379,835,093, has been calculated to have an SFAS 107 value of $303,938,809
by discounting the scheduled loan payments to maturity. Due to
restrictions on transferability and prepayment, and the inability to obtain
comparable financing due to previously modified debt terms or other
property specific competitive conditions, the Partnership would be unable
to refinance these properties to obtain such assumed debt amounts reported
(see note 4). The Partnership has no other significant financial
instruments.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
(2) INVESTMENT PROPERTIES
(a) General
The Partnership has acquired, either directly or through joint
ventures (note 3), nine apartment complexes, three shopping centers, ten
office buildings and a multi-use complex. Twelve properties have been sold
or disposed of by the Partnership as of December 31, 1994. All of the
remaining properties owned at December 31, 1994 were operating. The cost
of the investment properties represents the total cost to the Partnership
or its ventures plus miscellaneous acquisition costs.
Significant betterments and improvements are capitalized and
depreciated over their estimated useful lives. Maintenance and repair
expenses are charged to operations as incurred. Provisions for value
impairment are recorded with respect to the investment properties whenever
the estimated future cash from a property's operations and projected sale
are less than the property's net carrying value.
Depreciation on the operating properties has been provided over the
estimated useful lives of 5 to 30 years using the straight-line method.
All investment properties are pledged as security for the long-term
debt, for which generally there is no recourse to the Partnership. A
portion of the long-term debt on the Copley Place multi-use complex and
Gables Corporate Plaza (disposed January 1994, note 4(b)(7)) represent
mortgage loans which are subordinated to the existing senior mortgage
loans.
(b) Long Beach Plaza
The Partnership purchased Long Beach Plaza located in Long Beach,
California for $45,839,458 (net of discount on long-term debt of
$10,330,542). In January 1981, Australian Ventures, Inc. ("AVI") signed a
99 year ground and improvement lease at the Long Beach Plaza shopping
center located in Long Beach, California for approximately 144,000 square
feet. AVI sublet the space to Buffum's Department Store, an affiliate of
AVI. In March 1991, Buffum's filed for protection from creditors under
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Chapter XI of the United States Bankruptcy Code. In May 1991, Buffum's
vacated the leased premises. As a result and pursuant to certain
provisions of the ground and improvement lease that, among other things,
requires continuous operation of a store at the premises during the lease
term, the Partnership sought a termination of the lease and to obtain
possession of the premises. In March 1993, the Partnership completed a
settlement of its litigation with AVI involving the lease. Under the terms
of the settlement, AVI paid the Partnership $550,000, and the parties
terminated the ground and improvement lease. In addition, both parties
dismissed their respective claims in the lawsuit with prejudice. The
Partnership paid the $550,000 received from AVI to the mortgage lender for
the property as scheduled debt service due for April and part of May 1993
on the loan secured by the property. The Partnership has initiated
discussions with the first mortgage lender regarding a modification of its
mortgage loan secured by the property. As more fully discussed in note
4(b)(12), the lender has agreed to a short-term loan extension until August
31, 1995. There can be no assurance that such extension or any
modification will be consummated. If the Partnership is unable to secure a
modification or further extension to the loan, the Partnership may decide
not to commit any significant additional amounts of the property. This
would result in the Partnership no longer having an ownership interest in
such property and would result in gain for financial reporting and Federal
income tax purposes to the Partnership with no corresponding distributable
proceeds.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at December 31, 1994 is a party to seven operating
joint venture agreements. Pursuant to such agreements, the Partnership
made initial capital contributions of approximately $152,831,130 (before
legal and other acquisition costs and its share of operating deficits as
discussed below). In general, the joint venture partners, who are either
the sellers (or their affiliates) of the property investments being
acquired, or parties which have contributed an interest in the property
being developed, or were subsequently admitted to the ventures, make no
cash contributions to the ventures, but their retention of an interest in
the property, through the joint venture, is taken into account in
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 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 4 and to Note 5 of
Notes to the Combined Financial Statements.
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
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
relating to the various ownership interests of the Partnership and its
venture partners. During 1994, 1993 and 1992, three, two and three,
respectively, of the ventures' properties produced net cash receipts. In
addition, the Partnership generally has preferred positions (related to the
Partnership's cash investment in the ventures) with respect to distribution
of sale or refinancing proceeds from the ventures. In general, operating
profits and losses are shared in the same ratio as net cash receipts;
however, if there are no net cash receipts, substantially all profits or
losses are allocated to the partners in accordance with their respective
economic interest.
Physical management of the properties generally was performed by
affiliates of the venture partners during the development period and
rent-up period. The managers were responsible for cash flow deficits
(after debt service requirements). Compensation to the managers during
such periods for management and leasing was limited to specified payments
made by the ventures, plus any excess net cash receipts generated by the
properties during the periods. Thereafter, the management agreements
generally provide for an extended term during which the management fee is
calculated as a percentage of certain types of cash income from the
property. The management terms are in the extended term for all of the
ventures.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
The terms of certain of the venture agreements are summarized as
follows:
(b) Copley Place
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 (see note 9).
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 December
31, 1994 to fund its required obligations. 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 6.06%
per annum at December 31, 1994). The outstanding principal and accrued
interest, if any, are to be repaid from future available cash flow, as
defined. During 1994, the joint venture paid approximately $3,597,000 of
accrued interest on these loans. In addition, the Partnership and the
joint venture partner were obligated to equally contribute towards tenant
improvement and other capital costs beginning in 1990. The Partnership
contributed $847,022 in 1990 as its 50% share of capital and tenant
improvement costs at the property. In addition, the venture partner and
the Partnership each contributed $7,786,931 in October 1990. Commencing
January 1, 1992, the Partnership and the venture partner are required to
equally fund all cash deficits of the property. In addition, commencing
January 1, 1992, annual cash flow (as defined) after repayment to the
venture partner of operating deficit loans, 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 previously deferred management fees for 1993.
Operating profits and losses of the joint venture are 50% to the
Partnership and 50% to the joint venture partner.
The joint venture agreement further provides that, in general, upon
any sale or refinancing of the complex the first $60,000,000 of net
proceeds will be distributed equally between the Partnership and the joint
venture partner. The Partnership will then be entitled to receive an
amount equal to any cumulative deficiencies of its annual preferred return
of cash flow for 1990 and 1991 (balance at December 31, 1994 is
$12,000,000). The Partnership will then be entitled to receive the next
$190,000,000 plus an amount equal to certain interest which has been paid
or is payable to the developer on its $20,000,000 purchase price note. The
joint venture partner will then be entitled to receive the next
$190,000,000 plus an amount equal to certain interest paid to it on the
$20,000,000 purchase price note, with any remaining proceeds distributable
equally to the Partnership and the joint venture partner. Reference is
made to note 4(b)(9) for a discussion of the modification of the mortgage
loan (effective March 1, 1992) for the property.
An affiliate of the joint venture partner manages the portion of the
complex owned by the joint venture, pursuant to an agreement similar to
those described in note 3(a).
(c) 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
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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. Effective
March 25, 1993, the Partnership became a 20% shareholder of Carlyle
Managers, Inc. Related to this investment, the Partnership has an
obligation to fund, on demand, $600,000 of additional paid-in capital to
Carlyle Managers, Inc. (reflected in amounts due to affiliates in the
accompanying financial statements). The terms of the JMB/NYC venture
agreement generally provide that JMB/NYC's share of the Three Joint
Ventures' annual cash flow, sale or refinancing proceeds, operating and
capital costs (to the extent not covered by cash flow from a property) and
profit and loss will be distributed to, contributed by or allocated to the
Partnership in proportion to its (indirect) share of capital contributions
to JMB/NYC. 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 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 March 1993, JMB/NYC, originally a general partnership, was
converted to a limited partnership, and the Partnership's interest in
JMB/NYC, which previously had been held directly, was contributed to
Carlyle-XIII Associates, L.P. 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
effective March 25, 1993. Related to this investment, the Partnership has
an obligation to fund, on demand, $600,000 of additional paid-in capital
(reflected in amounts due to affiliates in the accompanying financial
statements). The general partner in each of JMB/NYC and Carlyle-XIII
Associates, L.P. is an affiliate of the Partnership. For financial
reporting purposes, the allocation of profits and losses of JMB/NYC to the
Partnership is 25%.
In October 1994, JMB/NYC entered into an agreement ("the Agreement")
with the Olympia & York affiliates of Olympia & York Developments, Ltd.
("O&Y") who are 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 upon either 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 most all property
management, leasing, sale (certain rights to control a sale were 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
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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. Such filings
are expected to occur in 1995. The reorganization plan is expected to
incorporate the proposed transactions contained in the Agreement. During
the bankruptcy proceedings there exists a possibility that one or more of
the plans could be challenged by certain creditors resulting in 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. As further
consequence of the effectiveness of the reorganization plan, the
restructuring of the Three Joint Ventures' agreements would include JMB/NYC
converting from a general partner to a limited partner and the elimination
of any funding obligation by JMB/NYC for any purposes. Consequently,
JMB/NYC would recognize, for financial reporting purposes, a gain to the
extent of the then current deficit investment balance (which amount was
$187,556,991 as of December 31, 1994). 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 December 31, 1994 and 1993. Such Purchase Notes, which
contain cross-default provisions, and are non-recourse to JMB/NYC, are
secured by JMB/NYC's interests in the Three Joint Ventures, and such
Purchase Note relating to the purchase of the interest in the ventures
owning the 2 Broadway Building is additionally secured by JMB/NYC's
interest in $19,000,000 of distributable sale proceeds from the other two
Joint Ventures. A default under the Purchase Notes would include, among
other things, a failure by JMB/NYC to repay a Purchase Note upon
acceleration of the maturity, and could cause an immediate acceleration of
the Purchase Notes for the other Joint Ventures. Beginning in 1992, the
Purchase Notes provide for monthly interest only payments on the principal
and accrued interest based upon the level of distributions payable to
JMB/NYC discussed below. If there are no distributions payable to JMB/NYC
or if the distributions are insufficient to cover monthly interest on the
Purchase Notes, then the shortfall interest (as defined) accrues and
compounds monthly. Interest accruals total $93,853,559 at December 31,
1994. During 1993 and 1994, no payments were made on any of the Purchase
Notes. All of the principal and accrued interest on the Purchase Notes is
due in 1999 or, if earlier, on the sale or refinancing of the related
property. 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 Olympia & York affiliates have informed JMB/NYC that they have
received a contract for the sale of the 2 Broadway Building at a price
which will not provide any proceeds to JMB/NYC to repay the related
Purchase Notes. Consequently, if the proposed sale is finalized,
$19,000,000 of the 2 Broadway Purchase Notes will be re-allocated and will
be payable out of JMB/NYC's share of distributable cash flow or sale
proceeds, if any, from the other two Joint Ventures.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Prior to 1992, operating profits (excluding depreciation and
amortization) were allocated 30% to JMB/NYC and 70% to the Olympia & York
affiliates, and operating losses (excluding depreciation and amortization)
were allocated 96% to JMB/NYC and 4% to the Olympia & York affiliates.
Depreciation and amortization were allocated 46.5% to JMB/NYC and 53.5% to
the Olympia & York affiliates. Subsequent to 1991, pursuant to the
agreement between JMB/NYC and the Olympia & York affiliates, for the period
January 1, 1992 to June 30, 1993, as discussed below, gross income is
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 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 were 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 O&Y 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 O&Y 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 calculating JMB/NYC's share of operating cash
flow or deficits through 1991 was as though the rate were fixed at 12-3/4%
per annum (versus the short-term U.S. Treasury obligation rate plus 1-3/4%
per annum (with a minimum 7%) payable on the first mortgage loan. JMB/NYC
believes that, commencing in 1992, the Three Joint Ventures' agreements
require an effective rate of interest with reference to the first mortgage
loan, based upon each Joint Venture's allocable share of the loan, to be 1-
3/4% over the short-term U.S. Treasury obligation rate plus any excess
monthly operating cash flow after capital costs of each of the Three Joint
Ventures, such sum not to be less than a 7% nor exceed a 12-3/4% per annum
interest rate, rather than the 12-3/4% per annum fixed rate that applied
prior to 1992. The Olympia & York affiliates disputed this calculation of
interest expense and contended that the 12-3/4% per annum fixed rate
applied after 1991.
During the quarter ended March 31, 1993, an agreement was reached
between JMB/NYC and the Olympia & York affiliates (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
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JMB/NYC would have been required to make to the Three Joint Ventures as if
the first mortgage loan bore interest at a rate of 12-3/4% 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 entitled 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
would be advanced in the form of loans to pay operating deficits and/or
unpaid priority distribution level amounts of any of the Three Joint
Ventures. Such loans will bear a market rate of interest, have a final
maturity of ten years from the date when made and will be 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 December 31, 1994 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 continued 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 twelve months ended December 31, 1994 was
$117,033,279. Based upon the amount of interest determined by JMB/NYC for
the twelve months ended December 31, 1994, interest expense for the Three
Joint Ventures was $64,482,676. The effect of recording the interest
expense calculated by JMB/NYC is to reduce the losses of the Three Joint
Ventures by $73,071,429 (of which the Partnership's share is $8,494,554)
for the period July 1, 1993 through December 31, 1994 and to
correspondingly reduce what would otherwise be JMB/NYC's funding obligation
with respect to the Three Joint Ventures.
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,
retroactive effective 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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 $78,812,861 at December 31, 1994) 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, any deficit capital
account funding obligation of JMB/NYC to the Joint Ventures would be
eliminated.
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. 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 will accrue
at 9% per annum and unless previously paid out of excess property cash flow
will be payable at maturity. There is no assurance that a restructuring of
the loan will be obtained under these or any other terms. In 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
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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.
The O & Y affiliates have informed JMB/NYC that they have received a
contract for the sale of 2 Broadway for a net purchase price of
$15,000,000. The first mortgage lender has preliminarily agreed in the
loan restructuring proposal discussed above to the sale of the building
according to the terms of the 2 Broadway sales contract. A sale pursuant
to the contract received by the O & Y affiliates would be subject to, among
other things, the approval of the first mortgage lender as well as JMB/NYC
in which approval is incorporated into the Agreement with the Olympia &
York affiliates. In anticipation of this sale and in accordance with the
Agreement with the Olympia & York affiliates, the unpaid first mortgage
indebtedness previously allocated to 2 Broadway, has been re-allocated to
237 Park Avenue and 1290 Avenue of the Americas. While there can be no
assurance that a sale would occur pursuant to such contract or any other
contract, if this contract were to be accepted by or consented to by all
required parties and the sale completed pursuant thereto, JMB/NYC would no
longer have an ownership interest in the 2 Broadway Joint Ventures. A
provision for value impairment has been recorded for financial reporting
purposes at December 31, 1993 for $192,627,560, net of the non-recourse
portion of the Purchase Notes related to the 2 Broadway Joint Venture
interests that are payable by JMB/NYC to the O & Y affiliates in the amount
of $46,646,810. The provision for value impairment has been allocated
$136,534,366 and $56,093,194 to the O & Y affiliates and to JMB/NYC,
respectively. Such provision was allocated to the partners to reflect
their respective ownership percentages before the effect of the non-
recourse promissory notes, including related accrued interest.
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
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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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
JMB/NYC would then proceed to terminate its affairs.
(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.
The maturity date for Orchard Associates' loan in the amount of
$18,000,000 from a commercial bank, secured solely by its interest in Old
Orchard shopping center, and originally due October 1, 1991, was extended
to December 31, 1993. The agreement required monthly installments of
interest only at the prime rate plus 1% per annum. Orchard Associates
continued to negotiate with the lender for permanent financing of this note
prior to its payoff in September 1993 as described below.
At sale, OOUV and an unaffiliated third party contributed the Old
Orchard shopping center and $60,366,572 in cash (before closing costs and
prorations), respectively, to a newly formed limited partnership.
Immediately at closing, the new partnership distributed to OOUV $60,366,572
in cash (before closing costs and prorations) in redemption of
approximately 89.5833% of OOUV's interest in the new partnership. OOUV,
the limited partner, has retained a 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 and was subsequently 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. Orchard recognized a gain of
$15,797,454 for financial reporting purposes ($7,898,727 allocable to the
Partnership) and recognized a gain for Federal income tax reporting
purposes of $32,492,776 ($16,246,388 allocable to the Partnership) in 1993.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 50% share ($1,702,082
to the Partnership) of such amount. The Partnership recognized a gain of
$1,702,082 for financial reporting purposes and recognized a gain for
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 amount will be received.
(4) LONG-TERM DEBT
(a) General
As described in note 4(b) and in response to operating deficits
incurred at certain properties, the Partnership is seeking and/or has
received mortgage note modifications on certain properties. Certain of the
modifications received which have expired and others expire on various
dates commencing November 1996. In addition, certain properties have loans
with scheduled maturities commencing March 1995. Upon expiration of such
modifications or at maturity, should the Partnership or its ventures be
unable to secure new or additional modifications to or refinancing of the
loans, based upon current and anticipated future market conditions, the
Partnership may not 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 gain for
financial reporting and Federal income tax purposes without any net
distributable proceeds. Such decisions would be made on a property-by-
property basis.
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Long-term debt consists of the following at December 31, 1994 and 1993:
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
11.5% Purchase Price mortgage note; secured by Copley Place
multi-use complex in Boston, Massachusetts; accruing interest
through August 31, 1998 when the entire balance is payable
(note 3(b)). . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,436,336 62,818,952
8% mortgage note (the note has been modified; see note 4(b)(9))
due August 1998; secured by Copley Place multi-use complex
in Boston, Massachusetts; balance originally payable
in monthly installments of principal and interest of
$2,184,042 through September 30, 1993 and $1,306,321
thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . 212,864,138 209,716,711
9-5/8% mortgage note; secured by the Plaza Tower office building
in Knoxville, Tennessee; payable in monthly installments of
principal and interest of $184,421 originally due November 1,
1994 and subsequently extended to March 1, 1995 when the
remaining principal of $15,910,000 is payable;
see note 4(b)(13). . . . . . . . . . . . . . . . . . . . . . . . 17,674,426 18,160,291
12.80% mortgage note; secured by the Gables Corporate Plaza
office building in Coral Gables, Florida; originally payable
in monthly installments of principal and interest until May 1,
1993 when the remaining principal balance was payable
(The note had been modified and was discharged in January 1994;
see note 4(b)(7)). . . . . . . . . . . . . . . . . . . . . . . . -- 24,967,836
13-1/8% mortgage note; secured by the Sherry Lane Place
office building in Dallas, Texas; originally payable in
monthly installments of principal and interest until
December 27, 1995 when the remaining principal balance
is payable. (The note has been remodified;
see note 4(b)(1)). . . . . . . . . . . . . . . . . . . . . . . . 40,498,538 40,498,538
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
----------- -----------
13% mortgage note secured by the Long Beach Plaza
shopping center in Long Beach, California; payable
in monthly installments of principal and interest
of $372,583 originally due June 27, 1994 and
subsequently extended to August 31, 1995 when the
remaining principal balance of $33,734,354 is
payable; see note 4(b)(12) . . . . . . . . . . . . . . . . . . . 33,734,354 33,734,354
12-1/2% mortgage note; secured by the University Park
office building in Sacramento, California;
originally payable in monthly installments of
interest only at the rate of 11% per annum with
the difference accruing until maturity on
July 1, 1993. (The note had been modified and
was discharged in January 1994; see note 4(b)(6)). . . . . . . . -- 16,294,125
Other mortgage loans:
Long Beach Plaza shopping center, non-interest bearing,
(net of $8,965,815 and $9,082,213 unamortized discount
at 12% at December 31, 1994 and 1993, respectively),
due 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,034,185 917,787
Marshalls Aurora Plaza shopping center, 12-3/4%;
originally payable in monthly installments of
principal and interest until November 1, 1996 when
the remaining principal balance is payable.
(The note has been modified; see note 4(b)(11)). . . . . . . . 5,890,904 6,468,313
Eastridge apartment complex, 10.34%, due 1995
(modified July 1, 1987 and satisfied in April
1994, see notes 4(b)(5) and 7(g)). . . . . . . . . . . . . . . -- 9,752,617
Greenwood Creek II apartment complex, 13-1/4%,
due 1997 (satisfied in 1993, see
notes 4(b)(8) and 7(f)). . . . . . . . . . . . . . . . . . . . -- --
Glades apartment complex, 6.1%, due 2002
(refinanced in 1992, see note 4(b)(2)) . . . . . . . . . . . . 9,860,000 9,890,000
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
----------- -----------
Glades apartment complex, 6% (plus,
subsequent to April 1995, 50% of cash flows
(as defined)), accruing interest through
October 1, 2002 when the entire balance
is payable (refinanced in 1992, see
note 4(b)(2)). . . . . . . . . . . . . . . . . . . . . . . . . 950,261 950,261
Carrollwood apartment complex, 7.45%,
due 1998 (refinanced in 1993,
see note 4(b)(10)) . . . . . . . . . . . . . . . . . . . . . . 7,227,872 7,400,309
Other; see note 3(b) . . . . . . . . . . . . . . . . . . . . . . 13,398,433 13,398,433
------------ -----------
Total debt . . . . . . . . . . . . . . . . . . . . . . . 413,569,447 454,968,527
Less current portion of long-term debt . . . . . . . . . 52,006,208 94,086,630
------------ -----------
Total long-term debt . . . . . . . . . . . . . . . . . . $361,563,239 360,881,897
============ ===========
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Included in the above total long-term debt is $60,733,525 and
$62,095,000, for 1994 and 1993, respectively, which represents mortgage
interest accrued but not currently payable pursuant to the terms of the
various notes.
Five year maturities of long-term debt are as follows:
1995. . . . . . . . . . . . . . $ 52,006,208
1996. . . . . . . . . . . . . . 5,956,799
1997. . . . . . . . . . . . . . 352,974
1998. . . . . . . . . . . . . . 330,078,126
1999. . . . . . . . . . . . . . 157,500
============
(b) Long-term Debt Modifications
(1) Sherry Lane Place Office Building
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 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 bore 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
second note, consisting of the remaining unpaid principal and accrued
interest, has a zero pay and accrual rate. All excess cash flow above debt
service on the first note is to be applied first against accrued interest
on the first note and then as contingent interest on the second note (as
defined).
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(2) The Glades Apartments
The long-term mortgage note secured by the Glades Apartments located
in Jacksonville, Florida was modified whereby the interest payment rate was
reduced for the period December 1, 1987 to November 30, 1989 and the
difference between the contract rate and the interest paid was deferred
until December 1, 1989 when the accrued interest and the then outstanding
principal balance began to amortize over a thirty year period at the
original interest rate. The entire balance was to be due and payable on
October 1, 1995.
The venture received a remodification from the lender to extend the
initial payment terms of the modification through the January 1, 1991
payment. Subsequently, the venture reached an agreement to further extend
the initial payment terms of the modification through the January 1, 1992
payment. The venture was negotiating with the first mortgage lender
regarding an additional modification or refinancing, and submitted debt
service payments under the previously modified terms to the extent of
available property cash flow through September 30, 1992. On October 1,
1992, the venture refinanced the existing long-term mortgage note (of
approximately $10,426,000) with a first and second mortgage note. The
venture paid a prepayment penalty relating to the original mortgage of
$300,000 in connection with the refinancing. The Partnership recognized
its share of $150,000 as an extraordinary item for financial reporting
purposes. The new first mortgage loan of $9,890,000 provides for interest
only payments of 6.1% per annum from October 1, 1992 through September 30,
1994. Thereafter, monthly installments of principal and interest are due
(amortized over a 30 year term) through the maturity of the loan on October
1, 2002. The second mortgage loan of $950,261 accrues simple interest of
6% per annum and requires quarterly payments of 50% of the net cash flow
(as defined) beginning April 1, 1995 through the earlier of the repayment
or maturity of the loan on October 1, 2002. There were no distributable
proceeds from the refinancing.
(3) Rio Cancion Apartments
The mortgage note secured by the Rio Cancion apartments located in
Tucson, Arizona and related deferred interest was satisfied on March 31,
1993 upon sale of the property (see note 7(e)). The first mortgage loan
was modified in 1987 and 1989 to lower the interest payable. On June 9,
1992, the Partnership reached an agreement for an additional modification
to the first mortgage loan effective November 1, 1991. Through December
31, 1992, the Partnership was required to submit debt service payments at a
rate of 10.25% per annum. On January 1, 1993, the contract rate of 12.25%
per annum and the pay rate of 10.25% per annum was permanently lowered to
10%. The additional modification also extended the maturity date to
January 1, 1997. In return, the lender was entitled to, as additional
interest, a minority residual participation of 25% of net sales proceeds
(as defined) after the Partnership had recovered its investment (as
defined).
(4) 1001 Fourth Avenue Plaza
The Partnership transferred title to the property to the lender on
November 1, 1993, as discussed below.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The long-term mortgage note secured by the 1001 Fourth Avenue Plaza
office building located in Seattle, Washington was modified effective June
16, 1987 to lower both the contract and payment interest rates. The
contract interest rate had been reduced to 9% per annum for the period from
June 16, 1987 through December 15, 1992, to 10% per annum for the period
from December 16, 1992 through May 15, 1994 and to 12% per annum for the
period from May 16, 1994 through May 15, 1995. In addition, the interest
payment rate had been reduced to 7% per annum from June 16, 1987 through
May 15, 1989, at 8% per annum from May 16, 1989 through December 15, 1992
and at 9% per annum from December 16, 1992 through May 15, 1995. The
difference between the contract rate and the interest paid was deferred and
bore interest at 9% per annum. In addition, any Net Cash Flow (as defined)
from the property was escrowed for future capital improvements. On May 16,
1995, the note was to revert to its original terms. In addition, upon the
subsequent sale of the property, the lender would have been entitled to a
minority residual participation beginning at 30% and decreasing to 15% of
Net Proceeds (as defined) from such sale or refinancing.
The Partnership continued to maintain a $2,000,000 letter of credit as
additional security for the lender for the modification of interest rates,
repayment schedule and other terms of the original loan. The letter of
credit was secured by the Partnership's investments in U.S. Government
obligations in an equal amount. The letter of credit was to be renewed
annually until the earlier of June 15, 1995 or the date on which Operating
Income (as defined) from the property equaled at least 1.2 times the
original debt service for a twelve month period. In October 1992, the
Partnership notified the lender of its intent not to renew the letter of
credit based on the property generating sufficient Operating Income (as
defined) to meet the calculation requirement described above. As a result,
the lender subsequently notified the Partnership that the Partnership was
in default for non-submittal of Net Cash Flow (as defined). Although the
Partnership had escrowed certain amounts for 1991 and 1992, the Partnership
did not believe it was in default with respect to such escrow obligations.
As a result of the alleged defaults, the lender subsequently attempted to
draw on the $2,000,000 letter of credit prior to the letter of credit
expiring in November 1992. The Partnership obtained a temporary
restraining order from the Supreme Court of the State of New York
disallowing the lender from drawing on the letter of credit in
consideration for the Partnership renewing the letter of credit for a
period of ninety days to allow the parties to attempt to resolve their
differences. In February 1993, the Partnership extended the letter of
credit for an additional sixty days in a further attempt to resolve the
disputes with the lender. Subsequently, in March 1993, the temporary
restraining order expired. The Supreme Court of the State of New York had
agreed to extend the temporary restraining order providing the Partnership
post a $2,000,000 bond by April 1, 1993. The Partnership posted a
$2,000,000 bond on April 1, 1993. The lender appealed this entire order.
On April 29, 1993, the Partnership was notified by the Supreme Court of the
State of New York that a decision was rendered in favor of the Partnership
regarding the disputes surrounding the letter of credit. In late June
1993, an order was entered by the court reflecting said decision. The
lender notified the Partnership that they intended to appeal the order. As
a result, the lender claimed that the release of the bond and the return of
the letter of credit had been stayed pending the appeal. As previously
reported, the Partnership was attempting to obtain an additional loan
modification from the mortgage lender. Such negotiations proved to be
unsuccessful and in November 1993, the Partnership transferred title to the
property in full satisfaction of the Partnership's mortgage obligation. As
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
part of the agreement to transfer title, the lender agreed to settle the
litigation and agreed to the return of the Partnership's bond and letter of
credit. The transfer of the Partnership's ownership interest resulted in a
net gain of $6,771,760 for financial reporting purposes and a gain of
$27,567,458 for Federal income tax purposes with no corresponding
distributable proceeds in 1993.
(5) 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 was due. The remodification
established release prices for the mortgage obligation (as defined), upon
execution until May 1, 1995.
In April 1994, the Partnership exercised its option under the latest
loan modification for a discounted payoff of its mortgage obligation
secured by the Eastridge Apartments. The loan balance of approximately
$9,696,000 was fully satisfied with a payment of approximately $8,700,000.
As a result of this transaction, the Partnership 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(g)).
(6) University Park Office Building
Effective July 1989, the Partnership remodified the note such that the
interest payment rate was reduced to 10% per annum for a period of two
years, at which time the loan was to be due and payable. The difference
between the contract rate and the interest paid was deferred and was
accruing at 12.5% per annum. The Partnership exercised its option to
extend the maturity date from July 1991 to 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 in January 1994. This resulted in the
Partnership no longer having an ownership interest in the property, and
resulted in net gain of approximately $5,676,000 for financial reporting
and approximately $6,897,000 for Federal income tax purposes to the
Partnership with no corresponding distributable proceeds in 1994.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(7) Gables Corporate Plaza
The Gables venture reached an agreement to modify the long-term first
mortgage note secured by Gables Corporate Plaza located in Coral Gables,
Florida. Effective April 1, 1989, the contract rate was permanently
lowered from 12.8% to 10.75% per annum 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 original
contract rate.
In addition, the Partnership agreed with the joint venture partner to
defer interest payments on its second and third mortgage notes for the same
five year period. The interest rate was 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 consolidated 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, and
therefore, 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 and resulted in net gain of approximately $7,678,000
for financial reporting and approximately $3,793,000 for Federal income tax
purposes without any net distributable proceeds in 1994. Accordingly, the
balances of the mortgage note and related accrued interest with a combined
outstanding balance of approximately $24,970,000 at December 31, 1993 had
been classified as current liabilities in the accompanying consolidated
financial statements.
(8) Greenwood Creek II Apartments
The Partnership was negotiating for modification of the long-term
mortgage note secured by Greenwood Creek II Apartments located in Benbrook
(Fort Worth), Texas. As a result of the negotiations, the Partnership made
monthly debt service payments of interest only at a rate of 8% per annum
between January 1989 and January 1990. In February 1990, the Partnership
ceased making debt service until March 1991. The Partnership had reached
an agreement in principle with the lender to submit the monthly cash flow
as debt service payments beginning April 1991 while continuing to negotiate
for the modification. However, the Partnership was notified that the loan
had been sold to a third party. The Partnership was not successful in
securing a modification. On April 6, 1993, the Partnership transferred
title of the property to the lender for a transfer price of $100,000
(before selling costs and prorations) in excess of the existing mortgage
balance. The Partnership recognized a gain of $1,787,073 for financial
reporting and recognized a gain of $1,823,988 for Federal income tax
purposes in 1993 (see note 7(f)).
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(9) Copley Place Associates
The joint venture modified the existing first mortgage note effective
March 1, 1992. The modification lowers the pay rate from 12% to 9% per
annum through August 1993, and to 7-1/2% per annum through August 1998.
The contract rate has been lowered to 10% per annum through August 1993 and
to 8-1/2% per annum through August 1998. After each monthly payment, the
difference between the contract interest rate on the outstanding principal
balance on the loan, including deferred interest, and interest paid at the
applicable pay rate (as defined), will be added to the principal balance
and will accrue interest at the contract interest rate. All outstanding
principal, including the unpaid deferred interest, is due and payable on
August 31, 1998. In return, the lender will be entitled to receive, as
additional interest, a minority residual participation of 10% of net
proceeds (if any, as defined) from a sale or refinancing after the
Partnership and its joint venture partner have recovered their investments
(as defined). Any cash flow from the property, after all capital and
leasing expenditures but before payment of a portion of 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 of approximately $4,424,000 has been
escrowed for future potential leasing requirements as set forth in the loan
modification. The property experienced a significant loss of rental income
due to the expiration of a major tenant's lease. Based on this fact, the
joint venture has initiated discussions with the first mortgage lender
regarding an additional modification of the loan. There can be no
assurances such remodification 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 vacant space.
(10) Carrollwood Apartments
In September 1993, the venture refinanced with a third party lender
the existing underlying mortgage loan with a balance of approximately
$7,200,000 payable at 12-3/4% per annum due in 1995. The new loan is in
the amount of $7,455,000. The loan is payable in monthly installments of
principal and interest and bears interest at 7.45% per annum for a five
year period until maturity. The venture paid a prepayment penalty relating
to the original mortgage of approximately $143,200 in connection with the
refinancing. The Partnership recognized its share of approximately
$141,700 as an extraordinary loss for financial reporting purposes. In
addition, the venture was obligated to establish an escrow account for
future capital improvements. The escrow account was initially funded by
the Partnership's capital contribution to the venture and is subsequently
funded by the operations of the venture. As of the date of this report, no
amounts have been withdrawn.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(11) 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 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.
(12) 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 place approximately $924,000 into escrow for future leasing
costs. The lender further agreed to fund $500,000 to be used for leasing
and tenant improvements by way of a second note bearing interest at 13% per
annum. Payment of principal and interest 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. The Partnership has not remitted all
of the scheduled debt service payments since June 1993. Accordingly, the
combined balances of the mortgage note and related accrued interest of
approximately $39,835,000 at December 31, 1994 and approximately
$35,449,000 at December 31, 1993 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 $6,233,000.
(13) 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 to the existing lender.
During January 1995, the Partnership reached another agreement with the
existing lender for an extension until March 31, 1995 provided the
Partnership pay down the principal balance and find an alternative source
of financing. As of the date of this report, the Partnership continues to
remit debt service under the existing loan terms.
The Partnership has reached an agreement in principle with a third
party lender to refinance approximately $14,900,000 of the existing
mortgage note. As such, the Partnership made a principal payment of
$1,500,000 to the existing mortgage lender during February 1995 and expects
to make an additional principal payment of approximately $1,010,000 during
April 1995. The new loan is expected to bear an interest rate of 1.8%
above five year U.S. Treasury obligations (currently 9.02%). Interest only
payments are expected to be made through maturity on October 31, 2000.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(5) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale of invest-
ment properties are to be allocated to the General Partners to the greatest
of (i) 1% of such profits, (ii) the amount of cash distributions to the
General Partners, or (iii) an amount which will reduce the General
Partners' capital account deficits (if any) to a level consistent with the
gain anticipated to be realized from the sale of properties. Losses from
the sale of properties are to be allocated 1% to the General Partners. The
remaining profits and losses will be allocated to the Limited Partners.
The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon termination
of the Partnership. Distributions of "Net cash receipts" of the
Partnership are allocated 90% to the Limited Partners and 10% to the
General Partners (of which 6.25% constitutes a management fee to the
Corporate General Partner for services in managing the Partnership).
The Partnership Agreement provides that, subject to certain
conditions, the General Partners shall receive as a distribution from the
sale of a real property by the Partnership up to 3% of the selling price,
and that the remaining proceeds (net after expenses and retained working
capital) be distributed 85% to the Limited Partners and 15% to the General
Partners. However, prior to such distributions being made, the Limited
Partners are entitled to receive 99% of net sale and financing proceeds and
the General Partners shall receive 1% until the Limited Partners (i) have
received cash distributions of sale or refinancing proceeds in an amount
equal to the Limited Partners' aggregate initial capital investment in the
Partnership and (ii) have received cumulative cash distributions from the
Partnership's operations which, when combined with sale or refinancing
proceeds previously distributed, equal a 6% annual return on the Limited
Partners' average capital investment for each year (their initial capital
investment as reduced by sale or refinancing proceeds previously
distributed). If upon the completion of the liquidation of the Partnership
and the distribution of all Partnership funds, the Limited Partners have
not received the amounts in (i) and (ii) above, the General Partners will
be required to return all or a portion of the 1% distribution of sale or
financing proceeds described above in an amount equal to such deficiency in
payments to the Limited Partners pursuant to (i) and (ii) above.
(6) MANAGEMENT AGREEMENTS - OTHER THAN VENTURES
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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Long Beach Plaza in Long Beach, California, Plaza Tower office
building in Knoxville, Tennessee, the two apartment complexes known as
Quail Place Apartments and Heritage Park II Apartments in Oklahoma City,
Oklahoma (prior to their sales in March 1992), Greenwood Creek II
Apartments in Benbrook, Texas, (prior to its sale in April 1993) Rio
Cancion Apartments (prior to its sale in March 1993) and Eastridge
Apartments in Tucson, Arizona (prior to its sale in June 1994), University
Park office building in Sacramento, California, (prior to transferring the
property to the lender in January 1994) 1001 Fourth Avenue Plaza office
building in Seattle, Washington, (prior to transferring the property to the
lender in November 1993), Sherry Lane Place office building in Dallas,
Texas, Glades Apartments in Jacksonville, Florida, Gables Corporate Plaza
in Coral Gables, Florida (prior to the lender appointing a receiver in May
1993), and the Bridgeport Apartments in Irving, Texas (prior to its sale in
April 1992) 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 in
Jacksonville, Florida and the Sherry Lane office building on the same terms
that existed prior to the sale.
(7) SALE OF INVESTMENT PROPERTIES
(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 land. The land 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 excluded land for $682,000,
the purchase price adjustment. In addition, the Partnership has reached an
agreement with the previous owner of the Allied Automotive Center, who has
agreed to cause such investigation and clean-up to be done at the previous
owner's expense. The previous owner has also indemnified the Partnership
from specified potential clean-up related liabilities. The Partnership, in
cooperation with the previous owner, has approved a plan to clean up the
parcel, and the previous owner has undertaken the clean up and is paying
the costs thereof. The cost of the remaining clean up is not estimated to
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
be material. The gain associated with this Parcel, approximately $543,000,
will be recognized when the closing occurs, currently estimated to be in
mid 1995. There can be no assurance that the sale of this Parcel will be
consummated on these or any other terms.
(b) Heritage Park-II Apartments
On March 26, 1992 the Partnership, through Partridge Place Limited
Partnership, sold the land, related improvements, and personal property of
the Heritage Park-II Apartments, located in Oklahoma City, Oklahoma for
$4,326,000 (before selling costs and prorations) which was paid in cash at
closing. In addition, the buyer paid to the Partnership incentive
management fees of $199,960. The seller paid an outside broker's
commission of $126,000 from the sales proceeds. In conjunction with the
sale, the mortgage note and related accrued interest of approximately
$8,173,000 was satisfied in full through a discounted payment of
approximately $4,200,000. The Partnership recognized a net gain from this
transaction in 1992 of approximately $2,688,000 (reflected as a loss on
sale of approximately $1,285,000 and an extraordinary gain on forgiveness
of indebtedness of approximately $3,973,000) for financial reporting
purposes and recognized a gain of approximately $4,624,000 for Federal
income tax purposes.
(c) Quail Place Apartments
On March 26, 1992 the Partnership, through Quail Springs Limited
Partnership, sold the land, related improvements, and personal property of
the Quail Place Apartments, located in Oklahoma City, Oklahoma for
$2,163,000 (before selling costs and prorations) which was paid in cash at
closing. In addition, the buyer paid to the Partnership incentive
management fees of $175,180. The seller paid an outside broker's
commission of $63,000 from the sales proceeds. In conjunction with the
sale, the mortgage note and related accrued interest of approximately
$5,417,000 was satisfied in full through a discounted payment of
approximately $2,100,000. The Partnership recognized a net gain from this
transaction in 1992 of approximately $1,659,000 (reflected as a loss on
sale of approximately $1,658,000 and an extraordinary gain on forgiveness
of indebtedness of approximately $3,317,000) for financial reporting
purposes and recognized a gain of approximately $2,879,000 for Federal
income tax purposes.
(d) Bridgeport Apartments
On April 2, 1992, the Partnership sold the land, related improvements
and personal property of the Bridgeport Apartments, located in Irving,
Texas to the existing lender for $430,000 in excess of the existing
mortgage note (before closing costs and prorations) which was paid in cash
at closing. As a result of the sale, the Partnership will not have any
further liability or obligation under the mortgage note which had an unpaid
principal balance of approximately $9,342,000 and an unpaid accrued
interest balance of approximately $2,462,000 at the date of the sale. The
Partnership recognized a gain in 1992 of approximately $5,076,000 for
financial reporting purposes and recognized a gain of approximately
$6,142,000 for Federal income tax purposes.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(e) Rio Cancion Apartments
On March 31, 1993, the Partnership sold the land, related
improvements, and personal property of the Rio Cancion Apartments, located
in Tucson, Arizona for $13,700,000 (before selling costs and prorations)
which was paid in cash at closing. In conjunction with the sale, the
mortgage note and related accrued interest with a balance of approximately
$12,157,000 was satisfied in full. The lender received, as its 25%
minority residual participation (as defined), approximately $317,000 (see
note 4(b)(3)). The Partnership received net sales proceeds of
approximately $809,000. The Partnership recognized a gain from this
transaction in 1993 of $2,524,958 for financial reporting purposes and
recognized a gain of $7,865,633 for Federal income tax purposes in 1993.
(f) Greenwood Creek II Apartments
On April 6, 1993, the Partnership transferred title to the existing
lender to the land, related improvements, and personal property of the
Greenwood Creek II Apartments, located in Benbrook, (Fort Worth) Texas for
a transfer price of $100,000 (before selling costs and prorations) in
excess of the existing mortgage balance of approximately $3,747,000 (see
note 4(b)(8)). The Partnership recognized a gain for financial reporting
purposes in 1993 of $1,787,073 and recognized a gain of $1,823,988 for
Federal income tax purposes in 1993.
(g) 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 obligation was satisfied in full
prior to the sale date (see note 4(b)(5)). The Partnership recognized a
gain of $5,010,871 for financial reporting purposes and a gain of
approximately $7,081,000 for Federal income tax purposes in 1994.
(8) LEASES
(a) As Property Lessor
At December 31, 1994, the Partnership and its consolidated ventures'
principal assets are two office buildings, two shopping centers, a
multi-use complex and two apartment complexes. The Partnership has
determined that all leases relating to these properties are properly
classified as operating leases; therefore, rental income is reported when
earned and the cost of each of the properties, excluding cost of land, is
depreciated over the estimated useful lives. Leases with commercial
tenants range in term from one to 30 years and provide for fixed minimum
rent and partial reimbursement of operating costs. In addition, leases
with shopping center tenants generally provide for additional rent based
upon percentages of tenants' sales volumes. With respect to the
Partnership's shopping center investments, a substantial portion of the
ability of retail tenants to honor their leases is dependent upon the
retail economic sector.
Apartment complex leases in effect at December 31, 1994 are generally
for a term of one year or less and provide for annual rents of approx-
imately $4,030,000.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Cost and accumulated depreciation of the leased assets are summarized
as follows at December 31, 1994:
Shopping centers:
Cost. . . . . . . . . . . . . $ 51,451,913
Accumulated depreciation. . (17,911,522)
------------
33,540,391
------------
Office buildings:
Cost. . . . . . . . . . . . 71,414,804
Accumulated depreciation. . (23,515,346)
------------
47,899,458
------------
Multi-use complex:
Cost. . . . . . . . . . . . 286,645,239
Accumulated depreciation. . (101,406,308)
------------
185,238,931
------------
Apartment complexes:
Cost. . . . . . . . . . . . 20,464,767
Accumulated depreciation. . (6,692,230)
------------
13,772,537
------------
Total . . . . . . . $280,451,317
============
Minimum lease payments receivable including amounts representing
executory costs (e.g., taxes, maintenance, insurance), and any related
profit in excess of specific reimbursements, to be received in the future
under the above operating commercial lease agreements, are as follows:
1995. . . . . . . . . . . $34,854,784
1996. . . . . . . . . . . 33,521,144
1997. . . . . . . . . . . 31,584,065
1998. . . . . . . . . . . 27,988,502
1999. . . . . . . . . . . 23,862,927
Thereafter. . . . . . . . 95,146,493
===========
Additional rent based upon percentages of tenants' sales volumes
included in rental income aggregated $526,850, $1,804,123 and $1,464,841
for the years ended December 31, 1994, 1993 and 1992, respectively.
(b) As Property Lessee
The following lease agreements have been determined to be operating
leases:
The Partnership owns the leasehold rights to the parking structure
adjacent to the Long Beach, California shopping center. The lease has an
initial term of 50 years which commenced in 1981 with one 49-year renewal
option exercisable by a local municipal authority. The lease provides for
annual rental of $745,000, which is subject to decrease based on formulas
which relate to the amount of real estate taxes assessed against the
shopping center and the parking structure. The rental expense for 1994,
1993 and 1992 under the above operating lease was $538,159, $528,276 and
$538,962, respectively, and consisted exclusively of minimum rent.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Copley Place venture has leased the air rights over the
Massachusetts Turnpike located beneath the Boston, Massachusetts multi-use
complex. The lease has a term of 99 years which commenced in 1978. The
total rent due under the terms of the air rights lease was prepaid by the
seller and is being amortized over the term of the air rights lease.
(9) TRANSACTIONS WITH AFFILIATES
In December 1984, Urban Holdings, Inc., an affiliate of the Corporate
General Partner of the Partnership, purchased all the outstanding stock of
the developer (joint venture partner) and property manager of the Old
Orchard shopping center and the Copley Place multi-use complex, and
successor entities to the developer and property manager, which continue in
their respective capacities. Consequently, the developer is an affiliate
of the Corporate General Partner and continues to possess all of the rights
and obligations granted the original developer under the terms of the
respective acquisition and related agreements.
Fees, commissions and other expenses required to be paid by the
Partnership and its consolidated ventures to the General Partners and their
affiliates as of December 31, 1994 and for the years ended December 31,
1993, and 1992 are as follows:
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
---------- --------- --------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees . . . . . . . . . . . $1,195,147 3,001,759 5,042,311 12,922,393
Insurance commissions. . . . . . . . 55,542 214,278 223,748 --
Reimbursement (at cost)
for administrative and
accounting services. . . . . . . . 220,159 148,712 180,688 --
Reimbursement (at cost) for
legal services . . . . . . . . . . 20,977 30,381 36,411 --
Reimbursement (at cost) for
out-of-pocket expenses . . . . . . 1,372 45,143 210,065 --
Management fees to corporate
general partner. . . . . . . . . . -- -- 12,715 --
Reimbursement (at cost) for
out-of-pocket salary and
salary related expenses
relating to on-site and
other costs for the
Partnership and its
investment properties. . . . . . . 69,775 -- -- --
---------- ---------- ---------- ----------
$1,562,792 3,440,273 5,705,938 12,922,393
========== ========== ========== ==========
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Payment of certain property management and leasing fees payable under
the terms of the management agreements ($12,915,000, approximately $35 per
$1,000 interest) at December 31, 1994 has been deferred. All amounts
currently payable do not bear interest and are expected to be paid in
future periods. In February 1995, the Partnership paid a substantial
portion of these deferred property management and leasing fees. Reference
is made to note 11(b) regarding payment of deferred fees.
The affiliated joint venture partner was obligated through December
31, 1991 to loan amounts to pay for any operating deficits (as defined) of
Copley Place. Through December 31, 1994, the affiliated joint venture
partner has loan approximately $13,398,000 at an interest rate based on its
line of credit, which bears interest at a floating rate (averaging 6.06%
per annum at December 31, 1994). During 1994, the joint venture paid
approximately $3,597,000 of accrued interest on these loans. The
Partnership contributed approximately $1,798,500 to the joint venture to
pay its share of such expenses.
(10) INVESTMENT IN UNCONSOLIDATED VENTURES
Summary combined financial information for JMB/NYC and its
unconsolidated ventures (note 3(c)) as of and for the years ended December
31, 1994 and 1993 are as follows:
1994 1993
------------- -------------
Current assets . . . . . . . . $ 44,191,548 17,668,206
Current liabilities (includes
$913,398,422 and $923,041,198
of current portion of long-
term debt at December 31,
1994 and December 31, 1993,
respectively). . . . . . . . (941,725,934) (940,836,999)
------------- -------------
Working capital (deficit). (897,534,386) (923,168,793)
------------- -------------
Investment property, net . . . 718,682,403 746,632,895
Accrued rent receivable. . . . 51,254,978 50,369,613
Deferred expenses. . . . . . . 11,698,403 11,096,044
Other liabilities. . . . . . . (149,171,447) (114,381,260)
Venture partners' deficit
(equity) . . . . . . . . . . 186,256,073 156,904,193
------------- -------------
Partnership's capital
(deficit). . . . . . . . $ (78,813,976) (72,547,308)
============= =============
Represented by:
Invested capital . . . . . . $ 43,728,411 43,728,411
Cumulative net losses. . . . (113,168,638) (106,901,970)
Cumulative cash
distributions. . . . . . . (9,373,749) (9,373,749)
------------- -------------
$ (78,813,976) (72,547,308)
============= =============
Total income . . . . . . . . . $ 147,761,499 168,002,257
============= =============
Expenses applicable to
operating loss . . . . . . . $ 183,850,523 411,977,853
============= =============
Net loss . . . . . . . . . . . $ 36,089,024 243,975,596
============= =============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
Also, for the year ended December 31, 1992, total income was
$177,682,092, expenses applicable to operating loss were $243,630,397 and
the net loss was $65,948,305 for JMB/NYC and the unconsolidated ventures.
(11) SUBSEQUENT EVENTS
(a) Distribution of Sales Proceeds
In March 1995, the Partnership made a sales distribution of
approximately $10,985,000 (approximately $30 per limited partnership
interest) out of net proceeds resulting primarily from the sale of Old
Orchard shopping center.
(b) Payment of Previously Deferred Property Management
and Leasing Fees
In February 1995, the Partnership paid $10,000,000 of previously
deferred property management and leasing fees to an affiliate of the
General Partner. Reference is made to note 9 for a detailed discussion of
these fees.
<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (a) ACQUISITION AT CLOSE OF PERIOD (b)
------------------------- --------------------------------------------------
LAND AND BUILDINGS LAND LAND AND BUILDINGS
LEASEHOLD AND BUILDINGS AND LEASEHOLD AND
DESCRIPTION ENCUMBRANCE INTEREST IMPROVEMENTS IMPROVEMENTS INTEREST IMPROVEMENTS TOTAL(g)
----------- ----------- ----------- -------------------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
APARTMENT
BUILDINGS:
Tampa,
Florida(d). .$7,227,872 1,092,010 7,408,618 293,501 1,092,010 7,702,119 8,794,129
Jacksonville,
Florida(d). .10,810,262 1,905,940 9,664,038 100,660 1,815,262 9,855,376 11,670,638
OFFICE
BUILDINGS:
Knoxville,
Tennessee(e).17,674,426 -- 28,884,725 4,358,203 1,508,417 31,734,511 33,242,928
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (a) ACQUISITION AT CLOSE OF PERIOD (b)
------------------------- --------------------------------------------------
LAND AND BUILDINGS LAND LAND AND BUILDINGS
LEASEHOLD AND BUILDINGS AND LEASEHOLD AND
DESCRIPTION ENCUMBRANCE INTEREST IMPROVEMENTS IMPROVEMENTS INTEREST IMPROVEMENTS TOTAL(g)
----------- ----------- ----------- -------------------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dallas,
Texas(d). . .40,498,538 7,902,979 35,029,347 (4,899,576) 6,198,484 31,834,266 38,032,750
Southfield,
Michigan(f) . -- 1,715,373 -- (1,576,247) 139,126 -- 139,126
SHOPPING
CENTERS:
Long Beach,
California. .34,768,539 3,801,066 42,765,277 (3,990,264) 3,376,877 39,199,202 42,576,079
Aurora,
Colorado. . . 5,890,904 2,035,721 6,674,891 165,222 2,035,721 6,840,113 8,875,834
MULTI-USE
COMPLEX:
Boston,
Massachu-
setts
(c)(d). . . .296,698,906 4,769,913 271,584,219 10,291,107 4,769,913 281,875,326286,645,239
------------ ----------- ----------- ------------ ----------- ----------------------
Total . .$413,569,447 23,223,002 402,011,115 4,742,606 20,935,810 409,040,913429,976,723
============ =========== =========== ============ =========== ======================
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1994
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DESCRIPTION DEPRECIATION(h) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
----------- ---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
APARTMENT BUILDINGS:
Tampa, Florida(d) . . . 3,112,868 1984 12/16/83 5-30 years 226,998
Jacksonville, Florida(d) 3,579,362 1985 10/9/84 5-30 years 209,432
OFFICE BUILDINGS:
Knoxville, Tennessee(e) 11,245,350 1979 10/26/83 5-30 years 537,484
Dallas, Texas(d). . . . 12,269,996 1983 12/1/83 5-30 years 515,880
Southfield, Michigan(f) -- 1974 3/30/84 5-30 years 2,904
SHOPPING CENTERS:
Long Beach, California. 15,237,145 1982 6/22/83 5-30 years 965,134
Aurora, Colorado. . . . 2,674,377 1982 4/1/83 5-30 years 116,950
MULTI-USE COMPLEX:
Boston, Massachusetts
(c)(d) . . . . . . . . 101,406,308 1983 9/1/83 5-30 years 8,089,270
------------ -----------
Total . . . . . . . $149,525,406 10,664,052
============ ===========
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<FN>
---------------
Notes:
(a) The initial cost to the Partnership represents the original purchase price of the properties, including
amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.
(b) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
approximately $84,100,794.
(c) Property operated under air rights; see Note 8(b).
(d) Properties owned and operated by joint ventures; see Note 3.
(e) The Partnership purchased the land underlying Plaza Tower office building in December 1985.
(f) Property sold except for a 1.9 acre parcel; see Note 7(a).
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
(g) Reconciliation of real estate carrying costs:
Balance at beginning of period; see Note 4(b) $ 474,203,190 627,815,579 650,806,083
Additions during period; see Note 7. . . . . 1,796,484 3,188,425 6,144,928
Reductions during period . . . . . . . . . . (46,022,951) (156,800,814) (29,135,432)
------------- ------------ ------------
Balance at end of period . . . . . . . . . . $ 429,976,723 474,203,190 627,815,579
============= ============ ============
(h) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . $ 149,914,951 178,425,639 165,375,392
Depreciation expense . . . . . . . . . . . . 13,753,198 18,343,123 19,490,916
Reductions during period . . . . . . . . . . (14,142,743) (46,853,811) (6,440,669)
------------- ------------ ------------
Balance at end of period . . . . . . . . . . $ 149,525,406 149,914,951 178,425,639
============= ============ ============
</TABLE>
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIII:
We have audited the combined financial statements of JMB/NYC Office
Building Associates, L.P. (JMB/NYC) and unconsolidated ventures as listed
in the accompanying index. In connection with our audits of the combined
financial statements, we also have audited the financial statement schedule
as listed in the accompanying index. These combined financial statements
and financial statement schedule are the responsibility of the General
Partners of Carlyle Real Estate Limited Partnership-XIII (the Partnership).
Our responsibility is to report on these combined financial statements and
financial statement schedule based on the results of our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our report.
In our opinion, 1992 combined financial statements referred to above
present fairly, in all material respects, the results of operations and
cash flows of JMB/NYC and unconsolidated ventures for the year ended
December 31, 1992, in conformity with generally accepted accounting
principles.
As discussed in Note 3 of the Partnership's notes to the consolidated
financial statements, incorporated by reference in Note 2 of the combined
financial statements, beginning July 1, 1993, JMB/NYC was in dispute with
the unaffiliated venture partners in the real estate ventures over the
calculation of the effective interest rate with reference to the first
mortgage loan, which covers the real estate owned through JMB/NYC's joint
ventures. The disputed interest aggregated $52,550,000 and $20,521,000 for
the years ended December 31, 1994 and 1993, respectively, and has not been
included in mortgage and other interest for 1994 or 1993 in the
accompanying combined financial statements. In October 1994, JMB/NYC
entered into an agreement (the Agreement) with the unaffiliated venture
partners in the real estate ventures which, when effective, would resolve
this dispute by providing interest at the same rate as the first mortgage
loan and would eliminate any funding obligations by JMB/NYC. However, as
discussed in Note 3, there are no assurances that the Agreement will be
finalized and become effective. The ultimate outcome of this uncertainty
cannot presently be determined.
The accompanying combined financial statements and financial statement
schedule have been prepared assuming that JMB/NYC and unconsolidated
ventures will continue as going concerns. As discussed in Note 3 of the
Partnership's notes to consolidated financial statements, incorporated by
reference in Note 2 of the combined financial statements, certain of the
unconsolidated ventures have suffered recurring losses from operations and
(Continued)
expect to incur cash flow deficits in the future. Such deficits may be
impacted by the resolution of the matter referred to above. JMB/NYC's
interest in each of the ventures is pledged to secure its obligations under
the joint venture agreements, including its obligations to fund possible
cash flow deficits incurred by the real estate ventures commencing July 1,
1993. There can be no assurance that either the unaffiliated venture
partners or JMB/NYC will be able to fund possible cash flow deficits in the
future. Also, as described in Note 3, the holder of the first mortgage
loan alleged certain defaults under the loan agreements. Further, JMB/NYC
and the unaffiliated venture partners in the real estate ventures have
agreed to file, for each of the real estate joint ventures, a pre-arranged
bankruptcy plan for reorganization under Chapter 11 of the Bankruptcy Code.
Such filings are expected to occur in 1995. These circumstances raise
substantial doubt about JMB/NYC and unconsolidated ventures' ability to
continue as going concerns. The General Partners' plans in regard to these
matters are also described in Note 3 of the Partnership's notes to the
consolidated financial statements. The combined financial statements and
financial statement schedule do not include any adjustments that might
result from the outcome of this uncertainty.
Because of the significance of the uncertainties discussed in the
preceding two paragraphs, we are unable to express and we do not express,
an opinion on the accompanying 1994 and 1993 combined financial statements
and 1994 financial statement schedule.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 27, 1995
<TABLE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES
COMBINED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash (including amounts held by property managers) . . . . . . . $ 1,529,078 839,552
Restricted funds . . . . . . . . . . . . . . . . . . . . . . . . 23,929,599 11,638,258
Rents and other receivables (net of allowance for doubtful
accounts of $8,167,305 for 1994 and $5,777,252 for 1993. . . . 3,234,487 2,985,810
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . 13,918,412 457,098
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . 1,425,723 1,508,043
Tenant notes receivable. . . . . . . . . . . . . . . . . . . . . 154,249 239,445
Due from the O&Y affiliates (net of allowance for uncollectibility
of $13,608,787 at December 31, 1994 and $11,946,284
at December 31, 1993) (note 2) . . . . . . . . . . . . . . . . -- --
-------------- --------------
Total current assets . . . . . . . . . . . . . . . . . . 44,191,548 17,668,206
-------------- --------------
Investment properties, at cost (notes 1, 2 and 3) -- Schedule III:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168,798,314 168,798,314
Buildings and improvements . . . . . . . . . . . . . . . . . . . 956,574,507 954,150,721
-------------- --------------
1,125,372,821 1,122,949,035
Less accumulated depreciation. . . . . . . . . . . . . . . . . . 406,690,418 376,316,140
-------------- --------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . 718,682,403 746,632,895
-------------- --------------
Accrued rents receivable (note 1). . . . . . . . . . . . . . . . . 51,254,978 50,369,613
Deferred expenses (note 1) . . . . . . . . . . . . . . . . . . . . 11,698,403 11,096,044
-------------- --------------
$ 825,827,332 825,766,758
============== ==============
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES
COMBINED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1994 1993
-------------- --------------
Current liabilities:
Current portion of long-term debt (note 3) . . . . . . . . . . . $ 913,398,422 923,041,198
Accounts payable and accrued expenses. . . . . . . . . . . . . . 4,666,201 3,492,409
Tenant allowances payable. . . . . . . . . . . . . . . . . . . . 2,809,707 2,369,373
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . 5,557,267 5,384,407
Unearned rent (note 4) . . . . . . . . . . . . . . . . . . . . . 13,724,100 1,979,375
Interest payable to the O&Y affiliates . . . . . . . . . . . . . 1,570,237 4,570,237
-------------- --------------
Total current liabilities. . . . . . . . . . . . . . . . 941,725,934 940,836,999
Unearned rent (note 4) . . . . . . . . . . . . . . . . . . . . . . 19,704,669 --
Notes payable (note 5) . . . . . . . . . . . . . . . . . . . . . . 34,158,225 34,158,225
Deferred interest payable (note 5) . . . . . . . . . . . . . . . . 93,853,559 78,605,523
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . 1,454,994 1,617,512
-------------- --------------
Commitments and contingencies (notes 1 and 2)
Total liabilities. . . . . . . . . . . . . . . . . . . . 1,090,897,381 1,055,218,259
Partners' capital accounts (deficits) (note 2):
Carlyle-XIII:
Capital contributions. . . . . . . . . . . . . . . . . . . . . 43,728,411 43,728,411
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . (113,168,638) (106,901,970)
Cumulative cash distributions. . . . . . . . . . . . . . . . . (9,373,749) (9,373,749)
-------------- --------------
(78,813,976) (72,547,308)
-------------- --------------
Venture partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . 608,851,666 608,381,190
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . (713,222,989) (683,400,633)
Cumulative cash distributions. . . . . . . . . . . . . . . . . (81,884,750) (81,884,750)
-------------- --------------
(186,256,073) (156,904,193)
-------------- --------------
Total partners' capital accounts (deficit) . . . . . . . (265,070,049) (229,451,501)
-------------- --------------
$ 825,827,332 825,766,758
============== ==============
<FN>
See accompanying notes to combined financial statements.
</TABLE>
<TABLE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . $147,628,786 167,820,507 177,499,667
Interest income . . . . . . . . . . . . . . . . 132,713 181,750 182,425
------------ ------------ ------------
147,761,499 168,002,257 177,682,092
------------ ------------ ------------
Expenses:
Mortgage and other interest (note 3). . . . . . 80,871,590 86,030,245 78,390,256
Depreciation. . . . . . . . . . . . . . . . . . 30,374,278 39,102,045 41,410,478
Property operating expenses . . . . . . . . . . 62,583,682 66,232,722 67,994,678
Professional services . . . . . . . . . . . . . 2,491,222 2,314,088 1,286,443
Amortization of deferred expenses . . . . . . . 2,257,477 2,173,860 2,321,741
Provision for value impairment (note 1) . . . . -- 192,627,560 51,423,084
Provision for doubtful accounts (note 2). . . . 5,272,274 23,497,333 803,717
------------ ------------ ------------
183,850,523 411,977,853 243,630,397
------------ ------------ ------------
Net loss . . . . . . . . . . . . . . . $(36,089,024) (243,975,596) (65,948,305)
============ ============ ============
<FN>
See accompanying notes to combined financial statements.
</TABLE>
<TABLE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
CARLYLE REAL
ESTATE LIMITED VENTURE
PARTNERSHIP-XIII PARTNERS
----------------- ---------------
<S> <C> <C>
Balance at December 31, 1991 . . . . . . . . . . . . . . . $(43,296,035) 137,730,455
Capital contributions. . . . . . . . . . . . . . . . . . . 35,000 15,139,959
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . (7,124,284) (58,824,021)
Cash distributions . . . . . . . . . . . . . . . . . . . . -- (24,000,752)
------------ ------------
Balance at December 31, 1992 . . . . . . . . . . . . . . . (50,385,319) 70,045,641
Capital contributions. . . . . . . . . . . . . . . . . . . 5,000 1,116,010
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . (22,166,989) (221,808,607)
Cash distributions . . . . . . . . . . . . . . . . . . . . -- (6,257,237)
------------ ------------
Balance at December 31, 1993 . . . . . . . . . . . . . . . (72,547,308) (156,904,193)
Capital contributions. . . . . . . . . . . . . . . . . . . -- 470,476
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . (6,266,668) (29,822,356)
Cash distributions . . . . . . . . . . . . . . . . . . . . -- --
------------ ------------
Balance at December 31, 1994 . . . . . . . . . . . . . . . $(78,813,976) (186,256,073)
============ ============
<FN>
See accompanying notes to combined financial statements
</TABLE>
<TABLE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . $(36,089,024) (243,975,596) (65,948,305)
Items not requiring (providing) cash:
Depreciation . . . . . . . . . . . . . . . . 30,374,278 39,102,045 41,410,478
Amortization of deferred expenses. . . . . . 2,257,477 2,173,860 2,321,741
Write-off tenant allowances payable. . . . . (1,337,328) -- --
Provision for value impairment . . . . . . . -- 192,627,560 51,423,084
Provision for doubtful accounts. . . . . . . 5,272,274 23,497,333 803,717
Changes in:
Rents and other receivables. . . . . . . . . (3,858,448) (4,583,255) (192,043)
Prepaid expenses . . . . . . . . . . . . . . (13,461,314) (203,064) (35,972)
Escrow deposits. . . . . . . . . . . . . . . 82,320 (24,494) (11,376)
Tenant notes receivable. . . . . . . . . . . 85,196 238,882 (164,720)
Accrued rents receivable . . . . . . . . . . (885,365) (24,448) 152,092
Interest payable to the O&Y affiliates . . . (3,000,000) 4,570,237 (1,171,214)
Accounts payable and other accrued expenses. 1,173,792 (1,296,990) 621,288
Accrued interest . . . . . . . . . . . . . . 172,860 (50,248) (4,545,929)
Unearned rent. . . . . . . . . . . . . . . . 31,449,394 97,864 (1,869,845)
Deferred interest payable. . . . . . . . . . 15,248,036 13,431,777 11,831,860
Tenant security deposits . . . . . . . . . . (162,518) 133,963 11,376
------------ ------------ ------------
Net cash provided by
operating activities. . . . . . . . . 27,321,630 25,715,426 34,636,232
------------ ------------ ------------
Cash flows from investing activities:
Restricted funds . . . . . . . . . . . . . . . (12,291,341) (11,638,258) --
Additions to investment properties,
net of tenant allowances payable . . . . . . (646,124) (1,785,586) (1,709,278)
Payment of deferred expenses . . . . . . . . . (2,859,836) (1,394,358) (943,675)
------------ ------------ ------------
Net cash used in investing activities . (15,797,301) (14,818,202) (2,652,953)
------------ ------------ ------------
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Cash flows from financing activities:
Capital contributions. . . . . . . . . . . . . 470,476 1,121,010 15,174,959
Advances to the O&Y affiliates . . . . . . . . (1,662,503) (1,176,224) (10,770,060)
Principal payments on long-term debt . . . . . (9,642,776) (8,613,592) (7,694,263)
Distributions to partners. . . . . . . . . . . -- (6,257,237) (24,000,752)
------------ ------------ ------------
Net cash used in
financing activities. . . . . . . . . (10,834,803) (14,926,043) (27,290,116)
------------ ------------ ------------
Net increase (decrease) in cash . . . . 689,526 (4,028,819) 4,693,163
Cash and cash equivalents,
beginning of year . . . . . . . . . . 839,552 4,868,371 175,208
------------ ------------ ------------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . $ 1,529,078 839,552 4,868,371
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . $ 68,450,694 68,078,479 71,104,325
Non-cash investing and financing activities:
Retirement of investment property. . . . $ -- 1,896,898 --
============ ============ ============
<FN>
See accompanying notes to combined financial statements.
</TABLE>
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(1) BASIS OF ACCOUNTING
The accompanying combined financial statements have been prepared for
the purpose of complying with Rule 3.09 of Regulation S-X of the Securities
and Exchange Commission. The entities included in the combined financial
statements are as follows:
JMB/NYC Office Building Associates, L.P. ("JMB/NYC") (a)
- 237 Park Avenue Associates (b)
- 1290 Associates (b)
- 2 Broadway Associates and
2 Broadway Land Company (b)
(a) The Partnership owns an indirect ownership interest in this
unconsolidated venture through Carlyle-XIII Associates, L.P.
(b) The Partnership owns an indirect ownership interest in these joint
ventures through JMB/NYC, an unconsolidated venture.
For purposes of preparing the combined financial statements, the effect of
all transactions between JMB/NYC and the Three Joint Ventures has been
eliminated.
The records of JMB/NYC and the Three Joint Ventures (the "Combined
Ventures") are maintained on the accrual basis of accounting as adjusted
for Federal income tax reporting purposes. The accompanying combined
financial statements have been prepared from such records after making
appropriate adjustments to present the Three Joint Ventures' accounts in
accordance with generally accepted accounting principles. Such adjustments
are not recorded on the records of the Three Joint Ventures.
Statement of Financial Accounting Standards No. 95 requires the
Combined Ventures to present a statement which classifies receipts and
payments according to whether they stem from operating, investing or
financing activities. The required information has been segregated and
accumulated according to the classifications specified in the
pronouncement.
In conjunction with the negotiations with representatives of the first
mortgage lender regarding a loan restructure, 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. Such reserved amounts of approximately
$23,930,000 and $11,638,000, in the aggregate, at December 31, 1994 and
1993, respectively, are classified as restricted funds in the accompanying
combined balance sheet.
Provisions for value impairment (as discussed below) are recorded with
respect to the investment properties whenever the estimated future cash
flows from a property's operations and projected sale are less than the
property's net carrying value.
As more fully discussed in Note 3(c) of Carlyle-XIII's financial
statements filed with this annual report, due to the potential sale of the
2 Broadway building at a sales price significantly below its original
carrying value, net of depreciation, the 2 Broadway venture has made a
provision for value impairment on such investment property of $192,627,560
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
during 1993. The provision for value impairment was allocated $136,534,366
and $56,093,194 to the O&Y 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 related accrued interest.
Due to the uncertainty of the 1290 Associates venture's ability to
recover the net carrying value of the 1290 Avenue of the Americas Building
through future operations and sale, the 1290 Associates venture made a
provision for value impairment on such investment property of $51,423,084.
Such provision at September 30, 1992 was recorded to effectively reduce the
net carrying value of the investment property and the related deferred
expenses to the then outstanding balance of the related non-recourse
financing allocated to the joint venture and its property. This provision
was allocated to the unaffiliated venture partners in accordance with the
terms of the venture agreement (see notes 3 and 5).
In response to persistent operating deficits and vacancy levels at the
2 Broadway Building and due to the uncertainty of the 2 Broadway joint
ventures' ability to recover the net carrying value of the investment
property through future operations and sale, the 2 Broadway joint ventures
made a provision for value impairment on such investment property of
$38,689,928 in 1990. Such provision was recorded to effectively reduce the
net carrying value of the investment property to the then outstanding
balance of the related non-recourse financing allocated to the joint
ventures and their property and was allocated to the unaffiliated venture
partners in accordance with the terms of the venture agreement (see notes 3
and 5).
Amounts due from the Olympia & York affiliates aggregated $13,608,787
and $11,946,284, respectively at December 31, 1994 and 1993. Due to the
financial difficulties of O & Y and its affiliates, as more fully discussed
in Note 3(c) of Carlyle XIII filed with this annual report, and the
resulting uncertainty of collectibility of these amounts from the Olympia &
York affiliates, JMB/NYC has recorded a provision for doubtful accounts for
the full receivable amount, $13,608,787 and $11,946,284, at December 31,
1994 and 1993, respectively, which is reflected in the accompanying
combined financial statements.
Due to the uncertainty of collectibility of amounts due from certain
tenants at the Three Joint Venture investment properties, a provision for
doubtful accounts of $3,609,771, $11,551,049 and $803,717 at December 31,
1994, 1993 and 1992, respectively, is reflected in the accompanying
combined financial statements.
Deferred expenses are comprised of leasing and renting costs which are
amortized using the straight-line method over the terms of the related
leases.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the venture partners rather than the
ventures.
Depreciation on the investment properties has been provided over the
estimated useful lives of 5 to 30 years using the straight-line method.
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
Although certain leases of the Three Joint Ventures' investment
properties provide for tenant occupancy during periods for which no rent is
due, the ventures accrue prorated rental income for the full period of
occupancy. In addition, although certain leases provide for step increases
in rent during the lease term, the ventures recognize the total rent due on
a straight-line basis over the entire lease. Such amounts are reflected in
accrued rents receivable in the accompanying combined balance sheets.
Straight-line rental income (reduction) was $885,365, $24,448 and
$(152,092) for the years ended December 31, 1994, 1993 and 1992,
respectively.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives. An affiliate of the joint venture
partners perform certain maintenance and repair work and construction of
certain tenant improvements at the investment properties.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires entities
with total assets exceeding $150 million at December 31, 1994 to disclose
the SFAS 107 value of all financial assets and liabilities for which it is
practicable to estimate. Value is defined in the Statement as the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The Combined
Ventures believe the carrying amount of its financial instruments
classified as current assets and liabilities (excluding current portion of
long-term debt) approximates SFAS 107 value due to the relatively short
maturity of these instruments. SFAS 107 states that quoted market prices
are the best evidence of the SFAS 107 value of financial instruments, even
for instruments traded only in thin markets. The first mortgage loan is
evidenced by certain bonds which are traded in extremely thin markets. As
of December 31, 1994 and through the date of this report, a limited number
of bonds have been sold and purchased in transactions arranged by brokers
for amounts ranging from approximately $.58 to $.60 on the dollar.
Assuming a rate of $.58 on the dollar, the implied SFAS 107 value of the
bonds (with an aggregate carrying balance of $913,398,422, in the
accompanying combined financial statements) would be approximately
$530,000,000. Due to the significant discount at which the bonds are
currently trading, the SFAS 107 value of the promissory notes payable and
related deferred interest (aggregating $128,011,784) which are effectively
subordinated to the repayment of the bonds, would be at a discount
significantly greater than that at which the bonds are currently traded.
Due to, among other things, the likely inability to obtain comparable
financing under current market conditions and other property specific
competitive conditions, and the unresolved issues with the venture partners
as well as the alleged defaults on the first mortgage loan, the Combined
Ventures would likely be unable to refinance these properties to obtain
such calculated debt amounts reported (see notes 3 and 5). The Combined
Ventures have no other significant financial instruments.
(2) VENTURE AGREEMENTS
A description of the venture agreements is contained in Note 3(c) of
Notes to Financial Statements filed with this annual report. Such note is
incorporated herein by reference.
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
(3) LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1994 and
1993:
1994 1993
------------ ------------
First mortgage loan bearing interest
at the short-term U.S. Treasury
obligation note rate plus 1-3/4%
with a minimum rate on the loan of
7% per annum; allocated among and
cross-collaterally secured by
the 237 Park Avenue Building,
1290 Avenue of the Americas
Building, 2 Broadway Land and
2 Broadway Building; payments of
principal and interest based
upon a 30-year amortization
schedule are due monthly, however,
commencing on a date six months
following the attainment of a
certain level of annualized cash
flow, any interest in excess of
12% per annum may be accrued,
to the extent that monthly cash
flow is insufficient to pay the
full monthly debt service, by
adding such deferred amount to
the outstanding balance of the
loan; the loan is in alleged
default at December 31, 1993 and
1994 (Reference is made to
Note 3(c) of Notes to Carlyle
Real Estate Limited Partner-
ship-XIII Financial Statements
filed with this annual report as
to the calculation of interest
rate with reference to this
first mortgage loan); the stated
maturity of principal of
$857,784,000 and accrued interest
is March 1999 . . . . . . . . . . . $913,398,422 923,041,198
Less current portion of
long-term debt . . . . . . . . . 913,398,422 923,041,198
------------ -----------
Total long-term debt . . . $ -- --
============ ===========
The allocation of the first mortgage loan among the joint ventures
(which is non-recourse to the joint ventures) is as follows:
1994 1993
------------ ------------
237 Park Avenue Associates. . . $365,278,508 214,107,494
1290 Avenue Associates. . . . . 548,119,914 453,194,197
2 Broadway Land Company . . . . -- 17,842,291
2 Broadway Associates . . . . . -- 237,897,216
------------ ------------
$913,398,422 923,041,198
============ ============
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
(4) LEASES
At December 31, 1994, the properties in the combined group consisted
of three office buildings. All leases relating to the properties are
properly classified as operating leases; therefore, rental income is
reported when earned and the cost of each of the properties, excluding the
cost of land, is depreciated over the estimated useful lives. Leases with
commercial tenants range in term from one to 25 years and provide for fixed
minimum rent and partial to full reimbursement of operating costs.
Affiliates of the joint venture partners have lease agreements and occupy
approximately 95,000 square feet of space at 237 Park Avenue at rental
rates which approximate market. During 1993 and 1992, 2 Broadway
Associates collected $4,781,158 and $6,069,444 of a total $13,040,601 bank-
ruptcy claim against Drexel Burnham Lambert, a former tenant of the 2
Broadway Building and is included in rental income in the 1993 and 1992
accompanying combined income statement. All remaining claims against
Drexel Burnham Lambert were sold during 1993.
During the fourth quarter of 1994, the Partnership negotiated an
amendment with a tenant at 1290 Avenue of the Americas, Deutsche Bank
Financial Products Corporation, under which the tenant will surrender space
on the 12th and 13th 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 8th and 9th floors (44,360 square feet or approximately
2% of the building's 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. (a tenant at 1290 Avenue of the Americas, which had
leased 253,193 square feet or approximately 13% of the building's leasable
space) filed for Chapter 11 bankruptcy protection in 1993. Because much of
the John Blair space had been subleased, the Joint Venture had been
collecting approximately 70% of the monthly rent due from John Blair from
the subtenants. Due to the uncertainty regarding the collection of the
balance of the monthly rents from John Blair, a provision for doubtful
accounts related to rents and other receivables and accrued rents
receivable aggregating $7,659,366 was recorded at December 31, 1993 related
to this tenant. During the 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. The Partnership is
amortizing the Deutsche Bank and John Blair lease termination fees over the
remaining terms of the amended lease and leases with former subtenants,
respectively.
Minimum lease payments including amounts representing executory costs
(e.g., taxes, maintenance, insurance), and any related profit in excess of
specific reimbursements, to be received in the future under the above
operating commercial lease agreements, are as follows:
1995. . . . . . . .$100,230,042
1996. . . . . . . . 90,547,908
1997. . . . . . . . 86,550,481
1998. . . . . . . . 80,991,098
1999. . . . . . . . 67,031,056
Thereafter. . . . . 332,342,740
------------
$757,693,325
============
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
(5) NOTES PAYABLE
Notes payable consist of the following at December 31, 1994 and 1993:
1994 1993
------------ -----------
Promissory notes payable to an
affiliate of the unaffiliated
venture partners in the Three
Joint Ventures, bearing interest
at 12.75% per annum; cross-
collaterally secured by JMB/NYC's
interest in the Three Joint Ventures,
one of which is additionally secured
by $19,000,000 of distributable
proceeds from two of the Three
Joint Ventures; interest accrues
and is deferred, compounded monthly,
until December 31, 1991; monthly
payments of accrued interest,
based upon the level of distributions
to JMB/NYC, thereafter until maturity;
principal and accrued interest due
March 20, 1999. Accrued deferred
interest of $93,853,559 and $78,605,523
is outstanding at December 31, 1994
and 1993, respectively. . . . . . . $34,158,225 34,158,225
----------- ----------
Less current portion
of notes payable. . . . . . . -- --
----------- ----------
Long-term notes payable . . . . $34,158,225 34,158,225
=========== ==========
The allocation of the promissory notes and related deferred interest
among the joint ventures is as follows:
1994 1993
----------- -----------
237 Park Avenue Associates. . . $ 16,917,580 14,902,454
1290 Associates . . . . . . . . 36,570,561 32,214,484
2 Broadway Land Company . . . . 3,266,254 2,877,196
2 Broadway Associates . . . . . 71,257,389 62,769,614
------------ -----------
$128,011,784 112,763,748
============ ===========
<TABLE>
SCHEDULE III
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
UNCONSOLIDATED VENTURES(A)TO ACQUISITION AT CLOSE OF PERIOD (B)
--------------------------------------------------------------------------------
BUILDINGS BUILDINGS
AND BUILDINGS AND AND
DESCRIPTION ENCUMBRANCE(C) LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (E)
------------------------- ----------- -------------------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE
BUILDINGS:
New York,
New York
(237 Park
Avenue) . . .$365,278,508 79,653,996 226,634,894 1,296,500 79,653,996 227,931,394 307,585,390
New York,
New York
(1290 Avenue
of the
Americas) . .548,119,914 90,952,993 556,434,718 (7,467,864) 84,285,719 555,634,128 639,919,847
New York,
New York
(2 Broadway). -- 26,421,677 378,445,199 (226,999,292) 4,858,599 173,008,985 177,867,584
------------ ----------- ------------- ------------ ----------- ----------- -------------
Total . ..$913,398,422 197,028,666 1,161,514,811 (233,170,656) 168,798,314 956,574,507 1,125,372,821
============ =========== ============= ============ =========== =========== =============
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1994
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DESCRIPTION DEPRECIATION(F) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
----------- ---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OFFICE BUILDINGS:
New York, New York
(237 Park Avenue). . $ 78,638,559 1981 8/14/84 5-30 years 9,554,894
New York, New York
(1290 Avenue of
the Americas). . . . 208,466,699 1963 7/27/84 5-30 years 19,267,433
New York, New York
(2 Broadway) . . . . 119,582,973 1959 8/14/84 5-30 years 8,137,451
------------ ----------
Total. . . . . . . $406,690,418 36,959,778
============ ==========
<FN>
-----------------
Notes:
(A) The initial cost represents the original purchase price of the property, including amounts incurred
subsequent to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
$1,362,619,128.
(C) Reference is made to Note 5 of Combined Financial Statements for the current outstanding principal balances
and a description of the notes payable secured by JMB/NYC's interests in the Three Joint Ventures which are not
included in the amounts stated above.
(D) Includes provision for value impairment at 2 Broadway of $192,144,503 recorded December 31, 1993, 1290
Avenue of the Americas of $50,446,010 recorded September 30, 1992 and 2 Broadway of $38,689,928 recorded December 31,
1990. See Note 1 of Notes to Combined Financial Statements for further discussion.
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(E) Reconciliation of real estate owned:
<CAPTION>
1994 1993 1992
-------------- -------------- -------------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . $1,122,949,035 1,316,389,393 1,366,280,363
Additions during period. . . . . . . . . . . 2,423,786 601,043 555,040
Provision for value impairment . . . . . . . -- (192,144,503) (50,446,010)
Retirements during period. . . . . . . . . . -- (1,896,898) --
-------------- ------------- -------------
Balance at end of period . . . . . . . . . . $1,125,372,821 1,122,949,035 1,316,389,393
============== ============= =============
(F) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . $ 376,316,140 339,110,993 297,700,515
Depreciation expense . . . . . . . . . . . . 30,374,278 39,102,045 41,410,478
Retirements during period. . . . . . . . . . -- (1,896,898) --
-------------- ------------- -------------
Balance at end of period . . . . . . . . . . $ 406,690,418 376,316,140 339,110,993
============== ============= =============
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
There were no changes in or disagreements with accountants during
fiscal year 1994 and 1993.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. The outstanding shares of JMB
are owned by certain of its officers and directors and members of their
families. JMB as the Corporate General Partner has responsibility for all
aspects of the Partnership's operations, subject to the requirement that
sales of real property must be approved by the Associate General Partner of
the Partnership, Realty Associates-XIII L.P., an Illinois Limited
Partnership with JMB as the sole general partner. The Associate General
Partner shall be directed by a majority in interest of its limited partners
(who are generally officers, directors and affiliates of JMB or its
affiliates) as to whether to provide its approval of any sale of real
property (or any interest therein) of the Partnership. The Partnership is
subject to certain conflicts of interest arising out of its relationships
with the General Partners and their affiliates as well as the fact that the
General Partners and their affiliates are engaged in a range of real estate
activities. Certain services have been and may in the future be provided
to the Partnership or its investment properties by affiliates of the
General Partners, including property management services and insurance
brokerage services. In general, such services are to be provided on terms
no less favorable to the Partnership than could be obtained from
independent third parties and are otherwise subject to conditions and
restrictions contained in the Partnership Agreement. The Partnership
Agreement permits the General Partners and their affiliates to provide
services to, and otherwise deal and do business with, persons who may be
engaged in transactions with the Partnership, and permits the Partnership
to borrow from, purchase goods and services from, and otherwise to do
business with, persons doing business with the General Partners or their
affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.
The names, positions held and length of service therein of each
director and executive officer and certain officers of the Corporate
General Partner of the Partnership are as follows:
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
H. Rigel Barber Chief Executive Officer 8/01/93
Executive Vice President 1/02/87
Douglas Cameron Executive Vice President 1/01/95
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Jeffrey R. Rosenthal Chief Financial Officer 8/01/93
Managing Director - Corporate4/22/91
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Ira J. Schulman Executive Vice President 6/01/88
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve one-year
terms until the annual meeting of the Corporate General Partner to be held
on June 7, 1995. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 7,
1995. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the Corporate General Partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV
("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-
XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB
Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage Partners,
Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB
Income Properties, Ltd.-VIII ("JMB Income-VIII"), JMB Income Properties,
Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-X ("JMB Income-X"),
JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB Income Properties,
Ltd.-XII ("JMB Income-XII"), and JMB Income Properties, Ltd.-XIII ("JMB
Income-XIII"). Most of the foregoing directors and officers are also
officers and/or directors of various affiliated companies of JMB including
Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.
("Arvida")), Arvida/JMB Managers-II, Inc. (the general partner of
Arvida/JMB Partners, L.P.-II ("Arvida-II")), and Income Growth Managers,
Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd.
("IDS/BIG")). Most of such directors and officers are also partners,
directly or indirectly, of certain partnerships which are associate general
partners in the following real estate limited partnerships: the
Partnership, Carlyle-VII, Carlyle-IX, Carlyle-X, Carlyle-XI, Carlyle-XII,
Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB Income-VI, JMB
Income-VII, JMB Income-VIII, JMB Income-IX, JMB Income-X, JMB Income-XI,
JMB Income-XII, JMB Income-XIII, Mortgage Partners, Mortgage Partners-II,
Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle
Income Plus-II and IDS/BIG.
The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 57) is an individual general partner of JMB
Income-II, JMB Income-IV and JMB Income-V. Mr. Malkin has been associated
with JMB since October, 1969. Mr. Malkin is a director of Urban Shopping
Centers, Inc., an affiliate of JMB that is a real estate investment trust
in the business of owning, managing and developing shopping centers, and a
director of Catellus Development Corporation, a major diversified real
estate development company. He is a Certified Public Accountant.
Neil G. Bluhm (age 57) is an individual general partner of JMB
Income-II, JMB Income-IV and JMB Income-V. Mr. Bluhm has been associated
with JMB since August, 1970. Mr. Bluhm is a director of Urban Shopping
Centers, Inc., an affiliate of JMB that is a real estate investment trust
in the business of owning, managing and developing shopping centers. He is
a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Burton E. Glazov (age 56) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Stuart C. Nathan (age 53) has been associated with JMB since July,
1972. Mr. Nathan is a director of Sportmart, Inc., a retailer of sporting
goods. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 61) (President of JMB Insurance Agency, Inc.) has
been associated with JMB since December, 1972.
John G. Schreiber (age 48) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc. a
company which is engaged in the real estate investing business. He is also
a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. Since 1994, Mr. Schreiber has
also served as a Trustee of Amli Residential Property Trust, a publicly-
traded real estate investment trust that invests in multi-family
properties. He is also a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers as well as a director for
a number of investment companies advised or managed by T. Rowe Price
Associates and its affiliates. Mr. Schreiber holds a Masters degree in
Business Administration from Harvard University Graduate School of
Business.
H. Rigel Barber (age 45) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Douglas Cameron (age 45) has been associated with JMB since April,
1977. Prior to becoming Executive Vice President of JMB in 1995, Mr.
Cameron was Managing Director of Capital Markets -- Property Sales from
June 1990. He holds a Masters degree in Business Administration from the
University of Southern California.
Glenn E. Emig (age 47) has been associated with JMB since December
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Jeffrey R. Rosenthal (age 43) has been associated with JMB since
December, 1987. He is a Certified Public Accountant.
Gary Nickele (age 42) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Ira J. Schulman (age 43) has been associated with JMB since February,
1983. He holds a Masters degree in Business Administration from the
University of Pittsburgh.
Gailen J. Hull (age 46) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 59) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Limited Partners, and a
share of profits or losses. Reference is made to Notes 5 and 9 for a
description of such distributions and allocations. In 1994, 1993 and 1992,
the General Partners received distributions of $0, $0 and $7,629,
respectively, and the Corporate General Partner received a management fee
of $0, $0, and $12,715, respectively. The General Partners received a
share of Partnership gains for tax purposes aggregating $3,984,272 in 1994,
$4,121,438 in 1993 and losses aggregating, $1,598,313 in 1992,
respectively. Such losses may benefit the General Partners (or the
partners thereof) to the extent that such losses may be offset against
taxable income from the Partnership or other sources.
The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership,
as described in note 9. The relationship of the Corporate General Partner
(and its directors and officers) to its affiliates is set forth above in
Item 10.
An affiliate of the Corporate General Partner provided property
management services for all or part of 1994 for the University Park office
building in Sacramento, California, the Plaza Tower office building in
Knoxville, Tennessee, the Long Beach Plaza in Long Beach, California, the
Eastridge Apartments in Tucson, Arizona, the Copley Place multi-use complex
in Boston, Massachusetts, the Gables Corporate Plaza in Coral Gables,
Florida, and the Sherry Lane Place office building in Dallas, Texas at
various fees calculated based upon the gross income from the properties.
In 1994, such affiliate earned property management and leasing fees
amounting to $1,195,147 for such services. The cumulative amount of
property management and leasing fees owed to an affiliate of the Corporate
General Partner as of December 31, 1994 was $12,922,393. Reference is made
to note 9 and 11(b). As set forth in the Partnership Agreement, the
Corporate General Partner must negotiate such agreements on terms no less
favorable to the Partnership than those customarily charged for similar
services in the relevant geographical area (but in no event at rates
greater than 6% of the gross income from a property), and such agreements
must be terminable by either party thereto, without penalty, upon 60 days'
notice.
JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned insurance brokerage commissions in 1994 aggregating $55,542
in connection with the providing of insurance coverage for certain of the
real property investments of the Partnership, all of which was paid at
December 31, 1994. Such commissions are at rates set by insurance
companies for the classes of coverage provided.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses and salaries
and related salary expenses relating to the administration of the
Partnership and the acquisition and operation of the Partnership's real
property investments. In 1994, the Corporate General Partner of the
Partnership was due reimbursement for such out-of-pocket expenses in the
amount of $71,147, all of which was paid at December 31, 1994. The General
Partners are also entitled to reimbursements for legal and accounting
services. Such costs for 1994 were $20,977 and $220,159, respectively, all
of which were paid as of December 31, 1994. Additionally, accrued interest
of approximately $3,597,000 relating to the deficit loans at Copley Place,
was paid to an affiliate of the Corporate General Partner during 1994.
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Corporate General Partner and its officers and directors own the following Interests of the
Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
-------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests JMB Realty Corporation 100 Interests directly Less than 1%
Limited Partnership
Interests Corporate General 100 Interests directly (1) Less than 1%
Partner and its
officers and directors
as a group
<FN>
(1) Includes 1.79 Interests owned by officers or their relatives for which each officer has investment and
voting power as to such Interests so owned.
No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires the General
Partners, the executive officers and directors of the Corporate General Partner and persons who own more than ten
percent of the Interests to file an initial report of ownership or changes in ownership of Interests on Form 3, 4
or 5 with the Securities Exchange Commission (the "SEC"). Such persons are also required by SEC rules to furnish
the Partnership with copies of all section 16(a) forms they file. Timely filing of an initial report of ownership
on Form 3 or Form 5 was not made on behalf of Glenn Emig.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) Exhibits.
3.* Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, and which is hereby
incorporated by reference.
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
herein by reference.
4-D.*Documents relating to the modification of the
mortgage loan secured by the Copley Place multi-use complex are hereby
incorporated herein by reference.
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 filed herewith.
10-F.Agreement of Limited Partnership of Carlyle-XIII
Associates L.P. is hereby incorporated by reference to the Partnership's
Report on Form 10-Q (File No. 0-12791) dated May 14, 1993.
10-G.Documents relating to the sale by the Partnership
of its interest in the Rio Cancion Apartments in Tucson, Arizona, are
herein incorporated by reference to the Partnership's Report on Form 8-K
(File No. 0-12791) for March 31, 1993, dated May 14, 1993.
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 hereby incorporated
herein by reference to the Partnership's report on Form 10-K (File No. 0-
12791) for December 31, 1993 dated March 28, 1994.
10-K.Amended and Restated Certificate of Incorporation
of Carlyle-XIV Managers, Inc., are hereby incorporated herein by reference
to the Partnership's report on Form 10-K (File No. 0-12791) for December
31, 1993 dated March 28, 1994.
10-L.Amended and Restated Certificate of Incorporation
of Carlyle-XIII Managers, Inc., are hereby incorporated herein by reference
to the Partnership's report on Form 10-K (File No. 0-12791) for December
31, 1993 dated March 28, 1994.
10-M.$600,000 demand note between Carlyle-XIII
Associates, L.P. and Carlyle Managers, Inc., are hereby incorporated herein
by reference to the Partnership's report on Form 10-K (File No. 0-12791)
for December 31, 1993 dated March 28, 1994.
10-N.$600,000 demand note between Carlyle-XIII
Associates, L.P. and Carlyle Investors, Inc., are hereby incorporated
herein by reference to the Partnership's report on Form 10-K (File No. 0-
12791) for December 31, 1993 dated March 28, 1994.
10-O.Settlement Agreement between Gables Corporate
Plaza Associates and Aetna Life Insurance Company, are hereby incorporated
herein by reference to the Partnership's report on Form 10-K (File No. 0-
12791) for December 31, 1993 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 hereby incorporated by
reference to the Partnership's report on Form 10-Q (File No. 0-12791) for
March 31, 1994 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 June 30, 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, copies of which are filed herewith.
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., copies of which are filed herewith.
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, copies of which are filed herewith.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule.
Although certain additional long-term debt instruments
of the Registrant have been excluded from Exhibit 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such agreements
to the SEC upon request.
(b) No reports on Form 8-K were filed since the beginning
of the last quarter of the period covered by this report.
----------------
* Previously filed as Exhibits 3, 4-C and 4-D, respectively, to
the Partnership's Report for December 31, 1992 on Form 10-K to the
Securities Exchange Act of 1934 (File No. 0-12791) dated March 30, 1993 are
hereby incorporated herein by reference.
No annual report or proxy material for the fiscal year 1994 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
By: JMB Realty Corporation
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Corporate General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and Director
Date: March 27, 1995
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 27, 1995
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 27, 1995
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 27, 1995
JEFFREY R. ROSENTHAL*
By: Jeffrey R. Rosenthal, Chief Financial Officer
Principal Financial Officer
Date: March 27, 1995
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 27, 1995
By: A. LEE SACKS*
A. Lee Sacks, Director
Date: March 27, 1995
By: STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 27, 1995
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 27, 1995
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
EXHIBIT INDEX
Document
Incorporated
By Reference Page
------------ ----
3. Amended and Restated Agreement of
Limited Partnership set forth as
Exhibit A to the Prospectus Yes
4-A. Mortgage loan documents secured by the
1001 Fourth Avenue Plaza Yes
4-B. Mortgage loan documents secured by the
Copley Place multi-use complex Yes
4-C. Remodification of mortgage loan documents
secured by 1001 Fourth Avenue Plaza Yes
4-D. Remodification of mortgage loan documents
secured by Copley Place multi-use complex.Yes
10-A. Acquisition documents related to the
1001 Fourth Avenue Plaza Yes
10-B. Acquisition documents related to the
Copley Place multi-use complex Yes
10-C. Documents related to the sale of Allied
Automotive Center. Yes
10-D. Documents related to the transferred
title of Commercial Union Office Building Yes
10-E. Agreement relating to JMB/NYC's deficit
funding obligations from January 1, 1992
through June 30, 1993. Yes
10-F. Agreement of Limited Partnership of
Carlyle-XIII Associates L.P. Yes
10-G. Documents relating to the sale by
the Partnership of its interest in
the Rio Cancion Apartments Yes
10-H. Documents relating to the sale of
its interest in the Old Orchard
Urban Venture Yes
10-I. Documents related to the transferred
title to the Commercial Union Office
Building Yes
10-J. Second Amended and Restated Articles
of Partnership of JMB/NYC Office
Building Associates Yes
10-K. Amended and Restated Certificate
of Incorporation of Carlyle-XIV
Managers, Inc. Yes
10-L. Amended and Restated Certificate
of Incorporation of Carlyle-XIII
Managers, Inc. Yes
10-M. $600,000 demand note between
Carlyle-XIII Associates, Ltd. and
Carlyle Managers, Inc. Yes
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
EXHIBIT INDEX - CONTINUED
Document
Incorporated
By Reference Page
------------ ----
10-N. $600,000 demand note between
Carlyle-XIII Associates, Ltd. and
Carlyle Investors, Inc. Yes
10-O. Settlement Agreement between Gables
Corporate Plaza Associates and Aetna
Life Insurance Company Yes
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 Yes
10-Q. Documents relating to the sale
by the Partnership of its interest
in the Eastridge Apartments Yes
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 No
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. No
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 No
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
------------------
* Previously filed as exhibits to the Partnership's Registration
Statement on Form S-11 (as amended) under the Securities Exchange Act of
1933 and the Partnership's prior Reports on Form 8-K and Form 10-K of the
Securities Exchange Act of 1934.
October 14, 1994
Mr. John Moore
Olympia & York
237 Park Avenue
New York, New York 10017
Re: Proposed Restructure of Two Broadway,
1290 Avenue of the Americas and
237 Park Avenue, New York, New York
Dear John:
This letter summarizes the general terms and
conditions of certain agreements among O&Y Equity Company,
L.P. ("Equity"), O&Y NY Building Corp. ("Building Corp"
and, together with Equity, "O&Y") and JMB/NYC Office
Building Associates, L.P. ("JMB") with respect to the New
York partnerships named 1290 Associates ("1290"), 237 Park
Avenue Associates ("237"), 2 Broadway Associates ("2
Broadway Building") and 2 Broadway Land Company ("2
Broadway Land"). 1290, 237, 2 Broadway Building and 2
Broadway Land will be collectively herein called the
"Partnerships". Such agreements are as follows:
Mr. John Moore
October 14, 1994
Page 2
1. As soon as practicable and, in any event, prior
to the bankruptcy filing described in the Summary of Terms
referred to in paragraph 3 below:
(a) O&Y and JMB will assume (subject to the
limitation on liability described in the next sentence),
as partners in 2 Broadway Building and 2 Broadway Land, in
the amounts set forth below, that portion of those certain
floating rate notes ("Bondholder Debt") in the original
principal amount of $970,000,000 (secured by a mortgage
covering property of each of the Partnerships) which is
allocable to 2 Broadway Building and 2 Broadway Land,
respectively. The amount of the Bondholders Debt assumed
by O&Y and JMB as aforesaid will be as follows:
Bondholder Debt
Bondholder Debt
Allocable to 2 Allocable
to 2
Broadway Building Broadway
Land
Equity $ 93,345,927. 00 $ 7,000,945.00
Building Corp. 6,734,375.00 505,078.00
JMB 135,979,509.00 10,198,463.00
$236,059,811. 00 $17,704,486.00
The respective liability of O&Y and JMB by reason of
such assumption will be limited to their respective equity
interests in 237 and 1290 and neither O&Y nor JMB shall
have any personal liability in connection with the
Bondholder Debt.
Mr. John Moore
October 14, 1994
Page 3
(b) Immediately following the assumption of
indebtedness described in subsection (a) above, 237 and
1290 will assume, for the benefit of O&Y and JMB, that
portion of the Bondholder Debt that had been assumed by
O&Y and JMB pursuant to subsection (a) above. The portion
of the Bondholder Debt assumed by 237 and 1290 as
aforesaid will be $153,764,297 by 237 and $100,000,000 by
1290. The liability of 237 and 1290 under the assumption
of Bondholder Debt pursuant to this subsection (b) will be
limited to 237's and 1290's respective interests in the
property subject to the Bondholder Debt and neither 237 or
1290 nor any partner in either shall have any personal
liability in connection with the Bondholder Debt.
2. O&Y and JMB, as partners in the Partnership and
the "Conversion Partnerships" (as defined in paragraph 5
hereof), and on behalf of themselves and their respective
affiliates, successors and assigns, agree that:
(a) the result of the transactions described in
paragraph 1 above will be, among other things, that O&Y
and JMB will be deemed to have made capital contributions
to 2 Broadway Building and 2 Broadway Land in an amount
equal to the respective
amounts of the Bondholder Debt that they assume pursuant
to
Mr. John Moore
October 14, 1994
Page 4
paragraph 1(a) above and that such capital Contributions
will no way be deemed to be reduced or otherwise affected
by the limitation of the liability of O&Y or JMB or the
assumption or such Bondholder Debt by 237 and 1290
described in said paragraph 1 or any of the other
transactions or events described in said paragraph 1;
(b) By reason of the deemed capital contributions to
2 Broadway Building and 2 Broadway Land as hereinabove set
forth, (i) the capital accounts of O&Y and JMB in 2
Broadway Building and 2 Broadway Land will be increased by
the amount of their respective deemed contributions, and
(ii) the deficit, if any, in the capital accounts of O&Y
or JMB in 2 Broadway Building or 2 Broadway Land will be
eliminated for all purposes of 2 Broadway Building and 2
Broadway Land and the respective partnership agreements
for the same; by reason of the assumption of such
Bondholder Debt by 237 and 1290 as aforesaid, the capital
accounts of O&Y and JMB in 237 and 1290, respectively,
shall be reduced by the amount of the Bondholder Debt
assumed by such Partnership for the benefit of such
partner as aforesaid, i.e., the Bondholder Debt assumed by
O&Y or JMB, as the case may be, as set forth in paragraph
l(a) hereof that is assumed in turn by such Partnership as
set forth in paragraph 1(b) hereof;
Mr. John Moore
October 14, 1994
Page 5
(c) following the sale of assets of 2 Broadway
Building and 2 Broadway Land or of the Conversion
Partnerships which are successors to 2 Broadway Building
and 2 Broadway Land (whether or not pursuant to the
"Purchase Agreement" described in paragraph 6 hereof),
neither O&Y nor JMB will have a negative balance in its
capital account in any of such Partnerships or Conversion
Partnerships and accordingly, even if such Partnerships of
Conversion Partnerships are liquidated following such
sale, neither O&Y nor JMB will have any obligation to make
a contribution to such Partnerships or Conversion
Partnerships by reason of any provision in the partnership
agreement of such Partnerships or Conversion Partnerships
(including, but not limited to, Section 8.8 of the
partnership agreements for 2 Broadway Building and 2
Broadway Land or similar provision in the partnership
agreements for such Conversion Partnerships or
requirements of law or otherwise) to the effect that a
partner in a partnership having a negative balance in its
capital account is obligated, upon the dissolution or
liquidation of such partnership, to contribute to such
partnership an amount equal to all or a portion of such
negative balance; (d) none of the transactions described
or referred to in this letter or the Summary of Terms
referred to in paragraph 3
Mr. John Moore
October 14, 1994
Page 6
hereof, and whether such transactions are considered
individually or collectively, will be deemed to have
caused or resulted in the dissolution or liquidation of
237, 1290, 2 Broadway Building, 2 Broadway Land or the
Conversion Partnerships. Accordingly, in addition to the
matters set forth in Subsection (c) above, none of such
transactions will have the effect of causing or resulting
in any obligation ("Deficit Restoration Obligation") of a
partner in a Partnership or Conversion Partnership having
a negative balance in its capital account in such
Partnership or Conversion Partnership to make a
contribution to such Partnership (whether pursuant to
Section 8.8 of the partnership agreement for each of the
Partnerships or similar provision in the partnership
agreements for the Conversion Partnerships or requirement
of law or otherwise);
(e) the parties acknowledge that no event has
ever occurred to the date of this letter which has caused
or resulted in a Deficit Restoration Obligation of any
present or past partner with respect to any of the
Partnerships.
3. The parties approve the Summary of Terms dated
October 14, 1994, a copy of which is attached to this
letter as such Summary of Terms is supplemented by this
letter.
Mr. John Moore
October 14, 1994
Page 7
4. Even if the Plan referred to in the Summary of
Terms is not consummated or there is no approval by the
bankruptcy court or the creditors of the Partnerships of
the elimination of the Deficit Restoration Obligation, O&Y
and JMB each agrees, effective upon the bankruptcy filing
referred to in paragraph 3 of the Summary of Terms, that
neither it nor any of its affiliates, successors or
assigns will at any time assert that another partner has a
Deficit Restoration Obligation under the partnership
agreement of any Partnership, Conversion Partnerships or
"New Partnership" (as defined in the Summary of Terms),
regardless of the facts or circumstances, including, but
not limited to, a liquidation of such Partnership or
Conversion Partnership or New Partnership and a negative
capital account of a partner at the time of such
liquidation. The agreement of the parties under the
foregoing sentence will be deemed canceled in the event
JMB fails (i) to enter into the modifications any releases
contemplated by Sections 1 and 2 of the Summary of
Terms, or (ii) to fulfill its obligations under Section 3
of the summary of Terms to vote to accept the Plan, and to
execute such documents as are required to be executed by
it pursuant to the Restructuring Proposal and consistent
with the contemplated Plan as a partner in each
Partnership, Conversion Partnership or New
Mr. John Moore
October 14, 1994
Page 8
Partnership, and to take such other actions reasonably
requested by O&Y in connection with the Restructuring
Proposal, so long as the same do not adversely affect
JMB's rights and interests as otherwise contemplated by
this letter and the Summary of Terms.
5. At JMB's option, prior to the bankruptcy filing,
the assets of the Partnerships will be conveyed to newly
formed Delaware limited partnerships ("Conversion
Partnerships") which O&Y or an affiliate of O&Y will be
the 1% general partner and O&Y and JMB will be the limited
partners, but which otherwise will have provisions,
ownership and interests which are, in substance, the same
as contemplated for the Partnerships (after the changes
referred to in this letter and Section 1 of the Summary of
Terms are made). If the Conversion Partnerships are
formed, then the New Partnerships will be amended and
restated versions of the relevant Conversion Partnerships
(and the transfers to 2 Bway L.P., 237 L.P. and 1290 L.P.
referred to in Sections 5(a) and 5(b) of the Summary of
Terms will not be necessary).
6. (a) O&Y has executed on behalf of 2 Broadway
Land and 2 Broadway building, as sellers, a purchase and
sale agreement
Mr. John Moore
October 14, 19 94
Page 9
("Purchase Agreement") dated July, 1994 with Ben Ploiny,
Inc. ("Purchaser"), as buyer, providing for the sale of
the land and building and related assets of such sellers.
The Purchase Agreement provides in part that it will not
be effective unless JMB executes the same on behalf of
such sellers on or before August 25, 1994 (as such date
has been or may be extended). JMB agrees that it will
execute the Purchase Agreement on behalf of such sellers
as a general partner thereof and will execute such other
documents as a general partner in 2 Broadway Land and 2
Broadway Building as O&Y reasonably requests (so long as
the same do not impose any recourse liability on JMB nor
reduce any of its
rights and interests as contemplated by this letter
agreement and the Summary of Terms).
(b) Olympia & York Massachusetts Financial Company
("MassFin"), an affiliate of O&Y, has obtained or will
obtain a consent by Citibank, N.A., as pledgee of the "JMB
Notes" described in paragraph 6 of the Summary of Terms,
to the amendment of the JMB Notes and the substitution of
collateral with respect thereto described in the Summary
of Terms, such consent ("Consent") being substantially in
the form attached to this letter. The Consent provides,
among other things, that the
Mr. John Moore
October 14, 1994
Page 10
same may not be modified, terminated or rescinded without
the prior approval of MassFin. O&Y hereby agrees that
neither MassFin nor any of its successors or assigns will
agree to any such modification, termination or rescission
without the prior written approval of JMB (and O&Y will
prevent MassFin and its successors and assigns from so
doing).
The provisions of paragraphs 1, 2, 4 and 6 hereof are
final and binding upon the parties. The parties
understand that, except for said paragraphs 1, 2, 4 and 6,
this letter sets forth in summary fashion the terms and
conditions of certain agreements in principle and (i) does
not represent a commitment of any kind or waiver or
relinquishment of any of the rights, remedies, claims or
collateral of O&Y or JMB; and (ii) is subject in all
respects to the execution of final definitive
documentation. Matters not covered by this letter are
subject to further discussion.
If this letter sets forth our mutual understanding,
then please so indicate by signing a copy of this letter
at the place indicated below.
Mr. John Moore
October 14, 1994
Page 11
Yours very truly,
JMB/NYC OFFICE BUILDING
ASSOCIATES,
L P.
By: Carlyle Managers, Inc.
General Partner
By:
Stuart C. Nathan
President
ACCEPTED AND AGREED TO:
O&Y EQUITY COMPANY, L.P.
By: O&Y Equity General Partner Corp.
By:
O&Y NY BUILDING CORP.
By:
Mr. John Moore
October 14, 1994
Page 12
The undersigned Olympia & York Massachusetts Financial
Company, hereby agrees that neither it nor any of its
successors
or assigns will agree to any modification, termination or
rescission of the Consent referred to in paragraph 6 (b)
or
without the prior written approval of JMB.
OLYMPIA & YORK MASSACHUSETTS
FINANCIAL COMPANY
By: O&Y (U.S.) Financial
Company,
General Partner
By: O&Y (U.S.) Development
Company, L.P., General
Partner
By: O&Y (U.S.) Development
General
Partner Corp., General
Partner
By:
Name:
Title:
October 14, 1994
OLYMPIA & YORK - JMB
Restructuring of Partnerships Owning
2 Broadway, 1290 Avenue of the Americas
and 237 Park Avenue
SUMMARY OF TERMS
The following sets forth in summary fashion the
general terms and conditions of certain agreements in
principle between O&Y Equity Company, L.P. ("Equity"), O&Y
NY Building Corp. ("Building Corp" and together with
Equity, "O&Y") and JMB/NYC Office Building Associates,
L.P. ("JMB") with respect to 2 Broadway ("2 Bway"), 1290
Avenue of the Americas ("1290") and 237 Park Avenue
("237") and the respective partnerships (the
"Partnerships") that own 2 Bway, 1290 and 237 (the
"Properties").
This Summary of Terms (i) does not represent a
commitment of any kind or a waiver or relinquishment of
any of the rights, remedies, claims or collateral of O&Y
or JMB, and (ii) is subject in all respects to internal
approval by O&Y and JMB and the execution of final,
definitive documentation. Matters not covered by this
Summary of Terms are subject to further discussion.
1. Modification of Partnership Agreements
As soon as practicable, and prior to the
bankruptcy filing described in Paragraph 3 below, the
partnership agreement of each of the Partnerships will be
modified (and O&Y, JMB and the Partnerships will enter
into such other agreements as shall be
appropriate) to provide as follows:
a) Distributions. All available cash (revenues
from all sources, including net cash flow and sale or
refinancing proceeds, minus (x) all expenditures, (y) the
fees described in paragraph 1(d) (iii) below and (z)
reserves required under loan documents or otherwise
established by O&Y) will be distributed (i) first to O&Y
until O&Y receives its Preference Amount (as hereinafter
defined) plus interest at 9% per annum, compounded
monthly, from May 1, 1994 and then (ii) pro rata to the
partners (53.5%k to O&Y and 46.5% to JMB) (with JMB's
share being first applied to the JMB Notes as described in
paragraph 6 below). The Preference Amounts will be
$58,900,000 for 1290, $27,800, 000 for 237 and $33,300,000
for 2 Bway) (subject to reallocation of any unpaid
Preference Amount from one Property to the others upon the
sale of such Property).
(b) Pooling of Funds. Cash from 1290, 237 and 2
Bway will be "pooled", such that, unless O&Y elects
otherwise, (i) cash from one Partnership that would
otherwise be available for
distribution, must be loaned to the other Partnership(s)
to the extent the other Partnerships need it to cover a
shortfall between expenditures and revenues (plus
available reserves), and (ii) cash from one Partnership
that would otherwise be available
for distribution to its partners pro rata (i e., under
clause 1(a) (ii) above) must be loaned to the other
Partnership(s) to the extent O&Y has not yet received in
full its Preference Amount plus interest from such other
Partnerships, (iii) cash reserves of the partnerships may
be commingled, but withdrawals therefrom by one
Partnership in excess of its deposits thereto will be
treated as loans by the other Partnerships to the
withdrawing
Partnership, and (iv) all such loans must be repaid, with
interest at 9% per annum, before the borrowing
Partnerships makes any distributions.
(c) Tax Allocations. For calendar years 1994 and
thereafter, tax allocations shall be made as described in
Exhibit A hereto.
(d) Management.
(i) Equity will have exclusive power and
authority to make all Partnership decisions and to take
all Partnership actions, including, without limitation,
leasing, management, sale or refinancing of the Property.
Except (A) in connection with the Plan (as described in
paragraph 3 below) and (B) as described in subparagraph
(d)(ii) below, JMB will have no right to approve or veto
any Partnership decision or action. Without limiting the
generality of the foregoing (except as described an
subparagraph (d)(ii) below), (x) JMB shall have no right
to approve or veto the entry into, or the modification,
termination or enforcement of, agreements or transactions
with O&Y affiliates (including, without limitation, loans
from and leases and services contracts with, O&Y
affiliates), (y) JMB shall have no right of first refusal
(or first offer) with respect to any sale of a Property,
and (z) JMB shall have no right to propose or oppose any
sale or refinancing. In taking actions and making
decisions on behalf of each Partnership, Equity will owe a
fiduciary duty to JMB, as its partner, as to all
Partnership matters, including, without limitation, all
matters set forth in this paragraph 1(d).
(ii) Except in connection with the
resolution of an event of default under a mortgage (i.e.,
a foreclosure, a transfer to the mortgagee or its designee
in lieu of foreclosure, or a sale to a third party to
avoid a reasonably foreseeable
foreclosure), Equity may not sell 237 or 1290 without
JMB's consent (which may be withheld by JMB in its
absolute discretion in the case of clause (A), but may not
be unreasonably withheld in the case of clause (B)), (A)
for any price if the closing will
occur prior to 1999 and (B) for a price that does not
exceed the Debt Balance (as hereinafter defined) allocable
to such Property if the Closing will occur during the
period from January 1, 1999
through April 1, 2001, provided that, if such price for a
sale during such period does exceed such Debt Balance,
then equity shall first give JMB notice of its intent to
sell and an opportunity to purchase O&Y's Partnership
interest for a price equal to the net proceeds that would
have been distributed to O&Y after the intended sale (and
(i) JMB will be required to cause O&Y to be released from
all recourse liability under the mortgage
loan and (ii) the procedure for giving JMB such
opportunity will otherwise be analogous to 6.2D(1) of the
existing Partnership agreements). Without limiting the
generality of the foregoing, Equity may not cause the
Partnership that owns 237 or 1290 to file a Chapter 11
bankruptcy petition without JMB's consent if the petition
is filed in furtherance of a pre-arranged plan to make a
sale of 237 or 1290 that would not be permitted without
JMB's consent as provided above. The "Debt Balance" shall
mean the outstanding balance of the mortgage debt
allocable to the Property in question as of the date
hereof (after accounting for the October 1994 payment and
the debt assumptions being made on the date hereof) (i.e.
$365,951,817 for 237 and $549,130,250 for 1290) plus
interest and other accruals thereon between the date
hereof and the date of such sale, less payments on such
mortgage debt between the date hereof and the date of such
sale. JMB shall have no right to approve or propose, and
no right of first refusal, right of first offer or
opportunity to purchase with respect to, any sale of a
Property that will close after April, 2001.
(iii) The existing management agreements with
an O&Y affiliate shall be modified to provide for the
following fees (alternatively, O&Y or its affiliate shall
be entitled to receive equivalent amounts, whether or not
characterized as fees, under one or more agreements other
than such management agreements):
(A) Property Management
fees: based on a percentage of gross
revenues from tenants, in accordance
with the provisions of the
Restructuring Proposal (as
hereinafter defined).
(B) Asset management fees:
0.5% of Gross Asset Value in each of
the first two years; .35% of Gross
Asset Value each year thereafter. "
Gross Asset Value" means net
operating income of the Property
divided by .09. The asset management
fee will be computed and payable
quarterly based on the previous
quarter's net operating income, as
further described in the
Restructuring Proposal.
(C) Leasing commissions:
Standard lease commissions on leasing
transactions not involving a
Commission to an outside broker, and
a 50% override on commissions to
outside brokers.
Such fees (or equivalent amounts) may be modified from
time to time as permitted under the mortgage loan then
affecting each Property. The continued payment of such
fees (or equivalent amounts) to O&Y or its affiliate shall
not be regarded as a breach of O&Y's fiduciary duty to
JMB.
(e) Accounting.
(i) The Partnerships' fiscal year for all
purposes will be the calendar year.
(ii) JMB will prepare the Partnerships' tax
returns in accordance with the provisions of paragraph
1(c), through the year in which the Plan is consummated.
O&Y shall give its approval or disapproval to the
allocations to JMB included in
such proposed returns within ten business days after JMB
provides them to O&Y. O&Y will prepare each Partnership's
tax returns for each year (if any) after the year in which
the Plan is consummated, if such Partnership continues to
exist, and will provide to JMB for its information (A) by
January 31 of each subsequent year the amount of JMB's tax
allocation for the preceding year and (B) such tax returns
at least five business days before the filing thereof.
(iii) O&Y will cause annual audited GAAP
financial statements to be prepared for 1994 and
subsequent years. If JMB desires to have its own audit
performed or additional statements or reports prepared, it
may do so at its expense. O&Y will give its approval or
disapproval to the results of any such JMB audit within
ten business days after the delivery of the audit report
to O&Y.
(f) Transfers of Partnership Interests.
(i) O&Y will have the right, without
obtaining JMB's consent and without giving JMB any right
of first refusal (or first offer), to sell, transfer,
assign, pledge, collaterally assign and grant security
interests in (collectively, "Transfer") all or part of its
Partnership interests.
(ii) JMB shall have no right to
Transfer all or part of its Partnership interests without
O&Y's consent, which may not be unreasonably withheld
(although it shall be considered reasonable for such
consent to be withheld if such a Transfer by JMB could
expose O&Y to a risk of gains or transfer tax liability
hosed upon an aggregation of such Transfer with a past or
planned future Transfer by O&Y).
(g) Capital Contributions. No partner will be
required to make any additional capital contributions; and
the partners' obligation to restore deficits in their
capital accounts upon the liquidation of a Partnership
("Deficit Restoration Obligations") will be eliminated,
effective upon consummation of the Plan.
2. Releases
Upon the modification of the partnership
agreements of the Partnerships, O&Y and JMB will deliver
mutual releases with respect to all prior agreements
(including the unmodified partnership agreements of the
Partnerships, the Basic Agreements under which JMB
acquired its interests, and any guarantees relating
thereto, but excluding the JMB Notes and related
agreements), and such releases shall apply to all
predecessors of
O&Y and JMB, respectively, as parties to such agreements.
3. Bankruptcy
As soon as practicable, the Partnerships will
file a pre-arranged bankruptcy case under chapter 11 of
the Bankruptcy Code. Prior to such filing, a plan of
reorganization for the Partnerships (the "Plan"),
including forms of documentation providing for the
restructuring of the mortgage debt of the Partnerships and
the sale of 2 Bway, and containing the provisions set
forth below (including, but not limited to, the
elimination of the Deficit Restoration Obligations with
respect to the Partnerships) will be negotiated and
approved by O&Y and the steering Committee (the
"Committee" ) of the mortgage debt bondholders (the
"Bondholders") (which Committee currently consists of
holders of approximately 63% of the principal of the
bonds). O&Y will give JMB reasonable notice of and a
reasonable opportunity to participate in, negotiating
sessions with the
Committee or the Bondholders. O&Y will also update JMB on
a weekly basis regarding the past week's discussions with
the Committee or the Bondholders and the expected schedule
thereof for the following week. JMB has received a copy
of the Restructuring Proposal dated June 30, 1994, among
the Partnerships and the Committee (the "Restructuring
Proposal"). JMB hereby approves the Restructuring
Proposal. JMB agrees (a) to execute such documents as are
required to be executed by it pursuant to the
Restructuring Proposal (as part of the approved Plan) as a
partner in each Partnership, Conversion Partnership or New
Partnership, including but not limited to the pledge of
its partnership interests provided in the Restructuring
Proposal and related financing statement and (b) to take
such other actions reasonably requested by O&Y in
connection with the Restructuring Proposal, so long as the
execution of such documents or the
taking of such actions does not materially adversely
affect JMB's rights and interests as otherwise
contemplated by the LOI and this Summary of Terns. The
Plan (i) will implement the Restructuring Proposal, (ii)
will provide for the elimination of
the Deficit Restoration Obligations with respect to the
Partnerships (and any Conversion Partnerships) and (iii)
will otherwise be substantially consistent, in all
respects materially affecting JMB, with the Restructuring
Proposal, this summary of terms and the letter of intent
to which it is attached (the "LOI"), except for changes
approved by JMB, which approval will not be unreasonably
withheld so long as the same do not materially adversely
affect JMB's rights and interests as otherwise
contemplated by the LOI and this Summary of Terms or
impose any personal liability on JMB or derogate in any
way any of the provisions referred to in clauses (ii) or
(iii) of this sentence. The term "Plan", as used in this
Summary of Terms, means and is limited to the plan of
reorganization described an the next preceding sentence.
The Plan will provide that if JMB votes to accept the
Plan, it will receive the treatment provided for in the
Restructuring Proposal and this summary of terms. The Plan
will further provide that if JMB votes to reject the Plan,
it will receive no distribution on account of its
partnership interests in the Partnerships or any
Conversion Partnerships (as defined an the LOI), and its
existing partnership interests in the Partnerships and any
Conversion Partnerships shall be extinguished. O&Y agrees
that it will support the elimination of the Deficit
Restoration Obligations with respect to the
Partnerships and any Conversion Partnerships and the
approval of such elimination by the creditors of each
Partnership and Conversion Partnership and the bankruptcy
court.
4. New Partnerships
Upon the consummation of the Plan, two new
Delaware limited partnerships (the "New Partnerships")
will be formed (which are referred to herein as "1290 LP"
and "237 LP"). The sole general partner (the "GP") of
each New Partnership will be a
Delaware business trust, and the limited partners of each
New Partnership will be O&Y (and/or its affiliate(s)) and
JMB. The trustee of the GP trust will be an institutional
trustee (the "Institutional Trustee"), selected by the
Bondholders or by O&Y with the approval of the
Bondholders, and the beneficiary of the GP trust will be
O&Y (and/or its affiliate(s)). Alternatively, the GP
trust may have Equity (or its affiliate), as well as the
Institutional Trustee, as trustees. The Institutional
Trustee will delegate to O&Y or its affiliate (as
co-trustee or as manager of the Property) all of its power
and authority to act as GP, except the Institutional
Trustee will retain authority with respect to certain
major decisions (including sole authority to make any
bankruptcy filing by a New Partnership) to be agreed upon
between O&Y and the Bondholders.
5. Transfer of Properties
(a) 2 Bway. Upon or prior to consummation of (and
in a manner not inconsistent with) the Plan, 2 Bway will
be sold to a third party. If appropriate, a third New
Partnership will be formed to acquire any remaining assets
of the Partnership that owns 2 Bway (including the
proceeds of the sale; but excluding, to the extent not
transferable, real estate tax refund claims), but such
assets will be subject to the provisions respecting them
set forth in the Restructuring Proposal.
(b) 1290 and 237. Upon consummation, 1290 and
237 (and all the other assets of the Partnerships that own
them) will be transferred to 1290 LP and 237 LP,
respectively.
6. JMB Notes
The purchase money notes (the "JMB Notes") issued
by JMB to an affiliate of O&Y, which have been pledged by
such affiliate to Citibank, will be amended (i) prior to
the bankruptcy filing (A) to provide for any distributions
to JMB from any of the Partnerships to be applied to
payment of such of the JMB Notes as the holder elects,
except that distributions from 237 and 1290 may not be
applied to more than $l9 million of the JMB Note relating
to 2 Bway, and (B) to extend the maturity date to 2004,
(ii) upon the sale of 2 Bway, to cancel any indebtedness
under the JMB Note relating to 2 Bway in excess of $l9
million, and (iii) concurrently with the transfers of the
Properties, to reflect such transfers and the New
Partnership agreements; provided that, unless Citibank
consents to the extension of maturity described in clause
(i)(B), the amendment referred to in clause (i)(A) will
not be effective. JMB will execute new pledge agreements
(and UCC-1 Financing Statements), pledging its interests
in the New Partnerships to secure (on a
cross-collateralized basis) the amended JMB Notes.
7. New Partnership Agreements
The Partnership agreement of each New Partnership
will reflect the following:
(a) Distributions. All available cash will be
distributed (i) first to O&Y until O&Y receives its New
Preference Amount (as hereinafter defined) plus interest
at 9%
per annum, compounded monthly, from May 1, 1994 and then
(ii) pro rata to the partners (1% to the GP, 52.5% to O&Y
and 46.5% to JMB) (with JMB's share being first applied to
the JMB Notes as described above). The New Preference
Amounts will be $81,500,000
for 1290 and $38,500,000 for 237 (in each case, (x) less
any proportionate share of distributions made in reduction
of the Preference Amounts after May l, 1994 as
contemplated by paragraph 1(a) (i) above and (y) subject
to reallocation of any unpaid New
Preference Amount from one Property to the other upon the
sale of
such Property).
(b) Pooling of Funds. Cash from 1290 and 237
will be "pooled", such that, unless O&Y elects otherwise,
(i) cash from one New Partnership that would otherwise be
available for distribution, must be loaned to the other
New Partnership to the
extent the other New Partnership needs it to cover a
shortfall between expenditures and revenues (plus
available reserves), and (ii) cash from one New
Partnership that would otherwise be available for
distribution to its partners pro rata (i.e., under
clause 7(a) (ii) above) must be loaned to the other New
Partnership to the extent O&Y has not yet received in full
its Preference Amount plus interest from such other New
Partnership, (iii) cash reserves of the New Partnerships
nay be commingled,
but withdrawals therefrom by one New Partnership in excess
of its deposits thereto will be treated as loans by the
other New Partnership to the withdrawing New Partnership,
and (iv) all such loans must be repaid, with interest at
9% per annum, before the
borrowing New Partnership makes any distributions.
(c) Tax Allocations. Tax allocations shall be
made as described in Exhibit A hereto.
(d) Management.
(i) The GP will have exclusive power and
authority (subject to its delegation thereof to O&Y as
described in paragraph 4 above) to make all New
Partnership decisions and to take all Partnership actions,
including, without limitation, leasing, management, sale
or refinancing of the Property. Except as described in
subparagraph (d) (ii) below, JMB will have no right to
approve or veto any New Partnership decision or action.
Without limiting the generality of the foregoing (except
as described in subparagraph (d)(ii) below), (x) JMB shall
have no right to approve or veto the entry into, or the
modification, termination or enforcement of, agreements or
transactions with O&Y affiliates (including, without
limitation, loans from and leases and service contracts
with, O&Y affiliates), (y) JMB shall have no right of
first refusal (or first offer) with respect to
any sale of a Property, and (z) JMB shall have no right to
propose or oppose any sale or refinancing. In taking
actions and making decisions on behalf of each New
Partnership, the GP will owe a fiduciary duty to the
limited partners, as to all New
Partnership matters, including, without limitation, all
matters set forth in this paragraph 7(d).
(ii) Except in connection with the
resolution of an extent of default under a mortgage (i.e.,
a foreclosure, transfer to the mortgagee or its designee
in lieu of foreclosure,
or a sale to a third party to avoid a reasonably
foreseeable foreclosure), GP may not sell 237 or 1290
without JMB's consent
(which may be withheld by JMB in its absolute discretion
in the case of clause (A), but may not be unreasonably
withheld in the case of clause (B)), (A) for any price if
the closing will occur prior to 1999 and (B) for a price
that does not exceed the Debt Balance allocable to such
Property if the closing will occur during the period from
January 1, 1999 through April 1, 2001, provided that, if
such price for a sale during such period does exceed such
Debt Balance, then the GP shall first give JMB notice of
its intent to sell and an opportunity to purchase O&Y's
Partnership interest (and beneficial interest in the GP
trust) for a price equal to the net proceeds that would
have been distributed to O&Y after the intended sale (and
(i) JMB will be required to cause O&Y to be released from
all recourse liability under the mortgage loan and (ii)
the procedure for giving JMB such opportunity will
otherwise be analogous to 6.2D(1) of the existing
Partnership agreements). Without limiting the generality
of the foregoing, the GP may not cause the New Partnership
that owns 237 or 1290 to file a Chapter 11 bankruptcy
petition without JMB's consent if the petition is filed in
furtherance of a pre-arranged plan to make a sale of 237
or 1290 that would not be permitted without JMB's consent
as provided above. JMB shall have no right to approve or
propose, and no right of first refusal, right of first
offer or opportunity to
purchase with respect to, any sale of a Property that will
close after April 1, 2001.
(iii) Each New Partnership will enter into a
management and leasing agreement with an O&Y affiliate
providing for (or O&Y or its affiliate will otherwise
become entitled to receive), the same fees (or equivalent
payments) as are described in Paragraph 1(d) (iii). Such
fees (or payments) may be modified from time to time as
permitted under the mortgage loan then affecting each
Property. The continued payment of such fees (or
equivalent amounts) to O&Y or its affiliate shall not be
regarded as a
breach of O&Y s fiduciary duty to JMB.
(e) Accounting
(i) The New Partnerships' fiscal year for
all purposes will be the calendar year.
(ii) JMB will prepare the New Partnerships'
tax returns in accordance with the provisions of paragraph
7(c), for the year in which the Plan is consummated. O&Y
shall give its approval or disapproval to the allocations
to JMB included in such proposed returns within ten
business days after JMB provides them to O&Y. O&Y will
prepare the New Partnerships' tax returns for each
subsequent year and will provide to JMB for its
information (A) by January 31 of each year after a year in
which O&Y has prepared such returns the amount of JMB's
tax allocation for the preceding year and (B) such tax
returns at least five business days before the filing
thereof.
(iii) O&Y will cause annual audited GAAP
financial statements to be prepared for each fiscal year
of the New Partnerships, within the time period required
under the New Partnerships' mortgage. If JMB desires to
have its own audit performed or additional statements or
reports prepared it may do so at its expense. If any
limited partner desires to have an audit performed or
additional statements or reports prepared, it may do so at
its expense. O&Y will give its approval or disapproval to
the results of any such JMB or limited partner audit
within ten business days after the delivery of the audit
report to O&Y.
(f) Transfers of Partnership Interests.
(i) The GP and O&Y (and their successors
and assigns) will have the right, without obtaining JMB's
consent and without giving JMB any right of first refusal
(or first offer), to sell transfer, assign, pledge,
collaterally assign and grant security interests in
(collectively, "Transfers") all or part of their New
Partnership interests and/or the beneficial interest in
the GP trust.
(ii) JMB shall have no right to Transfer
all or part of its New Partnership interests without the
GP's consent, which may not be unreasonably withheld
(although it shall considered reasonable for such consent
to be withheld if such a Transfer by JMB could expose O&Y
to a risk of gains or transfer tax liability based upon an
aggregation of such Transfer with a past or planned future
Transfer by O&Y).
(g) Capital Contributions. No partner will be
required to make any Capital Contributions (other than
nominal initial contributions, to the extent required to
form the Partnerships) or loans to the New Partnerships.
No partner will have any Deficit Restoration Obligations.
8. Legal Fees
The reasonable legal fees and expenses of O&Y,
JMB and the Partnerships incurred heretofore or hereafter
in connection with the Restructuring Proposal, the LOI,
this Summary of Terms, the transactions contemplated by
any of the foregoing, and the controversies related to or
resulting in any of the foregoing or such transactions
(collectively herein called the "Restructure") shall be
paid from available Property cash (and O&Y and JMB shall
each receive prompt reimbursement from such available
Property cash for any such legal fees and expenses paid by
it). For purposes of this paragraph 8, however, the
maximum amount of such legal fees and expenses paid or
incurred by JMB in connection with the Restructure for the
period prior to September 1, 1994 as deemed to be
$250,000. O&Y will promptly submit to the Partnerships,
the Conversion Partnerships or the New Partnerships, as
appropriate, for payment from available Property cash, all
statements from JMB or its counsel for such reasonable
legal fees and expenses. In the event that for any reason
(including, but not limited to, a determination that any
such payments are not in compliance with the Restructuring
Proposal), JMB shad not receive such payments from
available Property cash, then O&Y will pay JMB such
portion, if any, of such legal fees and expenses as shall
be necessary so that O&Y and JMB will each bear (without
reimbursement from Property cash) the same percentage of
its legal fees and expenses incurred in connection with
the Restructure.
Exhibit A
Certain Tax Allocations
(1) 2 Broadway
(a) Assumption of 2 Broadway debt by partners
pursuant to separate Assumption Agreements and movement of
that debt to 1290 Associates and 237 Park Avenue
Associates will be treated as capital contributions to 2
Broadway and distributions from 1290 Associates and 237
Park Avenue Associates.
(b) JMB's share of the loss from sale of the 2
Broadway property for $15 million will equal approximately
$75 million.
(2) 1290
As a result of the debt restructuring, the debt
inside 1290 Associates will be reallocated in accordance
with the current section 752 Regulations. This will
result in a deemed distribution to JMB in excess of its
basis. Thereafter, on a going-forward basis, there will
be further reallocation of debt away from JMB's since no
depreciation will be allocated to it.
(3) Operating Allocations
The partnership agreements will be amended to
provide:
(a) All future deductions and losses (except for
loss on disposition of properties) will be allocated to
O&Y.
(b) Operating income will be allocated to JMB to
the extent of any cash distributions received by JMB. All
other gross operating income will be allocated to O&Y.
(c) Gain or loss from disposition of the property
will be allocated in the same manner as under the existing
partnership agreements.
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated October 14, 1994 made
by 237 PARK AVENUE ASSOCIATES, a New York general
partnership (the "Partnership"), in favor and for the
benefit of O&Y EQUITY COMPANY, L.P., a Delaware limited
partnership ("Equity"), O&Y NY BUILDING CORP., a Delaware
corporation ("OYB"), and JMB/NYC OFFICE BUILDING
ASSOCIATES, L.P., an Illinois limited partnership ("JMB").
RECITALS:
A. Equity, O&Y and JMB (collectively, the
"Partners") are the partners in the Partnership and in 2
Broadway Associates ("2BL") and 2 Broadway Land Company
("2BL"), each a New York general partnership.
B. Capitalized terms used herein without
definition are used as defined in the First Amended and
Restated Agreement of General Partnership of the
Partnership dated as of August 14, 1984, as amended.
C. Pursuant to three separate Assumption
Agreements dated the date hereof given by the respective
Partners in favor and for the benefit of 2BA, each Partner
assumed and agreed to pay, subject to the terms and
conditions thereof, a portion (as specified therein) (such
Partner's "2BA Portion") of the outstanding principal of
the Existing Note, such that the Partners together have so
assumed $236,059,811 of such outstanding principal (the
"2BA Assumed Debt").
D. Pursuant to three separate Assumption
Agreements dated the date hereof given by the respective
Partners in favor and for the benefit of 2BL, each Partner
assumed and agreed to pay, subject to the terms and
conditions thereof, in addition to such Partner's 2BA
Portion of the 2BA Assumed Debt, a portion (as specified
therein) (such Partner's 2BL Portion") of the outstanding
principal of the Existing Note, such that the Partners
together have so assumed $17,704,486 of such outstanding
principal (the "2BL Assumed Debt").
E. The Partnership desires to make a
distribution to each Partner by assuming and agreeing to
pay, subject to the terms and conditions hereof, the
following amounts of each Partner's Portion of the 2BA
Assumed Debt and of each Partner's 2BL Portion of the 2BL
Assumed Debt:
Amount
of 2BL
Amount of 2BA Assumed
Assumed Debt to
Debt to be assumed be
assumed by
Partner by the Partnership the
Partnership
Equity $71,375,240 $5,353,145
OYB 5,149,315 386,199
JMB 66,511,998 4,988,400
The total amount of the 2BA Assumed Debt and the
2BL Assumed Debt that is being assumed by the Partnership
is herein referred to as the "Assumed Debt". The
respective amounts of the 2BA Assumed Debt and 2BL Assumed
Debt that are being assumed by the Partnership for the
benefit of each Partner are herein referred to as such
Partner's "Portion" of the Assumed Debt.
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Partnership hereby assumes and
agrees to pay when due each Partner's Portion (and,
therefore collectively 100%) of the Assumed Debt;
provided, however, that this assumption is made upon the
condition and with the qualification that no recourse
shall be had for the payment of the Assumed Debt against
any assets of the Partnership, any successor or assign of
the Partnership, or any other person or entity, other than
the Partnership's right, title and interest in the Trust
Estate (as such term is defined in the Existing
Encumbrance) (the "Mortgaged Property"); and provided
further, that the foregoing limitation on recourse shall
not limit the right of any person to name the Partnership
or any transferee of any or all of the Mortgaged Property
as a party defendant in any action or suit for a judicial
foreclosure on, or a sale of, the Mortgaged Property, or
in the exercise of any other remedy under this Assumption
Agreement, so long as no judgment in the nature of a
deficiency judgment or seeking personal liability shall be
asked of or (if obtained) enforced against the Partnership
(or any other person or entity) or against any such
transferee.
By virtue of the Partnership's assumption of the
Assumed Debt hereunder, the capital account of each
Partner in the Partnership shall be adjusted to account
for a distribution in the amount of such Partners Portion
of the Assumed Debt.
2
This Assumption Agreement shall not affect in
any manner the obligations of the Partnership or any other
person or entity to the holder of the Existing Note
IN WITNESS WHEREOF, the Partnership has executed
this Assumption Agreement as of the date first above
written.
237 PARK AVENUE ASSOCIATES
By: O&Y EQUITY COMPANY,
L.P.,
General Partner
By: O&Y Equity General
Partner Corp.,
General Partner
By:
Name:
Title:
By: O&Y NY BUILDING
CORP.,
General Partner
By:
Name:
Title:
By: JMB/NYC OFFICE
BUILDING
ASSOCIATES,
L.P.,
General Partner,
By: Carlyle
Managers, Inc.,
General
Partner
By:
Name:
Title:
3
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated October 14, 1994 made
by 1290 ASSOCIATES, a New York general partnership (the
"Partnership"), in favor and for the benefit of O&Y EQUITY
COMPANY, L.P., a Delaware limited partnership ("Equity"),
O&Y NY BUILDING CORP., a Delaware corporation ("OYB"), and
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P., an Illinois
limited partnership ("JMB").
RECITALS
A. Equity, OYB and JMB (collectively, the
"Partners") are the partners in the Partnership and in 2
Broadway Associates ("2BA") and 2 Broadway Land Company
("2BL"), each a New York general partnership.
B. Capitalized terms used herein without
definition are used as defined in the First Amended and
Restated Agreement of General Partnership of the
Partnership dated as of August 14, 1984, as amended.
C. Pursuant to three separate Assumption
Agreements dated the date hereof given by the respective
Partners in favor and for the benefit of 2BA, each Partner
assumed and agreed to pay, subject to the terms and
conditions thereof, a portion (as specified therein) (such
Partner's "2BA Portion") of the outstanding principal of
the Existing Note, such that the Partners together have so
assumed $236,059,811 of such outstanding principal (the
"2BA Assumed Debt").
D. Pursuant to three separate Assumption
Agreements dated the date hereof given by the respective
Partners in favor and for the benefit of 2BL, each Partner
assumed and agreed to pay, subject to the terms and
conditions thereof, in addition to such Partner's 2BA
Portion of the 2BA Assumed Debt, a portion (as specified
therein (such Partner's "2BL Portion") of the outstanding
principal of the Existing Note, such that the Partners
together have so assumed $17,704,486 of such outstanding
principal (the "2BL Assumed Debt").
E. The Partnership desires to make a
distribution to each Partner by assuming and agreeing to
pay, subject to the terms and conditions hereof, the
following amounts of each Partner's Portion of the 2BA
Assumed Debt and of each Partner's 2BL Portion of the 2BL
Assumed Debt:
Amount
of 2BL
Amount of 2BA Assumed
Assumed Debt to
Debt to be assumed be
assumed by
Partner by the Partnership the
Partnership
Equity $21,970,687 $1,647,800
OYB 1,585,060 118,879
JMB 69,467,511 5,210,063
The total amount of the 2BA Assumed Debt and the
2BL Assumed Debt that is being assumed by the Partnership
is herein referred to as the "Assumed Debt". The
respective amounts of the 2BA Assumed Debt and 2BL Assumed
Debt that are being assumed by the Partnership for the
benefit of each Partner are herein referred to as such
Partner's Portion of the Assumed Debt.
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Partnership hereby assumes and
agrees to pay when due each Partner's Portion (and,
therefore, collectively 100%) of the Assumed Debt;
provided, however, that this assumption is made upon the
condition and with the qualification that no recourse
shall be had for the payment of the Assumed Debt against
any assets of the Partnership, any successor or assign of
the Partnership, or any other person or entity, other than
the Partnership's right, title and interest in the Trust
Estate (as such term is defined in the Existing
Encumbrance) (the "Mortgaged Property"); and provided,
further, that the foregoing limitation on recourse shall
not limit the right of any person to name the Partnership
or any transferee of any or all of the Mortgaged Property
as a party defendant in any action or suit for a judicial
foreclosure on, or a sale of, the Mortgaged Property, or
in the exercise of any other remedy under this Assumption
Agreement, so long as no judgment in the nature of a
deficiency judgment or seeking personal liability shall be
asked of or (if obtained) enforced against the Partnership
(or any other person or entity) or against any such
transferee.
By virtue of the Partnership's assumption of the
Assumed Debt hereunder, the capital account of each
Partner in the Partnership shall be adjusted to account
for a distribution in the amount of such Partner's Portion
of the Assumed Debt.
2
This Assumption Agreement shall not affect in
any manner the obligations of the Partnership or any other
person or entity to the holder of the Existing Note
IN WITNESS WHEREOF, the Partnership has executed
this Assumption Agreement as of the date first above
written.
1290 ASSOCIATES
By: O&Y EQUITY COMPANY,
L.P.,
General Partner
By: O&Y Equity General
Partner Corp.,
General Partner
By:
Name:
Title:
By: O&Y NY BUILDING
CORP.,
General Partner
By:
Name:
Title:
By: JMB/NYC OFFICE
BUILDING
ASSOCIATES,
L.P.,
General Partner,
By: Carlyle
Managers, Inc.,
General
Partner
By:
Name:
Title:
3
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated October 14, 1994 made
by O&Y EQUITY COMPANY, L.P., a Delaware limited
partnership (the "Partner"), in favor and for the benefit
of 2 BROADWAY ASSOCIATES, a New York general partnership
(the "Partnership").
RECITALS:
A. The Partner is a partner in the Partnership.
B. Capitalized terms used herein without
definition are used as defined in the Second Amended and
Restated Agreement of General Partnership of the
Partnership dated as of August 14, 1984, as amended.
C. The Partner desires to make a capital
contribution to the Partnership by assuming and agreeing
to pay, subject to the terms and conditions hereof,
$93,345,927 of the Pro Rata Portion of the Existing Note
(the "Assumed Debt").
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Partner hereby resumes and agrees
to pay then due the Assumed Debt; provided, however, that
this assumption is made upon the condition and with the
qualification that no recourse shall be had for the
payment of the Assumed Debt against any assets of the
Partner, any successor or assign of the Partner, or any
other person or entity, other than the Partner's rights,
title and interest as a partner in the Partnership (the
Partnership Interest"); and provided, further, that the
foregoing limitation on recourse shall not limit the right
of any person to name the Partner or any transferee of any
or all of the Partnership Interest as a party defendant in
any action or suit for a judicial foreclosure on, or a
sale of, such Partnership Interest, or in the exercise of
any other remedy under this Assumption Agreement, so long
as no judgment in the nature of a deficiency judgment or
seeking personal liability shall be asked of or (if
obtained) enforced against the Partner (or any other
person or entity) or against any such transferee.
By virtue of the Partner's assumption of the
Assumed Debt hereunder, the capital account of the Partner
in the Partnership shall be adjusted to account for a
capital contribution in the amount of the Assumed Debt
and such capital contribution will in no way be deemed to
be reduced or otherwise affected by the foregoing
limitation on recourse with respect to
the Assumed Debt or by the assumption of portions of the
Assumed Debt by 1290 Associates and 237 Park Avenue
Associates pursuant to Assumption Agreements entered into
concurrently with or following the execution of this
Agreement or by any other transaction or event occurring
prior to, concurrently with, or in connection with this
Agreement.
This Assumption Agreement shall not affect in any
manner the obligations of the Partnership or any other
person or entity to the holder of the Existing Note.
IN WITNESS WHEREOF, the Partner has executed this
Assumption Agreement as of the date first above written.
O&Y EQUITY COMPANY,
L.P.
By: O&Y Equity
General
Partner Corp.,
General Partner
By:
Name:
Title:
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated October 14 1994 made
by O&Y NY BUILDING CORP., a Delaware corporation (the
"Partner"), in favor and for the benefit of 2 BROADWAY
ASSOCIATES, a New York general partnership (the
"Partnership")
RECITALS:
A. The Partner is a partner in the Partnership.
B. Capitalized terms used herein without
definition are used as defined in the Second Amended and
Restated Agreement of General Partnership of the
Partnership dated as of August 14, 1984, as amended.
C. The Partner desires to make a capital
contribution to the Partnership by assuming and agreeing
to pay, subject to the terms and conditions hereof,
$6,734,375 of the Pro Rata Portion the Existing Note (the
"Assumed Debt").
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Partner hereby assumes and agrees
to pay when due the Assumed Debt; provided, however, that
this assumption is made upon the condition and with the
qualification that no recourse shall be had for the
payment of the Assumed Debt against any assets of the
Partner, any successor or assign of the Partner, or any
other person or entity, other than the Partner's rights,
title and interest as a partner in the Partnership (the
Partnership Interest"); and provided, further, that the
foregoing limitation on recourse shall not limit the right
of any person to name the Partner or any transferee of any
or all of the Partnership Interest as a party defendant in
any action or suit for a judicial foreclosure on, or a
sale of, such Partnership Interest, or in the exercise of
any other remedy under this Assumption Agreement, so long
as no judgment in the nature of a deficiency judgment or
seeking personal liability shall be asked of or (if
obtained) enforced against the Partner (or any other
person or entity) or against any such transferee.
By virtue of the Partner's assumption of the
Assumed Debt hereunder, the capital account of the Partner
in the Partnership shall be adjusted to account for a
capital contribution in the amount of the Assumed Debt
and such capital contribution will in no way be deemed to
be reduced or otherwise affected by the foregoing
limitation on recourse with respect to
the Assumed Debt or by the assumption of portions of the
Assumed Debt by 1290 Associates and 237 Park Avenue
Associates pursuant to Assumption Agreements entered into
concurrently with or following the execution of this
Agreement or by any other transaction or event occurring
prior to, concurrently with, or in connection with this
Agreement.
This Assumption Agreement shall not affect in any
manner the obligations of the Partnership or any other
person or entity to the holder of the Existing Note.
IN WITNESS WHEREOF, the Partner has executed this
Assumption Agreement as of the date first above written.
O&Y BUILDING CORP.
By:
Name:
Title:
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated October 14, 1994 made
by JMB/NYC OFFICE BUILDING ASSOCIATES, L.P., an Illinois
limited partnership (the "Partner"), in favor and for the
benefit of 2 BROADWAY ASSOCIATES, a New York general
partnership (the "Partnership")
RECITALS :
A. The Partner is a partner in the Partnership.
B. Capitalized terms used herein without
definition are used as defined in the Second Amended and
Restated Agreement of General Partnership of the
Partnership dated as of August 14, 1984, as amended.
C. The Partner desires to make a capital
contribution to the Partnership by assuming and agreeing
to pay, subject to the terms and conditions hereof,
$135,979,509 of the Pro Rata Portion of the Existing Note
(the "Assumed Debt").
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Partner hereby assumes and agrees
to pay when due the Assumed Debt; provided, however, that
this assumption is made upon the condition and with the
qualification that no recourse shall be had for the
payment of the Assumed Debt against any assets of the
Partner, any successor or assign of the Partner, or any
other person or entity, other than the Partner's rights
title and interest as a partner in the Partnership (the
Partnership Interest"); and provided, further, that the
foregoing limitation on recourse shall not limit the right
of any person to name the Partner or any transferee of any
or all of the Partnership Interest as a party defendant in
any action or suit for a judicial foreclosure on, or a
sale of, such Partnership Interest, or in the exercise of
any other remedy under this Assumption Agreement, so long
as no judgment in the nature of a deficiency judgment or
seeking personal liability shall be asked of or (if
obtained) enforced against the Partner (or any other
person or entity) or against any such transferee.
By virtue of the Partners assumption of the
Assumed Debt hereunder, the capital account of the Partner
in the Partnership shall be adjusted to account for a
capital contribution in the amount of the Assumed Debt and
such capital contribution will in no way be deemed to be
reduced or otherwise
affected by the foregoing limitation on recourse with
respect to the Assumed Debt or by the assumption of
portions of the Assumed Debt by 1290 Associates and 237
Park Avenue Associates pursuant to Assumption Agreements
entered into concurrently with or following the execution
of this Agreement or by any other transaction or event
occurring prior to, concurrently with, or in connection
with this Agreement.
This Assumption Agreement shall not affect in any
manner the obligations of the Partnership or any other
person or entity to the holder of the Existing Note.
IN WITNESS WHEREOF, the Partner has executed this
Assumption Agreement as of the date first above written.
JMB/NYC OFFICE BUILDING
ASSOCIATES, L.P.
By: Carlyle Managers, Inc.
General Partner
By:
Name:
Title:
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated October 14, 1994 made
by O&Y EQUITY COMPANY, L P , a Delaware limited
partnership (the "Partner") in favor and for the benefit
of 2 BROADWAY LAND COMPANY, a New York general partnership
(the "Partnership").
RECITALS:
A. The Partner is a partner in the Partnership.
B. Capitalized terms used herein without
definition are used as defined in the Second Amended and
Restated Agreement of General Partnership of the
Partnership dated as of August 14, 1984, as amended.
C. The Partner desires to make a capital
contribution to the Partnership by assuming and agreeing
to pay, subject to the terms and conditions hereof,
$7,000,945 of the Pro Rata Portion of the Existing Note
(the "Assumed Debt").
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Partner hereby assumes and agrees
to pay when due the Assumed Debt; provided, however, that
this assumption is made upon the condition and with the
qualification that no recourse shall be had for the
payment of the Assumed Debt against any assets of the
Partner, any successor or assign of the Partner, or any
other person or entity, other than the Partner's rights,
title and interest as a partner in the Partnership (the
"Partnership Interest"); and provided, further, that the
foregoing limitation on recourse shall not limit the right
of any person to name the Partner or any transferee of any
or all of the Partnership Interest as a party defendant in
any action or suit for a judicial foreclosure on, or a
sale of, such Partnership Interest, or in the exercise of
any other remedy under this Assumption Agreement, so long
as no judgment in the nature of a deficiency judgment or
seeking personal liability shall be asked of or (if
obtained) enforced against the Partner (or any other
person or entity) or against any such transferee.
By virtue of the Partner's assumption of the
Assumed Debt hereunder, the capital account of the Partner
in the Partnership shall be adjusted to account for a
capital contribution in the amount of the Assumed Debt and
such capital contribution will in no way be deemed to be
reduced or otherwise affected by the foregoing limitation
on recourse with respect to
the Assumed Debt or by the assumption of portions of the
Assumed Debt by 1290 Associates and 237 Park Avenue
Associates pursuant to Assumption Agreements entered into
concurrently with or following the execution of this
Agreement or by any other transaction or event occurring
prior to, concurrently with, or in connection with this
Agreement.
This Assumption Agreement shall not affect in any
manner the obligations of the Partnership or any other
person or entity to the holder of the Existing Note.
IN WITNESS WHEREOF, the Partner has executed this
Assumption Agreement as of the date first above written.
O&Y EQUITY COMPANY, L.P.
By: O&Y Equity General
Partner Corp.,
General Partner
By:
Name:
Title:
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated October 14, 1994 made
by O&Y NY BUILDING CORP., a Delaware corporation (the
"Partner"), in favor and for the benefit of 2 BROADWAY
LAND COMPANY, a New York general partnership (the
"Partnership").
RECITALS:
A. The Partner is a partner in the Partnership.
B. Capitalized terms used herein without
definition are used as defined in the Second Amended and
Restated Agreement of General Partnership of the
Partnership dated as of August 14, 1984, as amended.
C. The Partner desires to make a capital
contribution to the Partnership by assuming and agreeing
to pay, subject to the terms and conditions hereof,
$505,078 of the Pro Rata Portion of the Existing Note (the
"Assumed Debt").
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Partner hereby assumes and agrees
to pay when due the Assumed Debt; provided, however, that
this assumption is made upon the condition and with the
qualification that no recourse shall be had for the
payment of the Assumed Debt against any assets of the
Partner, any successor or assign of the Partner, or any
other person or entity, other than the Partner's rights,
title and interest as a partner in the Partnership (the
"Partnership Interest"); and provided, further, that the
foregoing limitation on recourse shall not limit the right
of any person to name the Partner or any transferee of any
or all of the Partnership Interest as a party defendant in
any action or suit for a judicial foreclosure on, or a
sale of, such Partnership Interest, or in the exercise of
any other remedy under this Assumption Agreement, so long
as no judgment in the nature of a deficiency judgment or
seeking personal liability shall be asked of or (if
obtained) enforced against the Partner (or any other
person or entity) or against any such transferee.
By virtue of the Partner's assumption of the
Assumed Debt hereunder, the capital account of the Partner
in the Partnership shall be adjusted to account for a
capital contribution in the amount of the Assumed Debt and
such capital contribution will in no way be deemed to be
reduced or otherwise affected by the foregoing limitation
on recourse with respect to
the Assumed Debt or by the assumption of portions of the
Assumed Debt by 1290 Associates and 237 Park Avenue
Associates pursuant to Assumption Agreements entered into
concurrently with or following the execution of this
Agreement or by any other transaction or event occurring
prior to, concurrently with, or in connection with this
Agreement.
This Assumption Agreement shall not affect in any
manner the obligations of the Partnership or any other
person or entity to the holder of the Existing Note.
IN WITNESS WHEREOF, the Partner has executed this
Assumption Agreement as of the date first above written.
O&Y BUILDING CORP.
Name:
Title:
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated October 14, 1994 made
by JMB/NYC OFFICE BUILDING ASSOCIATES, L P , an Illinois
limited partnership (the "Partner"), in favor and for the
benefit of 2 BROADWAY LAND COMPANY, a New York general
partnership (the "Partnership").
RECITALS:
A. The Partner is a partner in the Partnership.
B. Capitalized terms used herein without
definition are used as defined in the Second Amended and
Restated Agreement of General Partnership of the
Partnership dated as of August 14, 1984, as amended.
C. The Partner desires to make a capital
contribution to the Partnership by assuming and agreeing
to pay, subject to the terms and conditions hereof,
$10,198,463 of the Pro Rata Portion of the Existing Note
(the "Assumed Debt").
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Partner hereby assumes and agrees
to pay when due the Assumed Debt; provided, however, that
this assumption is made upon the condition and with the
qualification that no recourse shall be had for the
payment of the Assumed Debt against any assets of the
Partner, any successor or assign of the Partner, or any
other person or entity, other than the Partner's rights,
title and interest as a partner in the Partnership (the
"Partnership Interest"); and provided, further, that the
foregoing limitation on recourse shall not limit the right
of any person to name the Partner or any transferee of any
or all of the Partnership Interest as a party defendant in
any action or suit for a judicial foreclosure on, or a
sale of, such Partnership Interest, or in the exercise of
any other remedy under this Assumption Agreement, so long
as no judgment in the nature of a deficiency judgment or
seeking personal liability shall be asked of or (if
obtained) enforced against the Partner (or any other
person or entity) or against any such transferee.
By virtue of the Partner's assumption of the
Assumed Debt hereunder, the capital account of the Partner
in the Partnership shall be adjusted to account for a
capital contribution in the amount of the Assumed Debt and
such capital contribution will in no way be deemed to be
reduced or otherwise
affected fly the foregoing limitation on recourse with
respect to the Assumed Debt or by the assumption of
portions of the Assumed Debt by 1290 Associates and 237
Park Avenue Associates pursuant to Assumption Agreements
entered into concurrently with or following the execution
of this Agreement or by any other transaction or event
occurring prior to, concurrently with, or in connection
with this Agreement.
This Assumption Agreement shall not affect in any
manner the obligations of the Partnership or any other
person or entity to the holder of the Existing Note.
IN WITNESS WHEREOF, the Partner has executed this
Assumption Agreement as of the date first above written.
JMB/NYC OFFICE BUILDING ASSOCIATES,
L.P.
By: Carlyle Managers, Inc.
General Partner
By:
Name:
Title:
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a partner of Sherry Lane Associates, a general
partnership which holds title to the Sherry Lane Place Office Building in
Dallas, Texas. The Partnership is a partner of Copley Place Associates, a
limited partnership which holds title to Copley Place in Boston,
Massachusetts. The developer of the property is a partner in the joint
venture. The Partnership is a partner of Carrollwood Station Associates,
Ltd., a limited partnership which holds title to the Carrollwood Station
Apartments in Tampa, Florida. The developer of the property is a partner
in the joint venture. The Partnership is a partner of Jacksonville Cove
Associates, Ltd., a limited partnership which holds title to The Glades
Apartments in Jacksonville, Florida. The developer of the property is a
partner in the joint venture. The Partnership is a 20% shareholder in
Carlyle Managers, Inc. and 20% shareholder in Carlyle Investors, Inc.
Reference is made to Note 3 for a description of the terms of such joint
venture partnerships. The Partnership's interest in the joint ventures and
the results of its operations are included in the Consolidated Financial
Statements of the Partnership filed with this annual report.
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the corporate general partner of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP, XIII, do hereby nominate,
constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any
of them, attorneys and agents of the undersigned with full power of
authority to sign in the name and on behalf of the undersigned officer or
directors a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, hereby
ratifying and confirming all that said attorneys and agents and any of them
may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 1995.
JUDD D. MALKIN
-----------------------
Judd D. Malkin Chairman and Director
NEIL G. BLUHM
-----------------------
Neil G. Bluhm President and Director
H. RIGEL BARBER
-----------------------
H. Rigel Barber Chief Executive Officer
JEFFREY R. ROSENTHAL
-----------------------
Jeffrey R. Rosenthal Chief Financial Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, the 31st day
of January, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the corporate general partner of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII, do hereby nominate,
constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any
of them, attorneys and agents of the undersigned with full power of
authority to sign in the name and on behalf of the undersigned officer or
directors a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, hereby
ratifying and confirming all that said attorneys and agents and any of them
may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 1995.
STUART C. NATHAN
-----------------------
Stuart C. Nathan Executive Vice President,
Director of General Partner
A. LEE SACKS
-----------------------
A. Lee Sacks Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, the 31st day
of January, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XIII, does hereby nominate, constitute and appoint
GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officer, a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1994, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 20th day of February, 1995.
GLENN E. EMIG
-----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1994,
and any and all amendments thereto, the 20th day of February, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,551,909
<SECURITIES> 18,959,986
<RECEIVABLES> 3,115,173
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,494,392
<PP&E> 429,976,723
<DEPRECIATION> 149,525,406
<TOTAL-ASSETS> 333,577,902
<CURRENT-LIABILITIES> 79,720,835
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (187,614,751)
<TOTAL-LIABILITY-AND-EQUITY> 333,577,902
<SALES> 0
<TOTAL-REVENUES> 65,969,277
<CGS> 0
<TOTAL-COSTS> 53,728,393
<OTHER-EXPENSES> 611,745
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,651,732
<INCOME-PRETAX> (26,022,593)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,022,593)
<DISCONTINUED> 20,066,874
<EXTRAORDINARY> 996,126
<CHANGES> 0
<NET-INCOME> (4,959,593)
<EPS-PRIMARY> (11.27)
<EPS-DILUTED> 0
</TABLE>
