CARLYLE REAL ESTATE LTD PARTNERSHIP XIII, 10-K405, 1996-04-01

CARLYLE REAL ESTATE LTD PARTNERSHIP XIII
10-K405, 1996-04-01
REAL ESTATE

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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, 1995 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, Illinois60611
(Address of principal executive office)(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each class which registered
- ------------------- ------------------------------

None None

Securities registered pursuant to Section 12(g) of the Act:

LIMITED PARTNERSHIP INTERESTS
(Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K X

State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.

Documents incorporated by reference: None

TABLE OF CONTENTS

Page
----
PART I

Item 1. Business. . . . . . . . . . . . . . . . 1

Item 2. Properties. . . . . . . . . . . . . . . 8

Item 3. Legal Proceedings . . . . . . . . . . . 10

Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . 10

PART II

Item 5. Market for the Partnership's Limited
Partnership Interests and Related
Security Holder Matters . . . . . . . . 10

Item 6. Selected Financial Data . . . . . . . . 12

Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations . . . . . . . . . 20

Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . 30

Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure. . . . . . . . 89

PART III

Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . 89

Item 11. Executive Compensation. . . . . . . . . 92

Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . 94

Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . 95

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . 95

SIGNATURES . . . . . . . . . . . . . . . . . . . . 99

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 no later
than December 31, 2033. The Partnership is self-liquidating in nature. At
sale of a particular property, the net proceeds, if any, are generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties. As discussed further in Item 7, the
marketplaces in which the portfolio operates and real estate markets in
general are in a recovery mode. The Partnership currently expects to
conduct an orderly liquidation of most of its remaining investment
portfolio as quickly as practicable. As a result, the Partnership currently
expects that it will sell or dispose of its remaining investment
properties, with the possible exception of its interests in the 237 Park
Avenue and the 1290 Avenue of the Americas properties, not later than
December 31, 1999, barring any unforeseen economic developments.
(Reference is also made to Note 1.)

The Partnership has made the real property investments set forth in
the following table:

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (f) SIZE PURCHASECAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
- ---------------------- ---------- ------------------------------ ---------------------
<S> <C> <C> <C> <C>
1. Copley Place
multi-use complex
Boston,
Massachusetts . 1,220,000
sq.ft. 9/1/83 24% fee ownership of improve-
n.r.a. 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. 9/1/83 11/1/93 fee ownership of land and
n.r.a. improvements (h)
3. Plaza Tower
office building
Knoxville,
Tennessee . . . 418,000
sq.ft. 10/26/83 4% fee ownership of land and
n.r.a. improvements
4. Gables Corporate
Plaza
office building
Coral Gables,
Florida . . . . 106,000
sq.ft. 11/15/83 1/5/94 fee ownership of land and
n.r.a. improvements (through joint
venture partnership) (h)
5. University Park
office building
Sacramento,
California. . . 120,000
sq.ft. 1/16/84 1/10/94 fee ownership of land and
n.r.a. improvements (h)

6. Sherry Lane Place
office building
Dallas, Texas . 286,000
sq.ft. 12/1/83 6% fee ownership of land and
n.r.a. improvements (through joint
venture partnerships)
7. Allied Automotive
Center
Southfield,
Michigan. . . . 192,000
sq.ft. 3/30/84 10/10/90 fee ownership of land and
n.r.a. improvements (e)
8. Commercial Union
Building
Quincy,
Massachusetts . 172,000
sq.ft. 3/12/84 8/15/91 fee ownership of land and
n.r.a. improvements
9. 237 Park Avenue
Building
New York,
New York. . . . 1,140,000
sq.ft. 8/14/84 4% fee ownership of land and
n.r.a. improvements (through joint
venture partnerships)
(c)(g)
10. 1290 Avenue of
the Americas
Building
New York,
New York. . . . 2,000,000
sq.ft. 7/27/84 8% fee ownership of land and
n.r.a. improvements (through joint
venture partnerships)
(c)(g)
11. 2 Broadway
Building
New York,
New York. . . . 1,600,000
sq.ft. 8/14/84 9/18/95 fee ownership of land and
n.r.a. improvements (through joint
venture partnerships)
(c)

12. Long Beach Plaza
shopping center
Long Beach,
California. . . 559,000
sq.ft. 6/22/83 4% fee ownership of land and
g.l.a. improvements and leasehold
interest in the parking
structure (d)
13. Marshalls Aurora
Plaza
shopping center
Aurora (Denver),
Colorado. . . . 123,000
sq.ft. 4/1/83 1% fee ownership of land and
g.l.a. improvements
14. Old Orchard
shopping center
Skokie (Chicago),
Illinois. . . . 843,000
sq.ft. 4/1/84 8/30/93 fee ownership of land and
g.l.a. 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)
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)
17. Lake Point
Apartments
Charlotte,
North Carolina. 208 units 9/15/83 12/29/89 fee ownership of land and
improvements

18. Eastridge
Apartments
Tucson, Arizona 456 units 8/23/83 6/30/94 fee ownership of land and
improvements (through a
joint venture partnership)
(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
21. Carrollwood Station
Apartments
Tampa, Florida. 336 units 12/16/83 1% fee ownership of land and
improvements (through a
joint venture partnership)
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)

<FN>
- -----------------------

(a) The computation of this percentage for properties held at December
31, 1995 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
of foreclosure. 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, 1995 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.

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, 1995.

The Partnership has certain personnel performing on-site duties at
some of the Partnership's properties, none of whom are officers or
directors of the Corporate General Partner of the Partnership.

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 1995 and 1994 for the Partnership's investment properties owned
during 1995:
<CAPTION>
1994 1995
--------------------------------------------------
At At At At At At At At
Principal Business3/31 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 89% 89% 89% 96% 94% 94% 92% 92%
2. Carrollwood Station
Apartments
Tampa, Florida. . . Residential 98% 97% 98% 97% 99% 99% 97% 96%
3. Long Beach Plaza
shopping center
Long Beach,
California. . . . . Retail 57% 54% 51% 51% 55% 53% 53% 55%
4. The Glades Apartments
Jacksonville, Florida Residential 94% 96% 97% 92% 87% 94% 96% 95%
5. Sherry Lane Place
office building
Dallas, Texas . . . Legal and
Financial Services98% 97% 96% 99% 98% 99% 97% 97%
6. Copley Place
multi-use complex
Boston, Massachusetts Retail/Business
Machines/Financial
Services 93% 75% 78% 70% 73% 73% 88% 86%

1994 1995
--------------------------------------------------
At At At At At At At At
Principal Business3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---------------------- ---- ---- ----- ---- ---- ----- -----
7. Plaza Tower
office building
Knoxville, Tennessee Financial Services91% 91% 91% 92% 92% 92% 93% 92%
8. 237 Park Avenue
Building
New York, New York. Advertising/Insurance/
Paper/Real Estate 98% 98% 98% 98% 98% 98% 98% 98%
9. 1290 Avenue of the
Americas Building
New York, New York. Men's Clothing
Financial Services90% 91% 91% 94% 94% 94% 94% 93%
10. 2 Broadway Building
New York, New York. Financial Services30% 19% 19% 18% 18% 18% N/A N/A

<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 and was not owned by the Partnership or its joint venture at
the end of the period.

</TABLE>

ITEM 3. LEGAL PROCEEDINGS

In February 1996, an action entitled TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA V. CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIII, JMB
REALTY CORPORATION, et. al. was initiated in California Superior Court of
Orange County, California. In the proceeding, Teachers Insurance and
Annuity Association of America ("Teachers"), as the holder of the mortgage
notes secured by the Long Beach Plaza Shopping Center, sought the
appointment of a receiver for the benefit of the lender to take exclusive
possession, control and operation of the property. Due to declining retail
sales at the shopping center and one of its anchor tenant's previously
vacating its space, the Partnership has not made all of the scheduled debt
service payments on the mortgage notes since June 1993. The Partnership
also did not pay the outstanding principal and accrued interest on the
first mortgage note at its maturity in August 1995 (combined principal and
accrued interest balance at December 31, 1995 was approximately
$44,220,000). The Partnership was unable to obtain a long-term
modification of the mortgage notes from Teachers, and the Partnership
decided not to commit any significant additional amounts to the property.
In March 1996, the Court granted Teachers' application and entered an order
for a receiver to take exclusive possession, control and operation of the
property. Accordingly, the receiver has control of the property and its
operations. An affiliate of the General Partners continues as the property
manager, at the discretion of the receiver. Title to the property is
expected to be transferred to Teachers or its designee in 1996 or 1997.

The Partnership is not subject to any other 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
1994 and 1995.

PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS

As of December 31, 1995, there were 38,794 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 form satisfactory to the Corporate
General Partner has been received by the Corporate General Partner. The
transferee consequently will not be entitled to receive any cash
distributions or any allocable share of profits or losses for tax purposes
until such 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, 1995, 1994, 1993, 1992 AND 1991

(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

<CAPTION>
1995 1994 1993 1992 1991
-------------------------- ----------- ------------------------
<S> <C> <C> <C> <C> <C>
Total income . . . . .$ 66,763,349 65,969,277 85,193,793 93,609,884 94,185,836
============ ======================== ========================
Operating loss . . . .$ 23,721,300 25,410,848 30,620,211 37,939,335 35,902,441
Partnership's share of
loss from operations
of unconsolidated
ventures. . . . . . . 6,600,158 6,271,489 22,416,922 8,007,990 13,356,918
Venture partners'
share of loss of
consolidated ventures'
operations. . . . . . (4,588,759) (5,659,744) (2,008,939) (3,376,600) (6,392,827)
------------ ------------------------ ------------------------
Net operating loss . . 25,732,699 26,022,593 51,028,194 42,570,725 42,866,532
Gain on sale
or disposition of
investment properties,
net . . . . . . . . . -- (18,364,792)(11,083,791) (2,132,879) (1,476,395)
Partnership's share
of (gain) loss on sale
of property or
interest in
property of
unconsolidated
ventures. . . . . . . 14,789,529 (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. . . . 40,522,228 5,955,719 32,045,676 40,437,846 42,551,763
Extraordinary items. . (15,632,407) (996,126) 141,776 (7,139,936) --
------------ ------------------------ ------------------------
Net loss . . . . . . .$ 24,889,821 4,959,593 32,187,452 33,297,910 42,551,763
============ ======================== ========================

1995 1994 1993 1992 1991
------------- ------------ ----------- ------------------------

Net loss per Interest
(b):
Net operating loss .$ 67.47 68.22 133.78 111.62 112.38
Gain on sale
or disposition of
investment
properties, net. . -- (49.66) (29.97) (5.77) (3.99)
Share of (gain) loss
on sale of property
or interest in
property of
unconsolidated
ventures. . . . . . 39.99 (4.60) (21.35) -- --
Loss on venture
partner's relin-
quishment of interest
in investment
property. . . . . . -- -- -- -- 3.14
Extraordinary items. (42.27) (2.69) .38 (19.31) --
------------ ------------------------ ------------------------
Net loss . . . . . .$ 65.19 11.27 82.84 86.54 111.53
============ ======================== ========================
Total assets . . . . .$307,460,106 333,577,902 374,787,300 489,687,072 530,051,709
Long-term debt . . . .$382,303,505 361,563,239 360,881,897 464,855,926 501,003,779
Cash distributions
per Interest (b). . .$ 30.00 -- -- .50 4.25
============ ======================== ========================
<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 from the Partnership are generally not equal to Partnership (income) loss for
financial reporting or Federal income tax purposes. Each Partner's taxable (income) or loss from the Partnership
in each year is equal to his allocable share of the taxable (income) loss of the Partnership, without regard to
the cash generated or distributed by the Partnership. Accordingly, cash distributions to the Limited Partners
since the inception of the Partnership have not resulted in taxable income to such Limited Partners and have
therefore represented a return of capital.

</TABLE>

<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1995

Property
- --------

Copley Place
multi-use
complex a) The net rentable square feet ("NRF") 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
NRF Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ --------------- ------------------
<S> <C> <C> <C> <C>

1991. . . . . 84% $26.09
1992. . . . . 92% 25.00
1993. . . . . 93% 25.00
1994. . . . . 70% 29.84
1995. . . . . 86% 24.41
<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 RentScheduled LeaseLease
b) Significant Tenants Square FeetPer AnnumExpiration DateRenewal Option(s)
------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Neiman Marcus 107,922 $1,136,874 1/2014 N/A
(Department Store)

Bain & Company 116,763 3,835,664 8/2004 N/A
(Investments)

Massachusetts Registry
of Motor Vehicles 128,824 4,025,750 7/1996 N/A

</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 1995
Year Ending Expiring NRF of Expiringof Expiring Base Rent
December 31, Leases Leases (1)(2) Leases Expiring
------------ --------- -------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>

1996 12 153,632 $4,867,353 19%
1997 16 86,641 1,831,044 7%
1998 12 59,468 1,441,285 6%
1999 12 122,593 2,806,348 11%
2000 18 105,529 2,662,967 10%
2001 16 89,748 2,650,990 10%
2002 12 102,278 2,918,825 11%
2003 6 56,103 1,756,698 7%
2004 19 191,709 8,012,903 31%
2005 22 64,033 2,983,322 12%
<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases with
replacement tenants have been executed as of March 25, 1996.
(2) Includes anchors which lease space but not anchors which own space.
</TABLE>

<TABLE>

Property
- --------

1290 Avenue of
the Americas
Office Building a) The net rentable feet ("NRF") occupancy rate
and average base rent per square foot
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> <C>

1991. . . . . 97% $36.25
1992. . . . . 97% 36.94
1993. . . . . 98% 35.78
1994. . . . . 94% 36.93
1995. . . . . 93% 37.32
<FN>
(1) Average base rent per square foot is based on NRF occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base RentScheduled LeaseLease
b) Significant Tenants Square FeetPer AnnumExpiration DateRenewal Option(s)
------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
None - No single tenant represents 10% or more of
the net rentable feet of the property.

</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 1290 Avenue of the Americas Office Building:

Annualized Percent of
Number of Approx. Total Base Rent Total 1995
Year Ending Expiring NRF of Expiringof Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- -------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>

1996 9 221,930 $ 5,196,228 7%
1997 5 44,258 1,950,084 3%
1998 14 239,010 9,334,656 13%
1999 6 78,422 2,871,480 4%
2000 5 7,540 246,804 --
2001 1 96,700 4,158,096 6%
2002 14 247,390 10,277,412 14%
2003 5 43,607 1,965,444 3%
2004 12 163,190 7,827,036 11%
2005 4 13,990 917,748 1%

<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases with replacement
tenants have been executed as of March 25, 1996.
</TABLE>

Property
- --------

237 Park Avenue
Office Building a) The net rentable feet ("NRF") occupancy rate
and average base rent per square foot
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> <C>

1991. . . . . 100% $35.03
1992. . . . . 98% 33.35
1993. . . . . 98% 30.85
1994. . . . . 98% 32.23
1995. . . . . 98% 31.14
<FN>
(1) Average 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> <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 at the 237 Park Avenue Office Building:

1996 2 5,700 $ 407,640 1%
1997 1 27,110 1,355,496 4%
1998 1 900 432,000 1%
1999 2 28,452 1,147,560 3%
2000 1 3,450 196,656 1%
2001 9 283,001 10,283,328 29%
2002 - -- -- --
2003 2 21,641 873,420 2%
2004 4 9,693 340,380 1%
2005 2 932 86,988 --
<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases with
replacement tenants have been executed as of March 25, 1996.
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

Unless otherwise indicated, all reference to "Notes" are to Notes to
Consolidated Financial Statements contained in this report. Capitalized
terms used herein, but not defined, have the same meanings as used in the
Notes.

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, 1995, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $5,908,000 and short-term
investments of approximately $2,568,000. Approximately $4,600,000 of the
cash and cash equivalents are for payment of a portion of the real estate
taxes for Copley Place. Remaining amounts are available for debt service
payments for the Long Beach Plaza shopping center for working capital
requirements and potential leasing and tenant improvement costs at certain
of the Partnership's other investment properties as further described
below. The Partnership and its consolidated ventures have currently
budgeted in 1996 approximately $9,422,000 for tenant improvements and other
capital expenditures. The Partnership's share of such items in 1996 is
currently budgeted to be $5,520,000. Actual amounts expended in 1996 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 is expected to
be through the net cash generated by the Partnership's investment
properties and through the sale or refinancing of such investments as well
as the cash and short-term investments currently held by the Partnership
and its ventures and escrow deposits required under the terms of certain
loan modifications and restricted funds. However, the Partnership does not
consider the 1290 Avenue of the Americas and 237 Park Avenue office
buildings as well as the Copley Place multi-use complex, the Long Beach
Plaza or the Sherry Lane Place office building to be sources of long-term
liquidity. 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 separate non-recourse loans secured
individually by the investment properties and are not obligations of the
entire investment portfolio, and the Partnership and its ventures are not
personally liable for the payment of the mortgage indebtedness.

In February 1995, the Partnership made a sales distribution totalling
$11,094,473 (approximately $30 per Interest) out of net sales proceeds
(primarily related to the sale of the interest in Old Orchard Shopping
Center). 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 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.

It is important to maintain liquidity in the Partnership in order to
provide funds for potential future obligations or for opportunities to
preserve or enhance the value of the remaining properties. Future
distributions from operations, sales or refinancings will be dependent upon
a combination of the current cash flow from the investment properties and
the longer term capital requirements of the Partnership.

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 November 1996) or
refinancings on the Sherry Lane Place office building, Plaza Tower office
building, Long Beach Plaza, Carrollwood Apartments, Marshall's Aurora Plaza
and Copley Place multi-use complex. 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 generally
result in net 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 August
1998 and subsequent years (reference is made to Note 4 and to Note 3 of
Notes to the Combined Financial Statements).

Copley Place

Cash deficits and funding requirements are currently allocated equally
between the Partnership and the joint venture partner. The joint venture
modified the existing first mortgage note effective March 1, 1992. The
modification lowered the pay rate from 12% to 9% per annum through August
1993, and 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. 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) is added to the
principal balance and accrues interest at the contract interest rate. The
outstanding principal balance, including the unpaid deferred interest, is
due and payable on August 31, 1998. In conjunction with the modification,
the lender is now 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, is being 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. At December 31, 1995, such
escrowed funds approximated $4,621,000.

In 1994 the property experienced a significant loss in rental income
in connection with the expiration of the IBM lease (279,432 square feet)
representing 23% of the leasable office space and the John Hancock Property
and Casualty Co. lease (97,180 square feet) representing 11.5% of the
leasable office space. During 1995, the property was able to lease over
200,000 square feet and to increase the office tower occupancy to 81% by
year end. Approximately 129,000 square feet of this space is leased to a
tenant with a July 1996 expiration. The joint venture has negotiated an
agreement in principle with the tenant to enter into a new lease with a
five year term. Finalization of the agreement is subject to documentation
acceptable to both parties. Consequently, there can be no assurance that
this lease will be finalized. Although the office market in Boston has
improved in the last year and rental rates appear to have stabilized, new
leases will likely continue to require significant expenditures for lease
commissions and tenant improvements prior to tenant occupancy.

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 in 1994 for the payment of the above mentioned fees. As of
December 31, 1995, the aggregate amount of such deferred management fees
the venture owes is approximately $304,000.

On March 31, 1995, the joint venture received $1,517,994 from a tenant
for rental amounts due from previous years. The joint venture used this
amount to pay a portion of the accrued interest on the outstanding loan
from the joint venture partner, as more fully discussed in Note 3(b).

Orchard Associates

In the third quarter of 1993, Orchard Associates, in which the
Partnership and an affiliated partnership sponsored by the Corporate
General Partner each have a 50% interest, sold (through a redemption) its
interest in the Old Orchard shopping center (reference is made to Note
3(d)).

At the time of redemption, OOUV retained a portion of the Orchard
Associates redemption proceeds in order to fund certain contingent amounts
which may have been due in the future. In July 1995, OOUV distributed to
Orchard Associates a significant portion of its redemption holdback of
$2,083,644. As a result, the Partnership received its share of the
holdback of $1,041,820. In October 1995, OOUV distributed to Orchard their
share of the pre-sale settlement with Federated department stores of
$288,452. As a result, Orchard distributed to the Partnership its share of
the settlement of $144,226. In February 1996, based on current proration
estimates, OOUV distributed to Orchard their share of reserves ($494,000)
previously held back by OOUV for potential operating prorations. As a
result, Orchard distributed $262,500 to the Partnership representing its
share of such excess reserves as well as its share of excess cash that had
been held at Orchard. The Partnership currently intends to retain these
funds for working capital purposes.

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.

JMB/NYC

Occupancy at 1290 Avenue of the Americas decreased slightly to 93%
during 1995. During the third quarter of 1995, the Joint Venture that owns
the building executed a lease with a major insurance company for
approximately 506,000 square feet of space in the building, for a fifteen
year term with occupancy to commence in 1996. During the fourth quarter of
1994, the Joint Venture that owns the building negotiated an amendment with
a tenant, Deutsche Bank Financial Products Corporation, under which the
tenant will surrender space on the 12th and 13th floors (137,568 square
feet or approximately 7% of the building's 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.

Occupancy at 237 Park Avenue remained at 98% during 1995.

In October 1994, JMB/NYC entered into an agreement (the "Agreement")
with the Olympia & York affiliates to resolve certain disputes which are
more fully discussed below. Certain provisions of the Agreement were
immediately effective and, therefore, binding upon the partners, while
others become effective either upon certain conditions being met or upon
execution and delivery of final documentation. In general, the parties
agreed to: (i) amend the Three Joint Ventures' agreements to eliminate any
funding obligation by JMB/NYC for any purpose in return for JMB/NYC
relinquishing its rights to approve almost all property management,
leasing, sale (certain rights to control a sale would be retained by
JMB/NYC through March 31, 2001) or refinancing decisions and the
establishment of a new preferential distribution level payable to the
Olympia & York affiliates from all future sources of cash, (ii) sell the 2
Broadway Building, and (iii) restructure the first mortgage loan. In
anticipation of this sale and in accordance with the Agreement, the unpaid
first mortgage indebtedness previously allocated to 2 Broadway was
allocated to 237 Park Avenue and 1290 Avenue of the Americas during 1994.
A more detailed discussion of these items is contained below and in Note
3(c). As part of the Agreement, in order to facilitate the restructuring,
JMB/NYC and the Olympia & York affiliates agreed to file for each of the
Three Joint Ventures a pre-arranged bankruptcy plan for reorganization
under Chapter 11 of the Bankruptcy Code. In June 1995, the 2 Broadway
Joint Ventures filed their pre-arranged bankruptcy plans for
reorganization, and in August 1995, the bankruptcy court entered an order
confirming their plans of reorganization. In September 1995, the sale of
the 2 Broadway Building was completed. Bankruptcy filings for the other
Joint Ventures are expected to occur in 1996. JMB/NYC is seeking to
incorporate much of the substance of the transactions proposed in the
Agreement in the proposed reorganization plans for the other Joint
Ventures, although various specifics of the proposed transactions are
expected to be changed and there is no assurance such proposed transactions
would be substantially incorporated. In particular, the restructuring of
their ownership interests in the 237 Park and the 1290 Avenue of the
Americas properties by the Olympia & York affiliates and the possible
reorganization of the 237 Park Avenue and 1290 ventures discussed below is
expected to result in certain changes to the transactions proposed in the
Agreement, although the extent of such changes has not been determined.
Consequently, there are no assurances that the substance of the
transactions contemplated in the Agreement will be finalized. In any
event, there would 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 significant share of future net proceeds
from operations, sale or refinancing. The contemplated restructuring of
the Joint Ventures' agreements would include the elimination of any funding
obligation by JMB/NYC for any purpose. Consequently, in such event,
JMB/NYC would recognize, for financial reporting purposes, a gain to the
extent of the then current deficit investment balance (which amount was

$257,188,201 as of December 31, 1995). In the event that one or more of
the transactions proposed in the Agreement are not consummated, JMB/NYC and
the Partnership may, among other things, recognize substantial gain for
Federal income tax purposes with no corresponding distributable proceeds.

In October 1995, certain affiliates of O&Y, including one of the
partners in the Joint Ventures, filed for protection from creditors under
Chapter 11 of the United States Bankruptcy Code. These affiliates of O&Y
are preparing a plan to restructure their ownership interests in the office
buildings, including the 237 Park Avenue and 1290 Avenue of the Americas
office buildings, which could take the form of one or more real estate
investment trusts. Any such restructuring would be subject to the approval
of their various creditors and other affiliates of O&Y as well as the
bankruptcy court, and would likely result in such creditors collectively
obtaining control of such ownership interests. In connection with such
restructuring, it is expected that 237 Park Avenue Associates and 1290
Associates will seek reorganization under Chapter 11 of the United States
Bankruptcy Code pursuant to a plan agreed upon by their creditors and their
partners, including JMB/NYC. Although JMB/NYC has had discussions with the
Olympia & York affiliates and certain creditors concerning restructuring
proposals and a reorganization of 237 Park Avenue Associates and 1290
Associates, a proposal for the restructuring of the Olympia & York
affiliates' ownership interests and a plan for the reorganization of the
two Joint Ventures have not been agreed upon. Accordingly, the terms of
such restructuring and reorganization and their effect, if consummated, on
the Joint Ventures and the Olympia & York affiliates' and JMB/NYC's
respective interests therein are subject to change. The Partnership
believes that the substance of these proposed transactions will be
effected, although changes in the form and structure of the proposed
transactions are expected to be required. However, it is possible that one
or more of the proposed transactions contemplated by the Agreement may not
be effected as a result of such restructuring, which could result in, among
other things, JMB/NYC and the Partnership recognizing substantial gain for
Federal income tax purposes with no corresponding distributable proceeds.

JMB/NYC has had a dispute with the Olympia & York affiliates over the
calculation of the effective interest rate with reference to the first
mortgage loan, which covered all three properties, for the purpose of
determining JMB/NYC's deficit funding obligation, as described more fully
in Note 3(c). 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 entitled the Olympia & York affiliates to a 7% per annum return on
such unpaid priority distribution level. The 1993 Agreement also provided

that, except as specifically agreed otherwise, the parties each reserved
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, and contend that a 12-3/4% per annum fixed rate applies. Certain
provisions of the Agreement with the Olympia & York affiliates, when
finalized, would resolve the funding obligation dispute.

The 237 Park Avenue and the 1290 Avenue of the Americas office
buildings currently serve as collateral for the first mortgage loan. A
restructuring of the loan now appears likely to depend upon the
restructuring of the ownership interests of various affiliates of O&Y in a
number of office buildings and the reorganization of the 237 Park Avenue
and 1290 ventures as discussed above. Prior to 1996, the lender asserted
various defaults under the loan. Commencing in January 1996, the Joint
Ventures ceased making monthly debt service payments on the first mortgage
loan. 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.

Should a restructuring of the Joint Ventures 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, JMB/NYC
would then proceed to terminate its affairs.

Long Beach Plaza

The Partnership granted several tenants 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. The Partnership continued to re-evaluate each
tenant's sales level and financial situation and grant, in certain
instances, additional relief. 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. The Partnership had initiated discussions with the first
mortgage lender regarding a permanent modification of its mortgage loan
secured by the property. In December 1994, the lender agreed to extend the
maturity of the loan until August 1995. The Partnership has been unable to
secure a permanent modification of the first and second notes from the
lender. The Partnership has decided not to commit any significant
additional amounts to the property. In March 1996, a receiver was
appointed for the benefit of the lender. As a result, the Partnership was
required to submit to the lender approximately $1,000,000 of prior years'
cash generated from the property. Title to the property is expected to be
transferred in late 1996 or 1997. Reference is made to Item 3 of this
report for a discussion of the receivership proceeding. This will result
in the Partnership no longer having an ownership interest in the property
and will result in a net gain for financial reporting and Federal income
tax purposes with no corresponding distributable proceeds in 1996.
(Reference is made to Note 2(b)).

Plaza Tower Office Building

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

The Partnership made principal payments in the amounts of $1,500,000
and $1,100,000 to the existing lender during February and April 1995,
respectively, and reached an agreement with a new third party lender to
refinance the mortgage note to October 2000. Reference is made to Note
4(b)(4) for the terms of the refinancing.

General

The affiliates of the Corporate General Partner have deferred certain
pre-1993 property management and leasing fees payable to them under the
terms of the management agreements in an aggregate amount of approximately
$2,877,000 (approximately $8 per Interest) through December 31, 1995. The
Partnership paid $10,000,000 of previously deferred fees during February
1995. The current deferred amounts do not bear interest and are payable in
future periods. Reference is made to Note 9.

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

While the real estate markets are recuperating, highly competitive
market conditions continue to exist in most locations. As a result, the
Partnership continues to conserve its working capital. All expenditures
are carefully analyzed and certain capital projects are deferred when
appropriate. The Partnership has also sought or is seeking additional loan
modifications where appropriate. By conserving working capital, the
Partnership will be in a better position to meet the future needs of its
properties since the availability of satisfactory outside sources of
capital may be limited given the portfolio's current debt levels. After
reviewing the remaining properties and their competitive marketplace, the
General Partners of the Partnership expect to be able to conduct an
orderly liquidation of most of the remaining assets as quickly as
practicable. Therefore, it is currently expected that the Partnership will

sell or dispose of its remaining investment properties, with the possible
exception of the Partnership's interest in the 237 Park Avenue and 1290
Avenue of the Americas properties, no later than 1999 (sooner if the
properties are sold or disposed of in the nearer term), barring unforeseen
economic developments.

As reported previously, the Partnership has held certain of its
investment properties longer than originally anticipated in an effort to
maximize the return of their investment to the Limited Partners. However,
the Partnership's goal of capital appreciation will not be achieved.
Moreover, although the Partnership expects to distribute from sale proceeds
some portion of the Limited Partners' original capital, without a dramatic
improvement in market conditions, the Limited Partners will receive
substantially less than half of their original investment.

RESULTS OF OPERATIONS

The decreases in cash and cash equivalents, short-term investments,
amounts due to affiliates and partners' capital and the corresponding
increase in buildings and improvements at December 31, 1995 as compared to
December 31, 1994 are due primarily to: (a) payment for tenant improvement
costs of approximately $2,493,000 primarily relating to the releasing of a
portion of a former major tenant's space at Long Beach Plaza and the former
IBM space at Copley Place multi-use complex, (b) principal payments of
$2,600,000 relating to the refinancing of the mortgage loan secured by the
Plaza Tower office building, (c) payment of $10,000,000 for previously
deferred property management and leasing fees and (d) distributions to
partners of previous sales proceeds of $11,094,473. Reference is made to
Notes 4(b)(4), 9 and Item 7.

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

The increase in escrow deposits and the decrease in accrued real
estate taxes at December 31, 1995 as compared to December 31, 1994 and the
decreases in property operating expenses for the year ended December 31,
1995 as compared to the same periods in 1994 and 1993 are due primarily to
the decrease in assessed property value for the Copley Place multi-use
complex, which lowered the property tax liability for this investment
property in 1995. The decrease in property operating expenses is also
attributable to the sale of Eastridge Apartments in June 1994 (see Note
7(d)).

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

The decrease in current portion of long-term debt and the
corresponding increase in long-term debt, less current portion at December
31, 1995 as compared to December 31, 1994 is primarily due to the
reclassification of the mortgage loan secured by the Plaza Tower office
building as a result of its refinancing in April 1995. The increase in
long-term debt, less current portion, at December 31, 1995 as compared to
December 31, 1994 is also due to the accrual of long-term deferred interest
of approximately $8,541,000 on the Copley Place purchase price note.

The increase in accounts payable at December 31, 1995 as compared to
December 31, 1994 is due primarily to the timing of payments at the Copley
Place multi-use complex.

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

The increase in restricted funds and the corresponding increase in
tenant security deposits at December 31, 1995 as compared to December 31,
1994 is due primarily to deposits received from a tenant at Copley Place to
be used by the tenant for tenant improvements upon lease renewal. The
tenant's current lease expires July 1996.

The increase in rental income for the year ended December 31, 1995 as
compared to the year ended December 31, 1994 is primarily attributable to
the Registry of Motor Vehicles taking occupancy of approximately 129,000
square feet in August of 1995 at Copley Place multi-use complex, partially
offset by the loss of IBM and John Hancock as tenants of the Copley Place
multi-use complex during April and October 1994, respectively.

The 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 lease in 1994 at
Copley Place multi-use complex, as discussed above.

The decrease in interest income for the year ended December 31, 1995
as compared to the year ended December 31, 1994 is due primarily to a lower
average balance in short-term investments as a result of the distributions
to partners of previous sales proceeds of $11,094,473 and the payment of
$10,000,000 for previously deferred property management and leasing fees,
partially offset by higher average interest rates in 1995. 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 the temporary investment 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 increase in mortgage and other interest for the year ended
December 31, 1995 as compared to the year ended December 31, 1994 is due
primarily to the compounding of interest on the Copley Place purchase price
note (see Note 3(b)).

The decrease in amortization of deferred expenses for the year ended
December 31, 1995 as compared to the year ended December 31, 1994 is due
primarily to the sale of Eastridge Apartments in June 1994 (see Note 7(d)).

The increase in general and administrative expenses for the year ended
December 31, 1995 as compared to the year ended December 31, 1994 and 1993
is attributable primarily to an increase in reimbursable costs to
affiliates of the General Partners in 1995 and the recognition of certain
additional prior year reimbursable costs to such affiliates. Reference is
made to Note 5.

The decrease in the Partnership's share of loss from operations of
unconsolidated ventures for the years ended December 31, 1994 and 1995 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 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 7(d) and
7(f)).

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(b)), a gain on the sale of the Greenwood Creek II Apartments of
$1,787,073 (see Note 7(c)), a gain on the transfer of title to the 1001
Fourth Avenue office building of $6,771,760 (see Note 7(e)).

The loss on sale of interest in unconsolidated ventures and the
extraordinary item for the twelve months ended December 31, 1995 and the
related increase in the Partnership's deficit investment in unconsolidated
venture at December 31, 1995 as compared to December 31, 1994 is primarily
due to the 1995 sale of 2 Broadway (see Note 3(c)) and the related gain on
the extinguishment of indebtedness.

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.

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)(2)).

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.

Inflation is not expected to significantly impact future operations
due to the expected liquidation of most of the Partnership's investment
properties by 1999. However, to the extent that inflation in future
periods would have an adverse impact on property operating expenses, the
effect would generally be offset by amounts recovered from tenants as many
of the long-term leases at the Partnership's commercial properties have
escalation clauses covering increases in the cost of operating and main-
taining 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.

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, 1995 and 1994
Consolidated Statements of Operations, years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows, years ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements

SCHEDULE
--------

Consolidated Real Estate and Accumulated DepreciationIII

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, 1995 and 1994
Combined Statements of Operations, years ended December 31,
1995, 1994 and 1993
Combined Statements of Partners' Capital Accounts (Deficit),
years ended December 31, 1995, 1994 and 1993
Combined Statements of Cash Flows, years ended December 31,
1995, 1994 and 1993
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 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, 1995 and 1994,
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1995, 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
$5,635,000, $6,109,000 and $2,386,000 for the years ended December 31,
1995, 1994 and 1993, respectively, and has not been included in
Partnership's share of loss from operations of unconsolidated ventures 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 and become effective. The ultimate outcome of
this uncertainty cannot presently be determined. The consolidated
financial statements do not include any adjustments that might result from
this uncertainty.

KPMG PEAT MARWICK LLP
Chicago, Illinois
March 25, 1996

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

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1995 AND 1994

ASSETS
------
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . $ 5,908,236 9,551,909
Short-term investments (note 1). . . . . . . . . . . . . . 2,568,329 18,959,986
Restricted funds . . . . . . . . . . . . . . . . . . . . . 1,312,240 484,234
Rents and other receivables. . . . . . . . . . . . . . . . 2,963,711 3,115,173
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 289,250 318,336
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . 6,191,089 6,064,754
------------ ------------
Total current assets . . . . . . . . . . . . . . . 19,232,855 38,494,392
Investment properties, at cost (notes 2, 3 and 4) - Schedule III:
Land and leasehold interests . . . . . . . . . . . . . . 20,935,810 20,935,810
Buildings and improvements . . . . . . . . . . . . . . . 412,286,995 409,040,913
------------ ------------
433,222,805 429,976,723
Less accumulated depreciation. . . . . . . . . . . . . . 163,309,553 149,525,406
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . 269,913,252 280,451,317
------------ ------------
Investment in unconsolidated ventures, at equity (notes 1 and 3) 1,459,879 2,451,859
Deferred expenses (note 1) . . . . . . . . . . . . . . . . . 5,261,096 5,151,072
Accrued rents receivable (note 1). . . . . . . . . . . . . . 489,911 514,291
Venture partners' deficits in ventures (note 1). . . . . . . 11,103,113 6,514,971
------------ ------------

$307,460,106 333,577,902
============ ============

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

CONSOLIDATED BALANCE SHEETS - CONTINUED

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

1995 1994
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . $ 39,666,113 52,006,208
Accounts payable . . . . . . . . . . . . . . . . . . . . . 2,858,162 2,018,276
Amounts due to affiliates (note 9) . . . . . . . . . . . . 4,249,390 14,210,085
Unearned rents . . . . . . . . . . . . . . . . . . . . . . 600,610 618,410
Accrued interest . . . . . . . . . . . . . . . . . . . . . 13,252,892 9,112,566
Accrued real estate taxes. . . . . . . . . . . . . . . . . 1,330,231 1,755,290
------------ ------------
Total current liabilities. . . . . . . . . . . . . 61,957,398 79,720,835
Tenant security deposits . . . . . . . . . . . . . . . . . . 1,704,872 765,933
Investment in unconsolidated venture, at equity (notes 1, 3 and 10)84,764,207 78,812,861
Long-term debt, less current portion (note 4). . . . . . . . 382,303,505 361,563,239
------------ ------------
Commitments and contingencies (notes 2, 3, 4, 7 and 8)

Total liabilities. . . . . . . . . . . . . . . . . 530,729,982 520,862,868
Venture partners' subordinated equity in venture (note 1). . 329,169 329,785
Partners' capital accounts (deficits) (notes 1 and 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . (21,515,491) (20,494,612)
Cumulative cash distributions. . . . . . . . . . . . . (1,149,967) (1,039,022)
------------ ------------
(22,664,458) (21,532,634)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . 326,224,167 326,224,167
Cumulative net losses. . . . . . . . . . . . . . . . . (486,200,337) (462,331,395)
Cumulative cash distributions. . . . . . . . . . . . . (40,958,417) (29,974,889)
------------ ------------
(200,934,587) (166,082,117)
------------ ------------
Total partners' capital (deficits) . . . . . . . . (223,599,045) (187,614,751)
------------ ------------
$307,460,106 333,577,902
============ ============

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>

1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . $ 65,729,288 64,648,336 84,609,796
Interest income. . . . . . . . . . . . . . 1,034,061 1,320,941 583,997
------------ ------------ ------------
66,763,349 65,969,277 85,193,793
------------ ------------ ------------
Expenses:
Mortgage and other interest. . . . . . . . 38,615,594 37,651,732 50,753,647
Depreciation . . . . . . . . . . . . . . . 13,784,147 13,753,198 18,343,123
Property operating expenses. . . . . . . . 35,234,465 37,293,007 43,065,564
Professional services. . . . . . . . . . . 647,443 547,566 708,403
Amortization of deferred expenses. . . . . 1,421,951 1,525,373 2,410,540
General and administrative . . . . . . . . 781,049 609,249 532,727
------------ ------------ ------------

90,484,649 91,380,125 115,814,004
------------ ------------ ------------
Operating loss. . . . . . . . . . . . 23,721,300 25,410,848 30,620,211
Partnership's share of loss from operations
of unconsolidated ventures (notes 1 and 10) 6,600,158 6,271,489 22,416,922
Venture partners' share of loss from
consolidated ventures' operations. . . . . (4,588,759) (5,659,744) (2,008,939)
------------ ------------ ------------
Net operating loss . . . . . . . . . 25,732,699 26,022,593 51,028,194
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)
Partnership's share of (gain) loss
on sale of property or interest
in property of unconsolidated
ventures (note 3(c)(d)). . . . . . . . . . 14,789,529 (1,702,082) (7,898,727)
------------ ------------ ------------
Loss before extraordinary items. . . 40,522,228 5,955,719 32,045,676

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

1995 1994 1993
------------ ------------ ------------
Extraordinary items (notes 3(c)
and 4(b)(2)) . . . . . . . . . . . . . . . (15,632,407) (996,126) 141,776
------------ ------------ ------------

Net loss. . . . . . . . . . . . . . . $ 24,889,821 4,959,593 32,187,452
============ ============ ============

Net loss per limited partnership interest
(note 1):
Net operating loss . . . . . . . . . . . $ 67.47 68.22 133.78
(Gain) loss on sale or disposition of
investment properties and
extinguishment of debt . . . . . . . . -- (49.66) (29.97)
Share of (gain) loss on sale of
property or interest in property
of unconsolidated ventures . . . . . . 39.99 (4.60) (21.35)
Extraordinary items. . . . . . . . . . . (42.27) (2.69) .38
------------ ------------ ------------

Net loss . . . . . . . . . . . . . . . $ 65.19 11.27 82.84
============ ============ ============

<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, 1995, 1994 AND 1993

<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,
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) . -- -- -- -- -- -- -- --
----------------- --------------------------------------------- -----------------------
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) . -- -- -- -- -- -- -- --
----------------- --------------------- ----------------------- ----------- ----------

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,
1994. . . .$1,000(20,494,612)(1,039,022)(21,532,634)326,224,167(462,331,395)(29,974,889)(166,082,117)

Net earn-
ings (loss) -- (1,020,879) -- (1,020,879) -- (23,868,942) -- (23,868,942)
Cash distri-
butions
($30 per
limited
partnership
interest) . -- -- (110,945) (110,945) -- -- (10,983,528)(10,983,528)
----------------- --------------------- ----------------------- ----------------------
Balance
(deficit)
Decem-
ber 31,
1995. . . .$1,000(21,515,491)(1,149,967)(22,664,458)326,224,167(486,200,337)(40,958,417)(200,934,587)
================= ===================== ======================= =======================

<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, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . $(24,889,821) (4,959,593) (32,187,452)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . 13,784,147 13,753,198 18,343,123
Amortization of deferred expenses. . . . 1,421,951 1,525,373 2,410,540
Amortization of discount on long-term debt 224,415 116,398 103,298
Long-term debt - deferred accrued interest 11,980,846 10,854,534 13,461,723
Partnership's share of loss from operations
of unconsolidated ventures . . . . . . 6,600,158 6,271,489 22,416,922
Venture partners' share of consolidated
ventures' operations . . . . . . . . . (4,588,759) (5,659,744) (2,008,939)
Gain on sale or disposition of investment
properties . . . . . . . . . . . . . . -- (18,364,792) (11,083,791)
Extraordinary items. . . . . . . . . . . (15,632,407) (996,126) 141,776
Partnership's share of (gain) loss on
sale of property or interest in property
of unconsolidated ventures . . . . . . 14,789,529 (1,702,082) (7,898,727)
Changes in:
Restricted funds . . . . . . . . . . . . (828,006) 54,566 2,319,106
Rents and other receivables. . . . . . . 151,462 596,186 (430,632)
Prepaid expenses . . . . . . . . . . . . 29,086 78,773 100,997
Escrow deposits. . . . . . . . . . . . . (126,335) (2,145,872) (634,588)
Accrued rents receivable . . . . . . . . 24,380 (27,002) 2,755,732
Accounts payable . . . . . . . . . . . . 839,886 (378,883) 9,591
Unearned rents . . . . . . . . . . . . . (17,800) (151,827) (357,915)
Accrued interest . . . . . . . . . . . . 4,140,326 521,403 1,957,457
Accrued real estate taxes. . . . . . . . (425,059) (309,189) 691,017
Amounts due to affiliates. . . . . . . . (9,960,695) (684,374) 26,167
Tenant security deposits . . . . . . . . 938,939 (114,123) (119,739)
------------ ------------ ------------
Net cash provided by (used in)
operating activities . . . . . . (1,543,757) (1,721,687) 10,015,666
------------ ------------ ------------

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
------------ ------------ ------------
Cash flows from investing activities:
Cash proceeds from sale of investment
properties, net of selling expenses
(note 7) . . . . . . . . . . . . . . . . -- 11,781,988 1,220,737
Additions to investment properties . . . . (3,246,082) (1,796,484) (3,188,425)
Cash expended in disposition of
investment properties. . . . . . . . . . -- (1,014) (55,111)
Net sales and maturities (purchases)
of short-term investments. . . . . . . . 16,391,657 4,135,915 (18,470,959)
Partnership's distributions from
unconsolidated ventures. . . . . . . . . 1,186,046 1,702,082 16,978,465
Partnership's contributions to
unconsolidated ventures. . . . . . . . . -- (10,000) (983,668)
Payment of deferred expenses . . . . . . . (1,531,975) (693,408) (1,030,569)
------------ ------------ ------------
Net cash provided by (used in)
investing activities . . . . . . 12,799,646 15,119,079 (5,529,530)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from refinancing of long-term debt 14,900,000 -- 4,253
Principal payments on long-term debt . . . (18,705,089) (10,022,203) (1,789,503)
Venture partners' contributions to ventures -- 814,568 33,746
Distributions to limited partners. . . . . (10,983,528) -- --
Distributions to general partners. . . . . (110,945) -- --
------------ ------------ ------------
Net cash used in
financing activities . . . . . . (14,899,562) (9,207,635) (1,751,504)
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents . . . . . . (3,643,673) 4,189,757 2,734,632

Cash and cash equivalents,
beginning of year. . . . . . . . 9,551,9095,362,152 2,627,520
------------ ------------ ------------
Cash and cash equivalents,
end of year. . . . . . . . . . . $ 5,908,236 9,551,909 5,362,152
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. $ 22,733,319 26,150,776 35,628,310
============ ============ ============

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
------------ ------------ ------------
Non-cash investing and financing activities:
Total sales price of investment properties,
net of selling expenses. . . . . . . . . $ -- 11,781,988 18,479,297
Mortgage loan payable. . . . . . . . . . . -- -- (17,258,560)
------------ ------------ ------------
Cash sales proceeds from sale of
investment properties, net of
selling expenses . . . . . . . . . . . $ -- 11,781,988 1,220,737
============ ============ ============
Proceeds from refinancing of long-term
debt . . . . . . . . . . . . . . . . . . $ -- -- 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 --
Payment on long-term debt . . . . . . . . . -- (8,700,000) --
------------ ------------ ------------
Extraordinary items - non-cash gain recognized on
forgiveness of indebtedness. . . . . . . . $ -- 996,126 --
============ ============ ============

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

(1) OPERATIONS AND BASIS OF ACCOUNTING

The Partnership holds (either directly or through joint ventures) an
equity investment portfolio of United States real estate. Business
activities consist of rentals to a wide variety of commercial and retail
companies, and the ultimate sale or disposition of such real estate. The
Partnership currently expects to conduct an orderly liquidation of its
remaining investment portfolio and wind up its affairs not later than
December 31, 1999.

The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated ventures (note 3) -
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 (through Carlyle-XIII Associates, L.P.) in 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 GAAP and consolidation adjustments are not recorded on the
records of the Partnership. The effect of these items for the years ended
December 31, 1995 and 1994 is summarized as follows:

1995 1994
------------------------------------------------------------
TAX BASIS
GAAP BASIS (Unaudited) GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . $307,460,106 69,275,776 333,577,902 95,005,745

Partners' capital accounts
(deficits) (note 5):
General partners. . . . . (22,664,458) (30,958,036) (21,532,634) (30,855,292)
Limited partners. . . . . (200,934,587) (263,807,168) (166,082,117) (216,768,786)

Net earnings (loss) (note 5):
General partners. . . . . (1,020,879) 8,200 (830,274) 3,984,272
Limited partners. . . . . (23,868,942) (36,054,854) (4,129,319) 1,368,982

Net earnings (loss) per
limited partnership
interest . . . . . . . . . . (65.19) (98.47) (11.27) 3.73
============ ============ ============ ============

</TABLE>

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.

The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations 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 ($2,194,000 and $9,724,000 at December 31, 1995 and 1994,
respectively) as cash equivalents with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.

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 all entities 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, 1995 (see note 2(b)) because of the
likely unfavorable resolution of the negotiations with the lender and the
debt has now matured. The Partnership considers the disclosure of the SFAS
107 value of such debt to be impracticable. The remaining debt, with a
carrying balance of $388,235,264, has been calculated to have an SFAS 107
value of $343,164,324 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.

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 or
may be 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. Fourteen properties have been
sold or disposed of by the Partnership as of December 31, 1995. All of the
remaining properties owned at December 31, 1995 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.

Depreciation on the operating properties has been provided over the
estimated useful lives of 5 to 30 years using the straight-line method.

During March 1995, Statement of Financial Accounting Standards No. 121
("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued. SFAS 121, when effective,
will require that the Partnership record an impairment loss on its long-
lived assets to be held and used whenever their carrying value cannot be
fully recovered through estimated undiscounted future cash flows from
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the long-lived asset's carrying value and
the asset's estimated fair value. Any long-lived assets identified as "to
be disposed of" would no longer be depreciated. Adjustments for impairment
loss would be made in each period as necessary to report these assets at
the lower of carrying value and fair value less costs to sell. In certain
situations, such estimated fair value could be less than the existing non-
recourse debt which is secured by the property. There would be no
assurance that any estimated fair value of these assets would ultimately be
obtained by the Partnership in any future sale or disposition transaction.

Under the current impairment policy, provisions for value impairment
are recorded with respect to 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. The amount of any such impairment
loss recognized by the Partnership is limited to the excess, if any, of the
property's carrying value over the outstanding balance of the property's
non-recourse indebtedness. An impairment loss under SFAS 121 would be
determined without regard to the nature or the balance of such non-recourse
indebtedness. Upon the disposition of a property with the related
extinguishment of the long-term debt for which an impairment loss has been
recognized under SFAS 121, the Partnership would recognize, at a minimum, a
net gain (comprised of gain on extinguishment of debt and gain or loss on
sale or disposition of property) for financial reporting purposes to the
extent of any excess of the then outstanding balance of the property's non-
recourse indebtedness over the then carrying value of the property,
including the effect of any reduction for impairment loss under SFAS 121.

The Partnership will adopt SFAS 121 as required in the first quarter
of 1996. Based upon the Partnership's current assessment of the full
impact of adopting SFAS 121, it is likely that additional provisions for
value impairment would be required for the properties owned by the
Partnership and its consolidated ventures, or by the Partnership's
unconsolidated ventures. Such provisions, including the Partnership's
share of such unconsolidated venture provisions, are currently estimated to

total approximately $13,100,000 in the first period of implementation of
SFAS 121. In addition, upon the disposition of an impaired property, the
Partnership would generally recognize more net gain for financial reporting
purposes under SFAS 121 than it would have under the Partnership's current
impairment policy, without regard to the amount, if any, of cash proceeds
received by the Partnership in connection with the disposition. Although
implementation of this new accounting statement could significantly impact
the Partnership's reported earnings, there would be no impact on cash
flows. Further, any such impairment loss would not be recognized for
Federal income tax purposes.

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) 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 1991, Buffum's filed for protection from creditors under Chapter
11 of the United States Bankruptcy Code and 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, the parties terminated the ground and improvement
lease and 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. 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 $44,220,000 at December 31,
1995 and approximately $39,835,000 at December 31, 1994 have been
classified as current liabilities in the accompanying consolidated
financial statements. The Partnership had initiated discussions with the
first mortgage lender regarding a modification of its mortgage loan secured
by the property, which was originally due in June 1994. The lender agreed
to a short-term loan extension until August 31, 1995. The Partnership has
been unable to secure a modification or further extension to the loan. The
Partnership has decided not to commit any significant additional amounts to
the property. In March 1996, a receiver was appointed for the benefit of
the lender. As a result, the Partnership was required to submit to the
lender approximately $1,000,000 of prior years' cash generated from the
property. Title is expected to be transferred in late 1996 or 1997. This
will result in the Partnership no longer having an ownership interest in
such property and will result in net gain for financial reporting and
Federal income tax purposes to the Partnership with no corresponding
distributable proceeds in 1996.

(3) VENTURE AGREEMENTS

(a) General

The Partnership at December 31, 1995 is a party to five 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. In
most instances, 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 Note 5 of
Notes to the Combined Financial Statements.

The Partnership in certain cases has a cumulative preferred interest
in net cash receipts (as defined) from the properties. Such preferential
interest relates to a negotiated rate of return on contributions made by
the Partnership. After the Partnership receives its preferential return,
the venture partner is generally entitled to a non-cumulative return on its
interest in the venture; net cash receipts are generally shared in a ratio
relating to the various ownership interests of the Partnership and its
venture partners. During 1995, 1994 and 1993, two, three and two,
respectively, of the ventures' properties produced net cash receipts. In
addition, the Partnership in certain cases 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 agreements 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 consideration which included a purchase

price note secured by the Partnership's interest in the joint venture,
which is discussed below. The Partnership has also 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).

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, 1995 to fund its required obligation. The loan accrues interest at the
contract rate based on the joint venture partner's line of credit. The
line of credit bears interest at a floating rate (currently averaging 7.83%
per annum at December 31, 1995). The outstanding principal and accrued
interest, if any, are to be repaid from future available cash flow, as
defined. During 1995 and 1994, the joint venture paid approximately
$1,518,000 and $3,597,000, respectively, of accrued interest on these
loans. In addition, the Partnership and the joint venture partner were
obligated and have contributed equally towards tenant improvement and other
capital costs beginning in 1990. Commencing January 1, 1992, the
Partnership and the venture partner are required to equally fund all cash
deficits of the property. In addition, 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, 1995 is
$12,000,000). The Partnership will then be entitled to receive the next
$190,000,000 plus an amount equal to certain interest which has been paid
or is payable to the developer on its $20,000,000 purchase price note
(which at December 31, 1995 has an outstanding balance, including accrued
interest at 11.5% per annum, of approximately $78,977,000 (Note 4(a)). 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. However, the
Partnership is obligated to use its share of any sale or refinancing
proceeds to satisfy, in full, the purchase price note payable to the joint
venture partner.

The joint venture modified the existing first mortgage note effective
March 1, 1992. The modification lowered the pay rate from 12% to 9% per
annum through August 1993 and, at that time, further reduced it to 7-1/2%
per annum through August 1998. The contract rate was lowered to 10% per
annum through August 1993 and, at that time, further reduced it to 8-1/2%
per annum through August 1998. After each monthly payment, the difference
between the contract interest rate on the outstanding principal balance on
the loan, including the difference between deferred interest and interest
paid at the applicable pay rate (as defined), will be added to the
principal balance and will accrue interest at the contract interest rate.
All outstanding principal, including the unpaid deferred interest, is due

and payable on August 31, 1998. In return, the lender will be entitled to
receive, as additional interest, a minority residual participation of 10%
of net proceeds (if any, as defined) from a sale or refinancing after the
Partnership and its joint venture partner have recovered their investments
(as defined). No amounts have been required to be accrued for such
contingent additional interest as of the date of this report. Any cash
flow from the property, after all capital and leasing expenditures, but
before payment of a portion of the property management fees, is escrowed
for the purpose of paying for future capital and leasing requirements.

As a result of the debt modification, the property produced cash flow
in 1993 and 1994. This cash flow has been escrowed ($4,621,000 at December
31, 1995) for future potential leasing requirements as set forth in the
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) representing 23% of the leasable office space and the John
Hancock Property and Casualty Co. lease (97,180 square feet) representing
11.5% of the leasable office space. During 1995, the property was able to
lease over 200,000 square feet and to increase the office tower occupancy
to 81% by year end. Approximately 129,000 square feet of this space is
leased to a tenant with a July 1996 expiration. The joint venture has
negotiated an agreement in principle with the tenant to enter into a new
lease with a five year term. Finalization of the agreement is subject to
documentation acceptable to both parties. Consequently, there can be no
assurance that this lease will be finalized. Although the office market in
Boston has improved in the last year and rental rates appear to have
stabilized, new leases will likely continue to require significant
expenditures for lease commissions and tenant improvements prior to tenant
occupancy.

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).

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 a 23-story office building, (ii) the 1290 Associates venture
which owns a 44-story office building, and (iii) the 2 Broadway Associates
and 2 Broadway Land Co. ventures which sold their 32-story office building
in September 1995 as discussed below (together "Three Joint Ventures" and
individually a "Joint Venture"). All of the buildings are located in New
York, New York. In addition to JMB/NYC, the partners of the Three Joint
Ventures include O&Y Equity Company, L.P. and O&Y NY Building Corp.
(hereinafter sometimes referred to as the "Olympia & York affiliates"),
both of which are affiliates of Olympia and York Developments, Ltd.
(hereinafter sometimes referred to as "O&Y").

JMB/NYC is a joint venture among Carlyle-XIII Associates, L.P.,
Carlyle-XIV Associates, L.P. and Property Partners, L.P. as limited
partners and Carlyle Managers, Inc. as the sole general partner. The
Partnership is a 20% shareholder of Carlyle Managers, Inc. 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
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 is a 20% shareholder.
Related to this investment, the Partnership has an obligation to fund, on
demand, $600,000 of additional paid-in capital (reflected in amounts due to
affiliates in the accompanying financial statements). The general partner
in each of JMB/NYC and Carlyle-XIII Associates, L.P. is an affiliate of the
Partnership. For financial reporting purposes, the allocation of profits
and losses of JMB/NYC to the Partnership is 25%.

The terms of the JMB/NYC venture agreement generally provide that
JMB/NYC's share of the Three Joint Ventures' annual cash flow, sale or
refinancing proceeds, operating and capital costs (to the extent not
covered by cash flow from a property) and profit and loss will be
distributed to, contributed by or allocated to the Partnership in
proportion to its (indirect) share of capital contributions to JMB/NYC. As
discussed below, an Agreement (the "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 Joint Ventures of depreciation,
amortization or operating losses and the allocation of operating income
from the Joint Ventures only to the extent of cash flow distributions to
JMB/NYC.

In October 1994, JMB/NYC entered into the Agreement with the Olympia &
York affiliates to resolve certain disputes which are more fully discussed
below. Certain provisions of the Agreement became 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 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 to be retained by JMB/NYC through March 31, 2001) or
refinancing decisions and the establishment of a new preferential
distribution level payable to the Olympia & York affiliates from all future
sources of cash, (ii) sell the 2 Broadway Building, and (iii) restructure
the first mortgage loan. In anticipation of this sale and in accordance
with the Agreement, the unpaid first mortgage indebtedness previously
allocated to 2 Broadway was allocated to 237 Park Avenue and 1290 Avenue of
the Americas during 1994. As part of the Agreement, in order to facilitate
the restructuring, JMB/NYC and the Olympia & York affiliates agreed to file
for each of the Three Joint Ventures a pre-arranged bankruptcy plan for
reorganization under Chapter 11 of the Bankruptcy Code. In June 1995, the
2 Broadway Joint Ventures filed their pre-arranged bankruptcy plans for
reorganization, and in August 1995, the bankruptcy court entered an order
confirming their plans of reorganization. In September 1995, the sale of
the 2 Broadway Building was completed. Bankruptcy filings for the other
Joint Ventures are expected to occur in 1996. JMB/NYC is seeking to
incorporate much of the substance of the transactions proposed in the
Agreement in the proposed reorganization plans for the other Joint
Ventures, although various specifics of the proposed transactions are
expected to be changed and there is no assurance that such proposed
transactions would be substantially incorporated. In particular, the
restructuring of their ownership interests in the 237 Park and the 1290
Avenue of the Americas properties by the Olympia & York affiliates and the
possible reorganization of the 237 Park Avenue and 1290 ventures discussed
below is expected to result in certain changes to the transactions proposed
in the Agreement, although the extent of such changes has not been
determined. Consequently, there are no assurances that the substance of
the transactions contemplated in the Agreement will be finalized. In any
event, there would 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 significant share of future net proceeds
from operations, sale or refinancing. The contemplated restructuring of
the Joint Ventures' agreements would include the elimination of any funding
obligation by JMB/NYC for any purposes. Consequently, in such event,
JMB/NYC would recognize, for financial reporting purposes, a gain to the
extent of the then current deficit investment balance (which amount was
$257,188,201 as of December 31, 1995). In the event that one or more of
the transactions proposed in the Agreement are not consummated, JMB/NYC and
the Partnership may, among other things, recognize substantial gain for
Federal income tax purposes with no corresponding distributable proceeds.

In October 1995, certain affiliates of O&Y, including one of the
partners in the Joint Ventures, filed for protection from creditors under
Chapter 11 of the United States Bankruptcy Code. These affiliates of O&Y
are preparing a plan to restructure their ownership interests in various
office buildings, including the 237 Park Avenue and 1290 Avenue of the
Americas office buildings, which could take the form of one or more real
estate investment trusts. Any such restructuring would be subject to the
approval of their various creditors and other affiliates of O&Y as well as
the bankruptcy court, and would likely result in such creditors
collectively obtaining control of such ownership interests. In connection
with such restructuring, it is expected that 237 Park Avenue Associates and
1290 Associates will seek reorganization under Chapter 11 of the United
States Bankruptcy Code pursuant to a plan agreed upon by their creditors
and their partners, including JMB\NYC. Although JMB\NYC has had
discussions with the Olympia & York affiliates and certain creditors
concerning restructuring proposals and a reorganization of 237 Park Avenue
Associates and 1290 Associates, a proposal for the restructuring of the
Olympia & York affiliates' ownership interests and a plan for the
reorganization of the two Joint Ventures have not been agreed upon.
Accordingly, the terms of such restructuring and reorganization and their
effect, if consummated, on the Joint Ventures and the Olympia & York
affiliates' and JMB\NYC's respective interests therein are subject to
change. The Partnership believes that the substance of these proposed
transactions will be effected, although changes in the form and structure
of the proposed transactions are expected to be required. However, it is
possible that one or more of the proposed transactions contemplated by the
Agreement may not be effected as a result of such restructuring, which
could result in, among other things, JMB/NYC and the Partnership
recognizing substantial gain for Federal income tax purposes with no
corresponding distributable proceeds.

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
$33,272,592 and $34,158,225 at December 31, 1995 and December 31, 1994,
respectively. 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. 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 the distributions paid or payable to JMB/NYC
are insufficient to cover monthly interest on the Purchase Notes, then the
shortfall interest (as defined) accrues and compounds monthly. Interest
accruals total $47,164,545 at December 31, 1995 as no payments were made on
any of the Purchase Notes during 1995 and 1994. 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 an extension
of the due dates on the Purchase Notes. It further provides for the
cancellation of indebtedness under the 2 Broadway Purchase Notes in excess
of $19 million. As discussed more fully below, in September 1995 the 2
Broadway Joint Ventures concluded the sale of the 2 Broadway Building at a
price which did not provide any proceeds to JMB/NYC to repay the related
Purchase Notes. Consequently, principal and accrued interest on the 2
Broadway Purchase Notes in the amount of $62,529,627 was discharged and
$19,000,000 of the 2 Broadway Purchase Notes will be re-allocated and is
payable out of JMB/NYC's share of distributable cash flow or sale proceeds,
if any, from the other two Joint Ventures.

Subsequent to 1991, pursuant to the agreement (the "1993 Agreement")
reached in March, 1993 between JMB/NYC and the Olympia & York affiliates,
for the period January 1, 1992 to June 30, 1993, as discussed below, gross
income was allocable to the Olympia & York affiliates to the extent of the
distributions of excess monthly cash flow received for the period with the
balance of operating profits or losses allocated 46.5% to JMB/NYC and 53.5%
to the Olympia & York affiliates. Beginning July 1, 1993, operating
profits or losses, in general, are allocated 46.5% to JMB/NYC and 53.5% to
the Olympia & York affiliates. The Agreement with the Olympia & York
affiliates, when effective, would provide 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 or 1995. However, JMB/NYC did
recognize a loss of $55,357,404 on the sale (as described below) of the 2
Broadway Building for Federal income tax purposes in 1995.

Under the terms of the Three Joint Ventures' agreements, 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 a
preferred return through December 31, 1991 to JMB/NYC. JMB/NYC did not
receive its preferred return for the fourth quarter 1991 and the Olympia &
York affiliates applied JMB/NYC's preferred return to 1992 disputed
interest calculations (see below). Subsequent to 1991, capital
contributions to pay for property operating deficits and other requirements
that may be called for under the Three Joint Ventures' agreements are
required to be shared 46.5% by JMB/NYC and 53.5% by the Olympia & York
affiliates. The 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 the purpose of calculating JMB/NYC's share of operating
cash flow or deficits after 1991 is as though the rate were fixed at 12-
3/4% per annum (versus the variable 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 variable 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 to exceed a 12-3/4% per annum interest rate, rather than the 12-3/4%
per annum fixed rate that applied prior to 1992. The Olympia & York
affiliates have disputed this calculation of interest expense and contended
that the 12-3/4% per annum fixed rate applied after 1991.

The 1993 Agreement 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 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 entitled the
Olympia & York affiliates to a 7% per annum return on such unpaid priority
distribution level. The 1993 Agreement also provided that, except as
specifically agreed otherwise, the parties each reserved 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, 1995 is approximately
$55,000,000. 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 variable 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, 1995
was $115,730,680. Based upon the amount of interest determined by JMB/NYC
for the twelve months ended December 31, 1995, interest expense for the
Three Joint Ventures was $67,258,773. The cumulative effect of recording
the interest expense calculated by JMB/NYC is to reduce the losses of the
Three Joint Ventures by $121,543,336 (of which the Partnership's share is
$14,129,413) for the period July 1, 1993 through December 31, 1995 and to
correspondingly reduce what would otherwise be JMB/NYC's funding obligation
with respect to the Three Joint Ventures.

Certain provisions of the Agreement with the Olympia & York
affiliates, when effective, would resolve the funding obligation dispute.
In general, the priority distribution level created in the 1993 Agreement
and JMB/NYC's alleged funding obligation subsequent to June 30, 1993 would
be eliminated in return for the creation of a new preferential distribution
level to the Olympia & York affiliates payable from all sources of
available cash ("Preference Amount"). Such Preference Amount would be
$81,500,000 for 1290 Avenue of the Americas and $38,500,000 million for 237
Park Avenue and both amounts would bear interest at 9% per annum,
compounded monthly, retroactively 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 remaining Purchase Notes.

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

The Partnership's potential liability for such contribution, if any,
would be its share, if any, of the liability of JMB/NYC and would depend
upon, among other things, the amounts of JMB/NYC's and the Olympia & York
affiliates' respective capital accounts at the time of a sale or other
disposition of Joint Venture property, the amount of JMB/NYC's share of the
taxable gain attributable to such sale or other disposition of the Joint
Venture property and the timing of the dissolution and liquidation of the
Joint Venture. 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 $84,764,207 at December 31,
1995) does not necessarily represent the amount, if any, the Partnership
would be required to pay to satisfy a deficit capital account restoration
obligation. Under the Agreement with the Olympia & York affiliates,

subject to the satisfaction of certain conditions, any deficit capital
account funding obligation of JMB/NYC to the Joint Ventures would be
eliminated.

In September 1995, the 2 Broadway Joint Ventures concluded the sale of
2 Broadway with a third party for a net purchase price, after commissions
and certain other payments but before prorations, of approximately
$18,300,000. As a result of this sale, the Partnership recognized, for
financial reporting purposes, its share of the loss on the sale of
investment property of $14,789,529 (which includes the Partnership's share
($10,113,054) of the write-off of JMB/NYC's remaining investment in the 2
Broadway Joint Ventures), offset by a gain of $15,632,407 which represents
the Partnership's share of JMB/NYC's related gain on the forgiveness of
indebtedness (as more fully discussed above). Such sale did not result in
the dissolution and termination of the 2 Broadway Building Joint Ventures
for the purposes of the deficit capital account balance computation as
described above. Due to the anticipated sale of the 2 Broadway building at
a sales price significantly below its original carrying value, net of
depreciation, a provision for value impairment was recorded at December 31,
1993 for financial reporting purposes for $192,627,560, which was allocated
$136,534,366 and $56,093,194 to the Olympia & York affiliates and JMB/NYC,
respectively. Such provision was allocated to the joint venture partners
to reflect their respective ownership percentages before the effect of the
non-recourse Purchase Notes including accrued interest.

The 237 Park Avenue and the 1290 Avenue of the Americas office
buildings serve as collateral for the first mortgage loan. Prior to 1996,
the lender asserted various defaults under the loan. Commencing in January
1996, the Joint Ventures ceased making monthly debt service payments on the
first mortgage loan. A restructuring of the loan now appears likely to
depend on the restructuring of the ownership interest of various affiliates
of O&Y in a number of office buildings and the reorganization of the 237
Park Avenue and 1290 ventures, as discussed above. 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.

Should a restructuring of the Joint Ventures 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, JMB/NYC
would then proceed to terminate its affairs.

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.

(d) Orchard Associates

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

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

At the time of redemption, OOUV retained a portion of the Orchard
Associates redemption proceeds in order to fund certain contingent amounts
which may have been due in the future. In July 1995, OOUV distributed to
Orchard Associates a significant portion of its redemption holdback of
$2,083,644. As a result, the Partnership received its share of the
holdback of $1,041,820. In October 1995, OOUV distributed to Orchard its
share of the pre-sale settlement with Federated department stores of
$288,452. As a result, Orchard distributed to the Partnership its share of
the settlement of $144,226. In February 1996, based on current proration
estimates, OOUV distributed to Orchard its share of reserves ($494,000)
previously held back by OOUV for potential operating prorations. As a
result, Orchard distributed $262,500 to the Partnership representing its
share of such excess reserves as well as its share of excess cash that had
been held at Orchard. The Partnership currently intends to retain these
funds for working capital purposes.

OOUV and Orchard have also entered into a contribution agreement
whereby they have agreed to share future gains and losses which may arise
with respect to potential revenues and liabilities from events which
predated the contribution of the property to the new venture (including,
without limitation the distribution to OOUV of $4,300,000 and the potential
future distribution of $3,400,000 as described above) in accordance with
their pre-contribution percentage interests. In September 1994, Orchard
received its share of the contingent $4,300,000, as discussed above, and
distributed to each of the respective partners their 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

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 have expired and
others expire on various dates commencing November 1996. In addition,
certain properties have loans with scheduled maturities commencing August
1998. 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 net 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>

Long-term debt consists of the following at December 31, 1995 and 1994:
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
11.5% purchase price note payable to an affiliate;
secured by Partnership's interest in the joint venture
that owns Copley Place multi-use complex in Boston,
Massachusetts; accruing interest through August 31,
1998 when the entire balance is payable (note 3(b)). . . . $ 78,977,399 70,436,336

8% mortgage note (the note has been modified; see note 3(b))
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 . . . . . . . . . . . . . . . . . . . . . . . . 216,303,920 212,864,138

9-5/8% mortgage note; secured by the Plaza Tower office building
in Knoxville, Tennessee; refinanced in April 1995 by the
loan described immediately below; see note 4(b)(4) . . . . -- 17,674,426

9.02% mortgage note; secured by the Plaza Tower office building,
payable monthly, interest only, until October 2000 when the
principal and any accrued interest is due. . . . . . . . . 14,900,000 --

8.5% (8% to December 31, 1994) mortgage note; secured
by the Sherry Lane Place office building in Dallas,
Texas; payable in monthly installments of interest
only until April 1, 1998 when the remaining principal
balance is payable (as remodified; see note 4(b)(1)) . . . 22,000,000 22,000,000

Contingent interest note; secured by the Sherry Lane
Place office building in Dallas, Texas; contingent
interest due annually equal to the excess cash flow
of the property (as defined); due April 1, 1998. . . . . . 18,158,558 18,498,538

13% mortgage note (in default) 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 was
payable; see note 2(b) . . . . . . . . . . . . . . . . . . 33,734,354 33,734,354

1995 1994
----------- -----------
Other mortgage loans:
Long Beach Plaza shopping center, non-interest bearing, (net
of $8,834,655 and $8,965,815 unamortized discount at 12%
at December 31, 1995 and 1994, respectively), due 2014 . 1,165,345 1,034,185

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)(3)) . . . . . 5,601,708 5,890,904

Glades apartment complex, 6.1%, due 2002 . . . . . . . . . 9,737,500 9,860,000

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 . . . . . . . . . . . . . . . . . . . . . . . 950,262 950,261

Carrollwood apartment complex, 7.45%,
due 1998 (refinanced in 1993,
see note 4(b)(2)). . . . . . . . . . . . . . . . . . . . 7,042,140 7,227,872

Other; see note 3(b) . . . . . . . . . . . . . . . . . . . 13,398,432 13,398,433
------------ -----------
Total debt . . . . . . . . . . . . . . . . . . . . 421,969,618 413,569,447
Less current portion of long-term debt . . . . . . 39,666,113 52,006,208
------------ -----------
Total long-term debt . . . . . . . . . . . . . . . $382,303,505 361,563,239
============ ===========

</TABLE>

Included in the above total long-term debt is $72,714,370 and
$60,733,525, for 1995 and 1994, 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:

1996. . . . . . . . . . . . . $ 39,666,113
1997. . . . . . . . . . . . . 352,974
1998. . . . . . . . . . . . . 342,058,972
1999. . . . . . . . . . . . . 157,500
2000. . . . . . . . . . . . . 15,067,500
============

(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
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 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).

(2) Carrollwood Apartments

In September 1993, the venture refinanced with an unaffiliated third
party lender the existing $7,200,000 mortgage loan. The new loan is in the
amount of $7,455,000. 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,
the escrow account has approximately $123,000 and no amounts have been
withdrawn.

(3) 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.

(4) 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 by $1,500,000 and find an
alternative source of financing. The Partnership continued to remit debt
service during this period under the existing loan terms.

In April 1995, the Partnership agreed with a new third party lender to
refinance approximately $14,900,000 of the existing mortgage note. As
such, the Partnership paid the previous mortgage lender another $1,100,000
on the existing mortgage note in order to further extend the loan until the
refinancing closed. The refinancing closed in April 1995 and there were no
distributable proceeds available.

(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 the General Partners shall
receive as a distribution of the proceeds (net after expenses and
liabilities and retained working capital) from the sale or refinancing of a
real property of up to 3% of the selling price of a property, and that the
remaining net proceeds for any property sold 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 or refinancing proceeds and the General Partners are entitled
to receive 1% until the Limited Partners (i) have received cumulative cash
distributions from the Partnership's operations which, when combined with
net 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 net sale or refinancing
proceeds previously distributed) and (ii) have received cash distributions
of net sale or refinancing proceeds in an amount equal to the Limited
Partners' aggregate initial capital investment in the Partnership. If upon
the completion of the liquidation of the Partnership and the distribution
of all Partnership funds, the Limited Partners have not received the
amounts in (i) and (ii) above, the General Partners will be required to
return all or a portion of the 1% distribution of net sale or refinancing
proceeds described above in an amount equal to such deficiency in payments
to the Limited Partners pursuant to (i) and (ii) above. The Limited
Partners have not received distributions to the above levels. As of the
date of this report, the General Partners have received $123,891 in
distributions of net sale proceeds.

(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.

The Long Beach Plaza in Long Beach, California, Plaza Tower office
building in Knoxville, Tennessee, Greenwood Creek II Apartments in
Benbrook, Texas, (prior to its sale in April 1993) Rio Cancion Apartments
(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 and Gables Corporate Plaza in Coral
Gables, Florida (prior to the lender appointing a receiver in May 1993)
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 OR DISPOSITION 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 had 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. Recently, the Partnership has been informed that
certain regulatory agencies have approved the clean-up of the site and
approved the shut down of the clean-up operation. The gain associated with
this Parcel, approximately $543,000, will be recognized if and when the
closing occurs (currently expected to be during 1996). There can be no
assurance that the sale of this Parcel will be consummated on these or any
other terms.

(b) Rio Cancion Apartments

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

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. The
Partnership recognized a gain of $1,787,073 for financial reporting
purposes and $1,823,988 for Federal income tax purposes in 1993.

(d) Eastridge Apartments

On June 30, 1994, the Partnership sold the land, related improvements,
and personal property of the Eastridge Apartments, located in Tucson,
Arizona for $12,000,000 (before selling costs and prorations) which was
paid in cash at closing. The mortgage obligation was satisfied in full
prior to the sale date. The Partnership recognized a gain of $5,010,871
for financial reporting purposes and approximately $7,081,000 for Federal
income tax purposes in 1994.

(e) 1001 Fourth Avenue Plaza

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

(f) University Park Office Building

The Partnership transferred title to the property to the lender in
January 1994 which 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.

(g) Gables Corporate Plaza

Title to the property to the lender was transferred to the lender in
1994 which resulted in net gain of approximately $3,793,000 for Federal
income tax purposes without any net distributable proceeds in 1994.

(8) LEASES

(a) As Property Lessor

At December 31, 1995, 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, 1995 are generally
for a term of one year or less and provide for annual rents of approx-
imately $4,229,934.

Cost and accumulated depreciation of the leased assets are summarized
as follows at December 31, 1995:

Shopping centers:
Cost . . . . . . . . . . $ 52,729,945
Accumulated depreciation (19,483,788)
------------
33,246,157
------------
Office buildings:
Cost . . . . . . . . . . 71,919,524
Accumulated depreciation (25,665,779)
------------
46,253,745
------------
Multi-use complex:
Cost . . . . . . . . . . 287,780,754
Accumulated depreciation (110,893,499)
------------
176,887,255
------------
Apartment complexes:
Cost . . . . . . . . . . 20,792,582
Accumulated depreciation (7,266,487)
------------
13,526,095
------------
Total. . . . . . $269,913,252
============

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:

1996 . . . . . . . . . . $ 38,933,380
1997 . . . . . . . . . . 34,780,103
1998 . . . . . . . . . . 31,000,695
1999 . . . . . . . . . . 26,209,319
2000 . . . . . . . . . . 21,287,850
Thereafter . . . . . . . 70,521,029
===========

Additional rent based upon percentages of tenants' sales volumes
included in rental income aggregated $675,043, $526,850 and $1,804,123 for
the years ended December 31, 1995, 1994 and 1993, 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 1995,
1994 and 1993 under the above operating lease was $633,548, $538,159 and
$528,276, respectively, and consisted exclusively of minimum rent.

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 continue in their
respective capacities. Consequently, the joint venture partner 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.

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investment properties. Fees, commissions
and other expenses required to be paid by the Partnership to the General
Partners and their affiliates as of December 31, 1995, 1994 and 1993 are as
follows:

<TABLE>

<CAPTION>
UNPAID AT
DECEMBER 31,
1995 1994 1993 1995
---------- --------- ---------- --------------
<S> <C> <C> <C> <C>
Property management and leasing fees
(note 6) . . . . . . . . . . . . $1,459,783 1,195,147 3,001,759 2,877,400
Insurance commissions. . . . . . . 65,185 55,542 214,278 --
Reimbursement (at cost) for
accounting services. . . . . . . 164,441 220,159 148,638 --
Reimbursement (at cost) for
portfolio management
services . . . . . . . . . . . . 74,396 69,775 -- --
Reimbursement (at cost) for
legal services . . . . . . . . . 9,267 20,977 30,455 --
Reimbursement (at cost) for
other administrative charges and
other out-of-pocket expenses . . 208,625 1,372 45,143 91,622
---------- --------- --------- ---------

$1,981,697 1,562,972 3,440,273 2,969,022
========== ========= ========= =========
<FN>

The above table reflects that during 1995, the Partnership recognized and paid certain 1994 administrative
charges of approximately $91,389 that had not previously been reimbursed.

</TABLE>

Payment of certain pre-1993 property management and leasing fees
payable under the terms of the management agreements ($2,877,000,
approximately $8 per $1,000 interest) at December 31, 1995 has been
deferred. All amounts currently payable do not bear interest and are
expected to be paid in future periods. All property management fees and
leasing fees are being paid currently. In February 1995, the Partnership
paid $10,000,000 of previously deferred property management and leasing
fees to an affiliate of the General Partner.

As more fully discussed in Note 3(c), the Partnership has an
obligation to fund, on demand, $600,000 and $600,000 to Carlyle Managers,
Inc. and Carlyle Investors, Inc., respectively, of additional paid-in
capital (reflected in amounts due to affiliates in the accompanying
financial statements). As of December 31, 1995, these obligations bore
interest at 5.83% per annum and cumulative interest accrued on these
obligations was $171,989.

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, 1995, the affiliated joint venture
partner has loaned approximately $13,398,000 at an interest rate based on
its line of credit, which bears interest at a floating rate (averaging
7.83% per annum at December 31, 1995). During 1995, approximately
$1,318,000 of interest accrued on these loans, and the joint venture paid
approximately $1,518,000 of accrued interest (including a portion accrued
from a prior year) on these loans. (See Note 3(b)).

Effective October 1, 1995, the Corporate General Partner of the
Partnership engaged independent third parties to perform certain
administrative services which were previously performed by, and partially
reimbursed to, affiliates of the General Partners. Use of such third
parties is not expected to have a material effect on the operations of the
Partnership.

(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, 1995 and 1994 are as follows:

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

Current assets . . . . . . $ 13,898,980 44,191,548
Current liabilities (includes
$902,603,491 and $913,398,422
of current portion of long-
term debt at December 31,
1995 and December 31, 1994,
respectively). . . . . . (930,523,456) (941,725,934)
------------- -------------
Working capital (deficit)(916,624,476) (897,534,386)
------------- -------------

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

Investment property, net . 649,606,970 718,682,403
Accrued rent receivable. . 52,194,637 51,254,978
Deferred expenses. . . . . 18,168,925 11,698,403
Other liabilities. . . . . (85,039,094) (149,171,447)
Venture partners' deficit. 207,040,770 186,256,073
------------- -------------
Partnership's capital
(deficit). . . . . . $ (74,652,268) (78,813,976)
============= =============
Represented by:
Invested capital . . . . $ 43,728,411 43,728,411
Cumulative net losses. . (109,006,930) (113,168,638)
Cumulative cash
distributions. . . . . (9,373,749) (9,373,749)
------------- -------------
$ (74,652,268) (78,813,976)
============= =============
Total income . . . . . . . $ 163,838,267 147,761,499
============= =============
Expenses applicable to
operating loss . . . . . $ 180,511,256 183,850,523
============= =============
Net loss . . . . . . . . . $ (16,672,989) 36,089,024
============= =============

Total income and net loss for the year ended December 31, 1995
includes a loss on sale of investment property of $38,214,703, offset by an
extraordinary gain on forgiveness of indebtedness of $62,529,627 related to
the sale of the 2 Broadway building in September 1995. (Reference is made
to note 3(c)).

Also, for the year ended December 31, 1993, total income was
$168,002,257, expenses applicable to operating loss were $411,977,853 and
the net loss was $243,975,596 for JMB/NYC and the unconsolidated ventures.

<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

<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
DESCRIPTIONENCUMBRANCE INTEREST IMPROVEMENTS IMPROVEMENTS INTEREST IMPROVEMENTSTOTAL(g)
- --------------------------------- -------------------------- ---------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
APARTMENT
BUILDINGS:
Tampa,
Florida(d).$ 7,042,1401,092,010 7,408,618 433,123 1,092,010 7,841,7418,933,751
Jacksonville,
Florida(d).10,687,762 1,905,940 9,664,038 288,853 1,815,262 10,043,56911,858,831
OFFICE
BUILDINGS:
Knoxville,
Tennessee(e)14,900,000 -- 28,884,725 4,596,689 1,508,417 31,972,99733,481,414

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
DESCRIPTIONENCUMBRANCE INTEREST IMPROVEMENTS IMPROVEMENTS INTEREST IMPROVEMENTSTOTAL(g)
- --------------------------------- -------------------------- ---------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>

Dallas,
Texas(d). .40,158,558 7,902,979 35,029,347 (4,632,014) 6,198,484 32,101,82838,300,312
Southfield,
Michigan(f) -- 1,715,373 -- (1,577,575) 139,126 -- 139,126
SHOPPING
CENTERS:
Long Beach,
California.34,899,699 3,801,066 42,765,277 (2,746,934) 3,376,877 40,442,53243,819,409
Aurora,
Colorado. . 5,601,708 2,035,721 6,674,891 199,924 2,035,721 6,874,8168,910,537
MULTI-USE
COMPLEX:
Boston,
Massachu-
setts
(c)(d). . .308,679,751 4,769,913 271,584,219 11,426,622 4,769,913 283,009,512287,779,425
------------ ---------- ----------------------- ----------- ----------------------

Total .$421,969,61823,223,002 402,011,115 7,988,688 20,935,810 412,286,995433,222,805
============ ========== ======================= =========== ======================
</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, 1995

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
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) . . 3,370,861 1984 12/16/83 5-30 years 207,021
Jacksonville, Florida(d) 3,895,626 1985 10/9/84 5-30 years 197,934
OFFICE BUILDINGS:
Knoxville, Tennessee(e) 12,315,609 1979 10/26/83 5-30 years 544,188
Dallas, Texas(d). . . 13,350,170 1983 12/1/83 5-30 years 586,527
Southfield, Michigan(f) -- 1974 3/30/84 5-30 years 2,901
SHOPPING CENTERS:
Long Beach, California 16,579,880 1982 6/22/83 5-30 years 528,880
Aurora, Colorado. . . 2,903,908 1982 4/1/83 5-30 years 102,923
MULTI-USE COMPLEX:
Boston, Massachusetts
(c)(d) . . . . . . . 110,893,499 1983 9/1/83 5-30 years 5,977,868
------------ ---------

Total . . . . . . $163,309,553 8,148,242
============ =========

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

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

<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, 1995 for Federal income tax purposes was
approximately $85,617,312.

(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, 1995

(g) Reconciliation of real estate carrying costs:

Balance at beginning of period . . . . . $429,976,723 474,203,190 627,815,579
Additions during period . . . . . . . . . 3,246,082 1,796,484 3,188,425
Reductions during period. . . . . . . . . -- (46,022,951) (156,800,814)
------------ ------------ ------------

Balance at end of period. . . . . . . . . $433,222,805 429,976,723 474,203,190
============ ============ ============

(h) Reconciliation of accumulated depreciation:

Balance at beginning of period. . . . . . $149,525,406 149,914,951 178,425,639
Depreciation expense. . . . . . . . . . . 13,784,147 13,753,198 18,343,123
Reductions during period. . . . . . . . . -- (14,142,743) (46,853,811)
------------ ------------ ------------

Balance at end of period. . . . . . . . . $163,309,553 149,525,406 149,914,951
============ ============ ============

</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.

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 $48,472,000, $52,550,000 and
$20,521,000 for the years ended December 31, 1995, 1994 and 1993,
respectively, and has not been included in mortgage and other interest 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, the holder of the
first mortgage loan alleged certain defaults under the loan agreements.
Also, commencing in January 1996, the real estate ventures ceased making
monthly debt service payments on the first mortgage loan. Further,
JMB/NYC and the unaffiliated venture partners in the real estate ventures

(Continued)

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 with respect to the 2 Broadway ventures
occurred in June of 1995 with the remaining filings expected to occur in
1996. 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 combined financial statements and financial
statement schedule.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 25, 1996

<TABLE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES

COMBINED BALANCE SHEETS

DECEMBER 31, 1995 AND 1994

ASSETS
------
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash (including amounts held by property managers) . . . . $ 647,722 1,529,078
Restricted funds (note 1). . . . . . . . . . . . . . . . . 9,356,055 23,929,599
Rents and other receivables (net of allowance for doubtful
accounts of $9,455,898 for 1995 and $8,167,305 for 1994 2,378,248 3,234,487
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 977,891 13,918,412
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . 492,957 1,425,723
Tenant notes receivable. . . . . . . . . . . . . . . . . . 46,107 154,249
Due from the O&Y affiliates (net of allowance for uncollectibility
of $15,417,785 at December 31, 1995 and $13,608,787
at December 31, 1994) (note 1) . . . . . . . . . . . . . -- --
-------------- --------------

Total current assets . . . . . . . . . . . . . . . 13,898,980 44,191,548
-------------- --------------

Investment properties, at cost (notes 1, 2 and 3) -- Schedule III:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,939,715 168,798,314
Buildings and improvements . . . . . . . . . . . . . . . . 799,898,096 956,574,507
-------------- --------------

963,837,811 1,125,372,821
Less accumulated depreciation. . . . . . . . . . . . . . . 314,230,841 406,690,418
-------------- --------------

Total investment properties,
net of accumulated depreciation. . . . . . . . . 649,606,970 718,682,403
-------------- --------------

Accrued rents receivable (note 1). . . . . . . . . . . . . . 52,194,637 51,254,978
Deferred expenses (note 1) . . . . . . . . . . . . . . . . . 18,168,925 11,698,403
-------------- --------------

$ 733,869,512 825,827,332
============== ==============

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES

COMBINED BALANCE SHEETS - CONTINUED

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

1995 1994
-------------- --------------
Current liabilities:
Current portion of long-term debt (note 3) . . . . . . . . $ 902,603,491 913,398,422
Accounts payable and accrued expenses. . . . . . . . . . . 5,980,842 4,666,201
Tenant allowances payable. . . . . . . . . . . . . . . . . -- 2,809,707
Accrued interest . . . . . . . . . . . . . . . . . . . . . 5,341,844 5,557,267
Unearned rent (note 4) . . . . . . . . . . . . . . . . . . 16,597,279 13,724,100
Interest payable to the O&Y affiliates . . . . . . . . . . -- 1,570,237
-------------- --------------
Total current liabilities. . . . . . . . . . . . . 930,523,456 941,725,934
Unearned rent (note 4) . . . . . . . . . . . . . . . . . . . 4,109,000 19,704,669
Notes payable (note 5) . . . . . . . . . . . . . . . . . . . 33,272,592 34,158,225
Deferred interest payable (note 5) . . . . . . . . . . . . . 47,164,545 93,853,559
Tenant security deposits . . . . . . . . . . . . . . . . . . 492,957 1,454,994
-------------- --------------
Commitments and contingencies (notes 1 and 2)

Total liabilities. . . . . . . . . . . . . . . . . 1,015,562,550 1,090,897,381
Partners' capital accounts (deficits) (note 2):
Carlyle-XIII:
Capital contributions. . . . . . . . . . . . . . . . . . 43,728,411 43,728,411
Cumulative net losses. . . . . . . . . . . . . . . . . . (109,006,930) (113,168,638)
Cumulative cash distributions. . . . . . . . . . . . . . (9,373,749) (9,373,749)
-------------- --------------
(74,652,268) (78,813,976)
-------------- --------------
Venture partners:
Capital contributions. . . . . . . . . . . . . . . . . . 608,901,666 608,851,666
Cumulative net losses. . . . . . . . . . . . . . . . . . (734,057,686) (713,222,989)
Cumulative cash distributions. . . . . . . . . . . . . . (81,884,750) (81,884,750)
-------------- --------------
(207,040,770) (186,256,073)
-------------- --------------
Total partners' capital accounts (deficit) . . . . (281,693,038) (265,070,049)
-------------- --------------

$ 733,869,512 825,827,332
============== ==============
<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, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . $138,537,668 147,628,786 167,820,507
Interest income . . . . . . . . . . . . . . 985,675 132,713 181,750
------------ ------------ ------------
139,523,343 147,761,499 168,002,257
------------ ------------ ------------
Expenses:
Mortgage and other interest (note 3). . . . 82,954,551 80,871,590 86,030,245
Depreciation. . . . . . . . . . . . . . . . 29,564,205 30,374,278 39,102,045
Property operating expenses . . . . . . . . 56,703,039 62,583,682 66,232,722
Professional services . . . . . . . . . . . 4,404,763 2,491,222 2,314,088
Amortization of deferred expenses . . . . . 2,321,990 2,257,477 2,173,860
Provision for value impairment (note 1) . . -- -- 192,627,560
Provision for doubtful accounts (note 2). . 4,562,708 5,272,274 23,497,333
------------ ------------ ------------
180,511,256 183,850,523 411,977,853
------------ ------------ ------------

Net operating loss . . . . . . . . (40,987,913) (36,089,024) (243,975,596)

Loss on sale of investment property (note 2) (38,214,703) -- --
------------ ------------ ------------

Loss before extraordinary item . . (79,202,616) (36,089,024) (243,975,596)

Extraordinary gain on forgiveness of indebtedness
(note 2) . . . . . . . . . . . . . . . . . 62,529,627 -- --
------------ ------------ ------------

Net loss . . . . . . . . . . . . . $(16,672,989) (36,089,024) (243,975,596)
============ ============ ============

<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, 1995, 1994 AND 1993

<CAPTION>
CARLYLE REAL
ESTATE LIMITED VENTURE
PARTNERSHIP-XIII PARTNERS
----------------- ---------------
<S> <C> <C>

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)
------------ ------------

Balance at December 31, 1994 . . . . . . . . . . . . . (78,813,976) (186,256,073)

Capital contributions. . . . . . . . . . . . . . . . . -- 50,000
Operating loss . . . . . . . . . . . . . . . . . . . . (6,794,224) (34,193,689)
Loss on sale of investment property. . . . . . . . . . (4,676,475) (33,538,228)
Extraordinary gain on forgiveness of indebtedness. . . 15,632,407 46,897,220
------------ ------------

Balance at December 31, 1995 . . . . . . . . . . . . . $(74,652,268) (207,040,770)
============ ============

<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, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . $(16,672,989) (36,089,024) (243,975,596)
Items not requiring (providing) cash:
Depreciation . . . . . . . . . . . . . . 29,564,205 30,374,278 39,102,045
Amortization of deferred expenses. . . . 2,321,990 2,257,477 2,173,860
Write-off tenant allowances payable. . . -- (1,337,328) --
Provision for value impairment . . . . . -- -- 192,627,560
Provision for doubtful accounts. . . . . 4,562,708 5,272,274 23,497,333
Loss on sale of investment property. . . 38,214,703 -- --
Extraordinary gain on forgiveness of
indebtedness . . . . . . . . . . . . . (62,529,627) -- --
Changes in:
Rents and other receivables. . . . . . . 856,239 (3,858,448) (4,583,255)
Prepaid expenses . . . . . . . . . . . . 12,893,726 (13,461,314) (203,064)
Escrow deposits. . . . . . . . . . . . . 932,766 82,320 (24,494)
Tenant notes receivable. . . . . . . . . 108,142 85,196 238,882
Accrued rents receivable . . . . . . . . (1,615,968) (885,365) (24,448)
Interest payable to the O&Y affiliates . (1,570,237) (3,000,000) 4,570,237
Accounts payable and other accrued expenses 1,428,266 1,173,792 (1,296,990)
Accrued interest . . . . . . . . . . . . (215,423) 172,860 (50,248)
Unearned rent. . . . . . . . . . . . . . (12,718,177) 31,449,394 97,864
Deferred interest payable. . . . . . . . 14,954,980 15,248,036 13,431,777
Tenant security deposits . . . . . . . . (962,037) (162,518) 133,963
------------ ------------ ------------

Net cash provided by
operating activities. . . . . . . 9,553,267 27,321,630 25,715,426
------------ ------------ ------------
Cash flows from investing activities:
Restricted funds . . . . . . . . . . . . . 14,573,544 (12,291,341) (11,638,258)
Additions to investment properties,
net of tenant allowances payable . . . . (21,981,262) (646,124) (1,785,586)
Cash proceeds from sale of investment
property . . . . . . . . . . . . . . . . 18,175,965 -- --
Payment of deferred expenses . . . . . . . (8,648,941) (2,859,836) (1,394,358)
------------ ------------ ------------
Net cash provided by (used in)
investing activities. . . . . . . 2,119,306 (15,797,301) (14,818,202)
------------ ------------ ------------

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
AND UNCONSOLIDATED VENTURES

COMBINED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
------------ ------------ ------------

Cash flows from financing activities:
Capital contributions. . . . . . . . . . . 50,000 470,476 1,121,010
Advances to the O&Y affiliates . . . . . . (1,808,998) (1,662,503) (1,176,224)
Principal payments on long-term debt . . . (10,794,931) (9,642,776) (8,613,592)
Distributions to partners. . . . . . . . . -- -- (6,257,237)
------------ ------------ ------------

Net cash used in
financing activities. . . . . . . (12,553,929) (10,834,803) (14,926,043)
------------ ------------ ------------

Net increase (decrease) in cash . . (881,356) 689,526 (4,028,819)

Cash and cash equivalents,
beginning of year . . . . . . . . 1,529,078 839,552 4,868,371
------------ ------------ ------------
Cash and cash equivalents,
end of year . . . . . . . . . . . $ 647,722 1,529,078 839,552
============ ============ ============

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest $ 69,785,231 68,450,694 68,078,479
============ ============ ============
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, 1995, 1994 AND 1993

(1) OPERATIONS AND 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, L.L.C. (b)
- 1290 Associates, L.L.C. (b)
- 2 Broadway Associates and
2 Broadway Land Company (b)(c)

(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.

(c) The property owned by these ventures was sold in September 1995.
Reference is made to Note 3(c) of the Partnership filed with this annual
report.

JMB/NYC holds (through joint ventures) an equity investment portfolio
of commercial real estate in the city of New York, New York. Business
activities consist of rentals to a variety of commercial companies, and the
ultimate sale or disposition of such real estate.

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.

The preparation of financial statements in accordance with GAAP
requires the Combined Ventures to make estimates and assumptions that
affect the reported or disclosed amount of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

Statement of Financial Accounting Standards No. 95 requires the
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
$9,356,000 and $23,930,000, in the aggregate, at December 31, 1995 and
1994, respectively, are classified as restricted funds in the accompanying
combined balance sheet.

Provisions for value impairment (as discussed more fully in Note 2 of
the Partnership's financial statements filed with this annual report) 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 agreement for sale of
the 2 Broadway building at a sales price significantly below its original
carrying value, net of depreciation, (the property was sold in September
1995) the 2 Broadway venture has made a provision for value impairment on
such investment property of $192,627,560 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.

Amounts due from the Olympia & York affiliates aggregated $15,417,785
and $13,608,787, respectively at December 31, 1995 and 1994. 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, $15,417,785 and $13,608,787 at December 31,
1995 and 1994, 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 $2,753,710, $3,609,771 and $11,551,049 at December 31,
1995, 1994 and 1993, 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.

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 was $1,615,968, $885,365 and $24,448 for the
years ended December 31, 1995, 1994 and 1993, 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 all
entities 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, 1995 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
$.66 to $.68 on the dollar. Assuming a rate of $.66 on the dollar, the
implied SFAS 107 value of the bonds (with an aggregate carrying balance of
$902,603,491, in the accompanying combined financial statements) would be
approximately $596,000,000. 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 $80,437,137) 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.

(3) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995 and
1994:

1995 1994
------------------------
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,
and the 1290 Avenue of the
Americas Building; payments of
principal and interest based
upon a 30-year amortization
schedule are due monthly; however,

1995 1994
------------------------
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, 1994 and
1995 (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 . . . . . . . . . . $902,603,491 913,398,422

Less current portion of
long-term debt . . . . . . . . 902,603,491 913,398,422
------------ -----------
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:

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

237 Park Avenue Associates . . $360,961,491 365,278,508
1290 Avenue Associates . . . . 541,642,000 548,119,914
------------------------
$902,603,491 913,398,422
========================

No amounts have been allocated to 2 Broadway Land Company or 2
Broadway Associates pursuant to the Agreement as more fully discussed in
Note 3(c) of the Partnership's financial statements filed with this annual
report.

(4) LEASES

At December 31, 1995, the properties in the combined group consisted
of two 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 17 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 the fourth quarter of 1994, the 1290 Associates venture
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. JMB/NYC 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:

1996. . . . . . .$ 101,790,528
1997. . . . . . . 105,623,514
1998. . . . . . . 101,134,583
1999. . . . . . . 91,277,743
2000. . . . . . . 88,562,774
Thereafter. . . . 562,345,204
--------------
$1,050,734,346
==============

(5) NOTES PAYABLE

Notes payable consist of the following at December 31, 1995 and 1994:

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

1995 1994
------------ -----------
to JMB/NYC, thereafter until maturity;
principal and accrued interest due
March 20, 1999. Accrued deferred
interest of $47,164,545 and $93,853,559
is outstanding at December 31, 1995
and 1994, respectively. . . . . . $33,272,592 34,158,225
----------- ----------
Less current portion
of notes payable. . . . . . -- --
----------- ----------

Long-term notes payable . . . $33,272,592 34,158,225
=========== ==========

The allocation of the promissory notes and related deferred interest
among the joint ventures is as follows:

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

237 Park Avenue Associates. . $19,205,193 16,917,580
1290 Associates . . . . . . . 41,515,672 36,570,561
237 Park Avenue Associates
and 1290 Associates
(note 2). . . . . . . . . . 19,716,272 --
2 Broadway Land Company . . . -- 3,266,254
2 Broadway Associates . . . . -- 71,257,389
----------- -----------

$80,437,137 128,011,784
=========== ===========

<TABLE>
SCHEDULE III
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995

<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
DESCRIPTIONENCUMBRANCE(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) . .$360,961,49179,653,996 226,634,894 1,312,776 79,653,996 227,947,670 307,601,666
New York,
New York
(1290 Avenue
of the
Americas) .541,642,000 90,952,993 556,434,718 8,848,434 84,285,719 571,950,426 656,236,145
----------------------- ----------- ---------- ----------- ----------- -----------

Total . .$902,603,491170,606,989 783,069,612 10,161,210 163,939,715 799,898,096 963,837,811
======================= =========== ========== =========== =========== ===========
</TABLE>

<TABLE>
SCHEDULE III - CONTINUED
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES

SUPPLEMENTARY INCOME STATEMENT INFORMATION

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
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). $ 86,212,869 1981 8/14/84 5-30 years 9,250,111
New York, New York
(1290 Avenue of
the Americas). . . 228,017,972 1963 7/27/84 5-30 years 19,058,789
------------ ----------
Total. . . . . . $314,230,841 28,308,900
============ ==========

<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, 1995 for Federal income tax purposes was
$1,004,958,700.
(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 1290 Avenue of the Americas of $50,446,010 recorded September
30, 1992.

</TABLE>

<TABLE>
SCHEDULE III - CONTINUED
JMB/NYC OFFICE BUILDING ASSOCIATES
AND UNCONSOLIDATED VENTURES

SUPPLEMENTARY INCOME STATEMENT INFORMATION

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

(E) Reconciliation of real estate owned:
<CAPTION>
1995 1994 1993
-------------- -------------- -------------
<S> <C> <C> <C>

Balance at beginning of period. . . . . . $1,125,372,821 1,122,949,035 1,316,389,393
Additions during period . . . . . . . . . 19,221,555 2,423,786 601,043
Provision for value impairment. . . . . . -- -- (192,144,503)
Sales/retirements during period . . . . . (180,756,565) -- (1,896,898)
-------------- ------------- -------------
Balance at end of period. . . . . . . . . $ 963,837,811 1,125,372,821 1,122,949,035
============== ============= =============

(F) Reconciliation of accumulated depreciation:

Balance at beginning of period. . . . . . $ 406,690,418 376,316,140 339,110,993
Depreciation expense. . . . . . . . . . . 29,564,205 30,374,278 39,102,045
Sales/retirements during period . . . . . (122,023,782) -- (1,896,898)
-------------- ------------- -------------

Balance at end of period. . . . . . . . . $ 314,230,841 406,690,418 376,316,140
============== ============= =============

</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 1995 and 1994.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. Substantially all of the
outstanding shares of JMB are owned by certain of its officers, directors,
members of their families and their affiliates. JMB as the Corporate
General Partner has responsibility for all aspects of the Partnership's
operations, subject to the requirement that sales of real property must be
approved by the Associate General Partner of the Partnership, ABPP
Associates, L.P. Effective December 31, 1995, ABPP Associates, L.P.
acquired all of the partnership interests in Realty Associates-XIII, L.P.,
the Associate General Partner, and elected to continue the business of
Realty Associates-XIII, L.P. ABPP Associates, L.P., an Illinois limited
partnership with JMB as its sole general partner, continues as the
Associate 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 the executive and certain other 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
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Chief Executive Officer 8/01/93
Executive Vice President 1/02/87
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91

There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 5, 1996. 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 5,
1996. 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.-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"). JMB is also the sole general partner of the
associate general partner of most of the foregoing partnerships.

Most of the foregoing directors and officers are also officers and/or
directors of various affiliated companies of JMB including Arvida/JMB
Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.
("Arvida")), 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-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 58) 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. He is
a Certified Public Accountant.

Neil G. Bluhm (age 58) 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 57) 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 54) 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 62) (President of JMB Insurance Agency, Inc.) has
been associated with JMB since December, 1972.

John G. Schreiber (age 49) 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 46) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.

Glenn E. Emig (age 48) 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.

Gary Nickele (age 43) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.

Gailen J. Hull (age 47) 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 60) 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 1995, the General
Partners received distributions of $110,945, and the Corporate General
Partner received a management fee. The General Partners received a share
of Partnership gains for tax purposes aggregating $8,200 in 1995.

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 during 1995 for the Long Beach Plaza in Long Beach,
California and the Copley Place multi-use complex in Boston, Massachusetts,
at various fees calculated based upon the gross income from the properties.

In 1995, such affiliate earned property management and leasing fees
amounting to $1,459,783 for such services. 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 1995 aggregating $65,185
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, 1995. 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 1995, the Corporate General Partner of the
Partnership or its affiliates were due reimbursement for such out-of-pocket
expenses in the amount of $208,625, of which $91,622 was unpaid at December
31, 1995. The General Partners are also entitled to reimbursements for
portfolio management, legal and accounting services. Such costs for 1995
were $74,396, $9,267 and $164,441, respectively, all of which were paid as
of December 31, 1995.

financial statements). As of December 31, 1995, these obligations bore
interest at 5.83% per annum and interest accrued on these obligations was
$171,989.

<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.

(b) The Corporate General Partner, its officers and directors and the Associate General Partner own the
following Interests of the Partnership:

NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests JMB Realty Corporation 5 Interests directly Less than 1%

Limited Partnership
Interests Corporate General 6.79 Interests directly (1) Less than 1%
Partner, its officers
and directors and the
Associate General
Partner as a group
<FN>

(1) Includes 1.79 Interests owned by officers or their relatives for which an 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.

Reference is made to Item 10 for information concerning ownership of the Corporate General Partner.

(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.

</TABLE>

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 is hereby
incorporated by reference to the Partnership's Report on Form 10-K (File
No. 0-12791) for December 31, 1992, dated March 30, 1993.

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

10-G.Documents relating to the sale by the Partnership
of its interest in the Rio Cancion Apartments in Tucson, Arizona, are
herein incorporated by reference to the Partnership's Report on Form 8-K
(File No. 0-12791) for March 31, 1993, dated May 14, 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 herein incorporated by
reference to the Partnership's report for December 31, 1994 on Form 10-K
(File No. 0-12791) dated March 27, 1995.

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

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

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

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

10-W.Agreement of Sale between 2 Broadway Associates,
L.P. and 2 Broadway Acquisition Corp. dated August 10, 1995, a copy of
which is filed herewith.

10-X.Agreement of Conversion of 1290 Associates into
1290 Associates, L.L.C. dated October 10, 1995 among JMB/NYC Office
Building Associates, L.P., an Illinois limited partnership, O&Y Equity
Company, L.P., a Delaware limited partnership and O&Y NY Building Corp., a
Delaware corporation, a copy of which is filed herewith.

10-Y.Agreement of Conversion of 237 Park Avenue
Associates into 237 Park Avenue Associates, L.L.C., dated October 10, 1995
among JMB/NYC Office Building Associates, L.P., an Illinois limited
partnership, O&Y Equity Company, L.P., a Delaware limited partnership and
O&Y NY Building Corp., a Delaware corporation, a copy of which is 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 1995 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 25, 1996

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

By: JMB Realty Corporation
Corporate General Partner

JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 25, 1996

NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1996

H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1996

GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1996

GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1996

By: A. LEE SACKS*
A. Lee Sacks, Director
Date: March 25, 1996

By: STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 25, 1996

*By: GAILEN J. HULL, Pursuant to a Power of Attorney

GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1996

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 BuildingYes

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 Yes

10-U. Amendment No. 1 to Carlyle-XIII
Associates Yes

10-V. Amendment No. 1 to JMB/NYC Office
Building Associates, L.P. Yes

10-W. Agreement of Sale between 2 Broadway
Associates, L.P. and 2 Broadway
Acquisition Corp. dated August 10, 1995 No

10-X. Agreement of Conversion of 1290
Associates into 1290 Associates,
L.L.C. dated October 10, 1995 No

10-Y. Agreement of Conversion of 237 Park
Avenue Associates into 237 Park Avenue
Associates, L.L.C. dated October 10,
1995 No

21. List of Subsidiaries No

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII

EXHIBIT INDEX - CONTINUED

Document
Incorporated
By Reference Page
------------ ----

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.

AGREEMENT OF SALE

BETWEEN

2 BROADWAY ASSOCIATES, L.P.

AS SELLER,

AND

2 BROADWAY ACQUISITION, CORP.

AS PURCHASER

TABLE OF CONTENTS

PAGE

ARTICLE I: Sale of the Property . . . . . . . . . . . 1

ARTICLE II: Deposit, Purchase Price and Apportionments 2

2.1 Deposit . . . . . . . . . . . . . . . . . . . . 2

2.2 Purchase Price. . . . . . . . . . . . . . . . . 2

2.3 Prorations. . . . . . . . . . . . . . . . . . . 2

2.4 Tax Reduction Proceedings . . . . . . . . . . . 5

2.5 Closing Expenses. . . . . . . . . . . . . . . . 5

ARTICLE III: Title and Survey . . . . . . . . . . . . 7

3.1 Permitted Exceptions. . . . . . . . . . . . . . 7

3.2 Other Title Matters . . . . . . . . . . . . . . 8

ARTICLE IV: Covenants; Assumption of Brokerage Agreements;
Representations. . . . . . . . . . . . . . . . . . . . 9

4.1 Seller's Covenants. . . . . . . . . . . . . . . 9

4.2 Purchaser's Covenants . . . . . . . . . . . . . 11

4.3 Assumption of Brokerage Obligations . . . . . . 12

4.4 Representations . . . . . . . . . . . . . . . . 13

ARTICLE V: The Closing. . . . . . . . . . . . . . . . 13

5.1 Time and Place of Closing . . . . . . . . . . . 13

5.2 Acts to be Performed by Seller. . . . . . . . . 13

5.3 Acts to be Performed by Purchaser . . . . . . . 14

i
ARTICLE VI: Conditions Precedent to Purchaser's
and Seller's Obligations to close. . . . . . . . . . . 15

6.1 Conditions to Purchaser's Obligations . . . . . 15

6.2 Conditions to Seller's Obligations. . . . . . . 15

6.3 Termination . . . . . . . . . . . . . . . . . . 16

ARTICLE VII: Termination, Default and Remedies. . . . 16

7.1 Permitted Termination . . . . . . . . . . . . . 16

7.2 Default by Seller . . . . . . . . . . . . . . . 16

7.3 Default by Purchaser. . . . . . . . . . . . . . 17

ARTICLE VIII: Miscellaneous . . . . . . . . . . . . . 17

8.1 Casualty and Condemnation . . . . . . . . . . . 17

8.2 Brokerage . . . . . . . . . . . . . . . . . . . 18

8.3 Notices . . . . . . . . . . . . . . . . . . . . 18

8.4 Governing Law . . . . . . . . . . . . . . . . . 20

8.5 Integration; Modification; Waiver . . . . . . . 20

8.6 Counterpart Execution . . . . . . . . . . . . . 20

8.7 Headings; Construction. . . . . . . . . . . . . 21

8.8 Binding Effect; Assignment. . . . . . . . . . . 21

8.9 Exhibits. . . . . . . . . . . . . . . . . . . . 21

8.10 Recordation . . . . . . . . . . . . . . . . . . 21

8.11 Approval. . . . . . . . . . . . . . . . . . . . 22

8.12 Survival. . . . . . . . . . . . . . . . . . . . 22

8.13 Severability. . . . . . . . . . . . . . . . . . 22

8.14 Non-recourse. . . . . . . . . . . . . . . . . . 22

8.15 Seller's Access to Books and Records. . . . . . 22

ii
8.16 No Consequential Damages. . . . . . . . . . . . 23

8.17 Employee Arrangements . . . . . . . . . . . . . 24

8.18 Indemnification . . . . . . . . . . . . . . . . 24

8.19 Third Party Beneficiary . . . . . . . . . . . . 24

Exhibits
A. The land
B. Title Exceptions
C. (Intentionally Omitted)
D. (Intentionally Omitted)
E. Form of Assumption of Brokerage Agreements
F. Schedule of Leases
G. Schedule of Contracts
H. Form of Deed
I. Form of Assignment and Assumption of Ground Lease Agreement
J. Form of Assignment of Leases and Contracts
K. Form of Bill of Sale
L. Form of FIRPTA Affidavit
M. Schedule of Employees
N. Form of Letter Regarding Assumption of Collective
Bargaining Agreements
O. Schedule of Collective Bargaining Agreements

iii
AGREEMENT OF SALE

THIS AGREEMENT OF SALE (this "AGREEMENT") is made and entered into as
of August 10, 1995 between 2 broadway Associates, L.P., as seller
("SELLER"), and 2 BROADWAY ACQUISITION, CORP., a NY CORP., as purchaser
("Purchaser"). In consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and Purchaser agree as Follows:

ARTICLE I: SALE OF PROPERTY

Subject to the terms and provisions of the Agreement, Seller agrees
to sell to Purchaser, and Purchaser agrees to purchase from Seller, all of
the following described property (collectively, the "PROPERTY"):

(a) all of Seller's right, title and interest in and to the
fee title in that certain parcel of land (the "LAND") located in New York,
New York, being described on EXHIBIT A hereto, and the building and other
improvements constructed on the Land (the "IMPROVEMENTS") commonly known as
2 Broadway, New York, New York;

(b) all of Seller's interest as lessor and all of Seller's
interest as lessee, under that certain Lease Agreement dated as of May 28,
1956 between New York Produce Exchange, as landlord, and Frederick A.
Pfister and Joseph A. Marone, as tenants, as amended by amendments dated
December 30, 1957 and July 31, 1959 or otherwise (the "GROUND LEASE");

(c) all right, title and interest of Seller under all leases
and other agreements providing for the occupancy of space in the
Improvements (each, a "LEASE"), and all prepaid rentals (to the extent
applicable to a period after the Closing Date (as defined in Section 5.1
below) and the security deposits under the Leases (to the extent not
applied prior to the Closing Date);

(d) subject to the provisions of Sections 2.3 (d), 4.1 (b)
and 8.17, to the extent assignable, all right, title and interest of Seller
(x) under all agreements relating to the operation or maintenance of the
Property including, without limitation, service and maintenance agreements,
but excluding any such agreements with affiliates of the Seller or its
partners (the "CONTRACTS") and (y) the Collective Bargaining Agreements (as
defined in Section 8.17 (c));

(e) all machinery, equipment, fixtures and building supplies,
owned by Seller, located in or on the Land or the Improvements, and used in
connection with the operation of the Improvements (the "PERSONAL
PROPERTY");

(f) subject to the provisions of Section 8.1 below, all
right, title and interest, if any, of Seller in and to any land lying in
the bed of any highway, street, road or avenue, opened or proposed, in
front of or adjoining all or any part of the Land, to the center line
thereof, and to any award made, or to be made, in lieu thereof, and in and
to any unpaid award for damage to the Land by reason of change of grade of
any such highway, street, road or avenue; and
(g) all right, title and interest of Seller in and to any
easements, rights-of-way, privileges, rights and appurtenances of any kind
relating to and for the benefit of the Land and the Improvements,
including, without limitation, all development rights, air rights, zoning
rights and any adjacent vaults, alleys, strips or gores of land, sidewalks,
driveways and parking areas and benefits thereunto belonging and pertaining
to the Land and Improvements existing as of the date hereof and at any time
hereafter.

(h) The parties hereto acknowledge and agree that the value
of the Personal Property is DE MINIMIS and no part of the Purchase Price
(as hereinafter defined) is applicable thereto.

ARTICLE II: DEPOSIT, PURCHASE PRICE AND APPORTIONMENTS

2.1 DEPOSIT. Prior to the execution of this Agreement, Purchaser
has deposited the sum of $1,500,000.00 (the "DEPOSIT") with the Title
Company (as defined in Section 3.1 below) pursuant to the "Offer for the
Purchase of Property known as 2 Broadway, New York, New York" (the "Offer
Letter"). The Deposit is being held by the Title Company in an interest
bearing account and otherwise in accordance with that certain escrow
agreement referred to in the Offer Letter, among the Title Company,
Purchaser and Seller as security for the performance by Purchaser of its
obligations hereunder.

2.2 PURCHASE PRICE.The purchase price for the Property (the
"PURCHASE PRICE") shall be TWENTY MILLION FIVE HUNDRED THOUSAND DOLLARS
($20,500,000.00), which shall be paid as Closing (as defined in Section 5.1
below), plus or minus any net prorations due to Seller or Purchaser, as the
case may be, as described in Section 2.4 below, by wire transfer to Seller
and/or such other payees as Seller may designate in writing, upon notice
given as least two business days prior to the Closing Date (as hereinafter
defined). The net Purchase Price shall be paid by (a) the Title Company
delivering the amount of the Deposit to Seller and (b) the Purchaser
delivering the balance to Seller.

2.3 PRORATIONS.

(a) The items described below with respect to the Property
shall apportioned between seller and Purchaser and shall be prorated on a
per diem basis as of 11:59 p.m. of the day before the Closing Date:

(i) annual rents and other fixed charges under the
Leases ("FIXED RENT"), as, when and to the extent collected

(ii) unfixed charges payable under the Leases
(including, without limitation, on account of percentage rental, taxes,
porter's wage, operating expenses and electricity) ("UNFIXED RENT"), as
when and to the extent collected;

(iii)real estate taxes, vault taxes, water charges and
sewer rents, if any, n the basis of the fiscal year for which assessed;

(iv) assessments, if any;

-2-
(v) amounts payable under the Contracts assigned to
Purchaser.

(vi) employees' wages, vacation pay, welfare benefits
and payroll taxes;

(vii)interest on tenant security deposits if applicable;

(viii) building supplies contained in unopened
cartons or packages located at the Property (based upon Seller's cost, as
set forth in invoices or other proof reasonably satisfactory to Purchaser);
and

(ix) fees payable in connection with licenses and
permits covering the Property or any structures or equipment located
thereon.

(b) If the closing Date shall occur before the real estate
tax rate or assessment is fixed for the tax year in which the Closing date
occurs, the apportionment of taxes shall be upon the basis of the tax rate
or assessment for the next preceding year applied to the latest assessed
valuation and Seller and Purchaser shall readjust real estate taxes
promptly upon the fixing of the tax rate or assessment for the tax year in
which the closing Date occurs.

(c) If there is a water meter(s) on the Property, Seller
shall furnish a reading to a date not more than thirty (30) days prior to
the Closing Date, and the unfixed meter charge and the unfixed sewer rent,
if any, based thereon for the intervening time shall be apportioned on the
basis of such last reading.

(d) Seller will close all of its accounts relating to the
Property with any and all utility companies, and none of the deposits held
by such utility companies, whether or not such deposits are assignable
shall be assigned to purchaser but shall be the property of, and shall be
retained by, Seller. Purchaser shall be responsible for making its own
arrangements to open new accounts relating to the Property with any and all
utility companies. Seller will cancel all of its insurance covering the
Property as of the Closing Date, and Purchaser shall be responsible for
obtaining its own insurance coverage. Seller will cancel all its
arrangements with its affiliates which provide elevator maintenance and
other repair and maintenance services to the Property.

(e) Seller and Purchaser shall prepare an agreement (the
"PRORATION AGREEMENT") setting forth in reasonable detail the prorations
described above and stating the net amount owed to Seller or Purchaser, as
the case may be, on account thereof. Seller and Purchaser shall execute
and deliver the Proration Agreement as provided in Sections 5.2 and 5.3
below.

(f) If a net amount is owed by Seller to Purchaser as set
forth in the Proration Agreement, such amount shall be credited against the
payment to be made by Purchaser pursuant to Section 2.2 above. If a net
amount is owed by Purchaser to Seller as set forth in the Proration
Agreement, such amount shall be added to the payments to made by Purchaser
pursuant to Section 2.2 above. If the net amount owed by Seller or
Purchaser as the case may be, is not determined at least two business days
prior to Closing, so as to be included in the Seller's wire instructions
contemplated by Section 2.2, such amount shall be paid by certified check
payable to the other party or its designee.

-3-
(g) If any of the items described above cannot be apportioned
at the Closing because of the unavailability of information as to the
amounts which are to be apportioned or otherwise, or are incorrectly
apportioned at Closing or subsequent thereto, such items shall be
apportioned or reapportioned, as the case may be, as soon as practicable
after the Closing Date or the date such error is discovered, as applicable;
provided that, with the exception of any item required to be apportioned
pursuant to paragraph (h) below neither party shall have the right to
request apportionment or reapportionment of any such item after the first
anniversary of the Closing Date.

(h) The apportionment of Fixed and Unfixed Rent
(collectively, "RENT") and the collection of Rent arrearage shall be
subject to the following:

(i) If, on the Closing Date, there is any past due Rent
owing by any tenant or other party under a Lease (each, a "TENANT") for any
period prior to the Closing Date, any Rent received by Purchaser from such
Tenant shall be adjusted between Seller and Purchaser as follows: (1)
first, to Rent due by such Tenant for the month in which the Closing Date
occurs and which shall apportioned in accordance with Section 2.3(a) above,
(2) second, to Rent then due and payable by such Tenant for any period
after the Closing Date and (3( then, the excess, if any, to past due Rent
for the period prior to the Closing Date. Purchaser shall use reasonable
efforts to collect such sums. Purchaser grants Seller the right to sue at
law on behalf of the landlord) but not to bring any summary dispossess
proceeding) to collect past due Rent owed by Tenants as of Closing Date.
Any sums received by Purchaser to which Seller is entitled shall be held in
trust for Seller on account of said past due Rent payable to Seller, and
Purchaser shall remit to Seller any such sums received by Purchaser to
which Seller is entitled within five (5) days after receipt thereof. If
Seller receives any amounts after the Closing Date which attributable, in
whole or in part, to any period from and after the Closing Date, Seller
shall remit to Purchaser that portion of the moneys so received by Seller
to Purchaser is entitled within five (5) days after receipt thereof.

(ii) Unfixed Rents shall be apportioned for the fiscal
year for which such Rent is calculated under respective Lease in proportion
to the number of days in such fiscal year occurring prior to the Closing
Date and the number of days in such fiscal year from and after the Closing
Date. If any Unfixed Rent payable under any Lease has not been billed or
has not been determined in accordance with the provisions of the respective
Lease as of the Closing Date, Purchaser shall bill the same when billable
and each party shall cooperate with the other to determine the correct
amount of such charges. Seller shall be entitled to all Unfixed Rent (i)
relating to fiscal year occurring in its entirety prior to the Closing Date
and (ii) relating to a charge or expense incurred prior to the Closing Date
but which is not being apportioned pursuant to this Agreement (e.g.,
overtime HVAC, recoveries of legal fees in Tenant disputes).

(iii)All prepaid rentals made under any Lease in respect
of periods on or after the Closing Date and security deposits (to the
extent required to be returned to the respective Tenant at the expiration
of its Lease) shall be delivered to Purchaser at the Closing. Seller shall
reasonably cooperate with Purchaser to change the beneficiary on all
security deposits that are letters of credit or certificates of deposit to
Purchaser.

-4-
(iv) For the avoidance of doubt, the parties confirm
that all amounts due and payable in respect of Leases which have expired or
otherwise terminated prior to the Closing Date shall be the sole property
of Seller and, notwithstanding anything to the contrary contained herein,
Seller may take such actions as it desires to collect such amounts.

2.4 TAX REDUCTION PROCEEDINGS.

Seller is hereby authorized to continue any proceeding
now pending for the reduction of the assessed valuation of the Property
("TAX PROCEEDINGS") and to initiate any such Tax Proceedings, through the
Closing Date. All such proceeding shall be prosecuted by counsel of
Seller's choice. Seller shall have the right to withdraw, settle or
otherwise compromise any protest or reduction proceeding affecting real
estate taxes assessed against the Property (i) for the fiscal period ending
June 30, 1995 or any prior fiscal period without the prior consent of
Purchaser and (ii) for the fiscal year ending June 30,1996 provided
Purchaser shall have consented with respect thereto, which consent shall
not be unreasonably withheld or delayed. The amount of any tax refunds
(net of attorneys' fees and other costs of obtaining such tax refunds
whether incurred prior to or after the day hereof or the Closing Date and
net of amounts required to be refunded to tenants (including former
tenants)) with respect to any portion of the Property for a tax period in
which the Closing Date occurs shall be apportioned between Seller and
Purchaser as of the Closing Date. All refunds for prior tax years belong
solely to Seller and, upon receipt of Purchaser or its successors or
assigns, same shall be immediately paid to Seller. Purchaser shall not
make any filings or take any other actions which would prevent Seller from
prosecuting Tax Proceedings brought by Seller.

2.5 CLOSING EXPENSES.

(a) TITLE AND SURVEY. Purchaser shall bear all costs of
obtaining the Title Report and of the premium for an ALTA owner's title
policy (1992 form) (the "TITLE POLICY") and survey costs (including costs
of updating the Survey (as defined in Section 3.1 below).

(b) REAL ESTATE TRANSFER TAX. Seller and Purchaser agree to
comply timely with the requirements of Article 31 of the New York Tax Law
and the regulations applicable thereto, as the same may be amended from
time to time. Seller and Purchaser shall swear to and deliver the return
require by said statute and the regulations issued pursuant to the
authority thereof (the "RET RETURN"), it being acknowledged by the parties
that Seller intends to file an RET Return stating that, pursuant to the
provisions of Section 1146(c) of the United States Bankruptcy Code and the
Bankruptcy Court's order confirming the Seller's Plan of Reorganization the
transfer of the Property pursuant to this Agreement shall be exempt from
the Real Estate Transfer Tax imposed by said Article 31. Any Real Estate
Transfer Tax which may nevertheless be imposed by said Article 31 shall be
paid by Seller.

(c) REAL PROPERTY TRANSFER TAX. Seller and Purchaser agree
to comply timely with the requirements of Chapter 21 of Title 11 of the
Administrative Code of the City of New York and the regulations applicable
thereto, as the same may be amended from time to time. Seller and
Purchaser shall swear to and deliver the return required by said statute
and the regulations issued pursuant to the authority thereof (the "RPT
RETURN"), it being acknowledged

-5-
by the parties that Seller intends to file an RPT Return stating that,
pursuant to the provisions of Section 1146(c) of the Bankruptcy Code and
the Bankruptcy Court's order confirming the Seller's Plan of
Reorganization, the transfer of the Property pursuant to this Agreement
shall be exempt from the Real Estate Transfer Tax imposed by said Chapter
21. Any Real Estate Transfer Tax which may nevertheless be imposed by said
Chapter 21 shall be paid by Seller.

(d) GAINS TAX.

(i) Seller and Purchaser agree to comply timely with
the requirements of Article 31-B of the Tax Law of the State of New York
and the regulations applicable thereto, as the same from time to time may
be amended (collectively, the"GAINS TAX LAW") in good faith and in such
manner as to avoid any postponement of the Closing; Purchaser agrees to
deliver to Seller simultaneously with the execution of this Agreement a
duly executed and acknowledged Transferee Questionnaire prepared by Seller.

At the Closing, Seller shall deliver or cause to be delivered to the Title
Company either (A) an official Statement of No Tax Due, or (B) an official
Tentative Assessment and Return (in the case of either (A) or (B), the
"GAINS TAX DOCUMENT") accompanied by a bank check payable to the order of
the State Tax Commission in the amount of the tax shown to be due thereon.
In the event that on the anticipated Closing Date Seller has not obtained
the Gains Tax Document, Seller shall be entitled, by notice to Purchaser,
to adjourn the closing one or more times for an aggregate period not to
exceed sixty (60) days and Purchaser's obligations hereunder shall remain
in full force and effect in the meantime.

(ii) Without limiting the provisions of Section 8.8
below, if the Purchaser assigns this Agreement to the extent permitted
pursuant to said Section 8.8, no assignment of any rights hereunder shall
be effective unless Purchaser and each assignee comply timely with the
requirements of the Gains Tax Law applicable to the assignment transaction
and unless Purchaser and each assignee delivers to Seller and/or the Title
Company on or before the Closing Date the applicable items referred to in
clauses (A) or (B) of the preceding paragraph (i), all as may be required
as a prerequisite to the recording of the Deed (as defined in Section
5.2(a)). Purchaser shall not be entitled to any delay of the Closing Date
by reason of Purchaser's obligation to comply timely with the requirements
of the Gains Tax Law in the event of any such assignment.

(iii)In addition to making the payment and delivering
the instruments and documents referred to above in this Section 2.5(d),
Seller, Purchaser and any assignee of Purchaser shall timely (A) make any
other payments (except that Purchaser shall have no obligation to make any
payments other than in its capacity, if any as assignor hereunder) and (B)
execute, acknowledge and deliver such further documents and instruments, as
may be necessary to comply with the Gains Tax Law.

(e) TAX PAYMENTS. Upon Seller's request, made not less than
two (2) business days prior to the Closing, Purchaser shall bring to the
Closing separate certified or bank check(s) in the amount(s) of the taxes,
if any, due with respect to the Real Estate Transfer Taxes as referred to
in (b) and (c) above and the Gains Tax Law, if any. The entire amount of
taxes due under the Gains Tax Law (excluding any amounts required to be
paid as a result of an

-6-
assignment of this Contract and the entire amount of taxes due with respect
to such Real Estate Transfer Taxes shall be credited against the Purchase
Price payable at Closing.

(f) PROFESSIONAL FEES AND EXPENSES. Seller and Purchaser
shall each pay their respective legal, consulting and other professional
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby.

(g) RECORDING CHARGES. Purchaser shall pay all recording
charges, if any, payable in connection with the recording of the Deed and
the Ground Lease Assignment. Each party shall pay all other charges, if
any, payable in connection with the recording of any documents delivered by
or on behalf of such party.

ARTICLE III: TITLE AND SURVEY

3.1 PERMITTED EXCEPTIONS.

(a) Purchaser has been furnished with a preliminary title
report no. NY941074M (the "TITLE REPORT") with respect to the Property,
dated July 12, 1994 and further redated February 3,1995 issued by
Commonwealth Land Title Insurance Company (the "TITLE COMPANY"). Seller
has caused to be furnished to Purchaser a survey of the Land prepared by
Earl B. Lovell-S.P. Belcher, Inc., dated June 5,1959, last redated March
28,1995 (the "SURVEY").

(b) The Property is to be sold and conveyed subject to the
following (the "PERMITTED EXCEPTIONS"):

(i) the matters set forth on EXHIBIT B hereto and the
standard exclusions set forth in Purchaser's title insurance policy;

(ii) the state of facts shown on the Survey, and any
additional state of facts that an accurate update of the Survey might show
provided that such additional facts do not materially and adversely affect
the use of the Improvements as an office building;

(iii)all laws, ordinances, rules and regulations of the
United States, the State of New York, the City of New York or any agency,
department, commission, bureau or instrumentality of any of the foregoing
having jurisdiction (each, a "GOVERNMENTAL AUTHORITY") affecting the
Property, as the same may now exist or may be hereafter modified
supplemented or promulgated;

(iv) unpaid federal or state inheritance and estate
taxes, or unpaid state and local franchise, general corporation and/or
income taxes or other monetary liens, provided that, based upon a deposit
with the Title Company, an indemnity to the Title Company, the order of a
bankruptcy court having jurisdiction, or other assurances by Seller to the
Title Company, Seller is able to induce the Title Company to omit such lien
or encumbrance as an objection to title or to insure against its collection
out of the Property;

-7-
(v) right, lack of right or restricted right of any
owner of the Property to construct and or maintain (and the right of any
Governmental Authority to require the removal of) any vault or vaulted
area, in or under the streets, sidewalks or other areas abutting the
Property and any applicable licensing statute, ordinance and regulation,
the terms of any license pertaining thereto and the lien of street,
sidewalk or other area vault taxes;

(vi) all presently existing and future liens of (A) real
estate taxes and (B) water rates, water meter charges, water frontage and
sewer taxes, rents ad charges provided that the items set forth in (A) and
(B) are apportioned as provided in this Agreement;

(vii)all violations of laws, ordinances, orders,
requirements or regulations of any Governmental Authority, applicable to
the Property whether or not noted in the records of or issued by, any
Governmental Authority, existing on the Closing Date;

(viii) such matters as the Title Company shall be
willing, without special premium, to omit as exceptions to coverage or to
except with insurance against collection out of or enforcement against the
Property;

(ix) any utility company rights, easements and
franchises, provided same do not materially and adversely affect the use of
the Improvements as on office building; and

(x) financing statements covering fixtures, equipment
or personal property of existing or past Tenants.

3.2 OTHER TITLE MATTERS.

(a) In the event that on the anticipated Closing Date title
to the Property shall be subject to liens, encumbrances or other matters
which are not Permitted Exceptions, and if Purchaser shall be unwilling to
waive the same and to close the transaction contemplated by this Agreement
without abatement or reduction of the Purchase Price or credit or allowance
of any kind, Seller shall have the right, at Seller's sole election, either
(i) to take such action as Seller shall deem advisable to remove, remedy or
comply with such liens, encumbrances or objections or (ii) to cancel this
Agreement. Seller shall be deemed to have remedied such liens,
encumbrances or objections for all purposes of this Agreement and Purchaser
shall be obligated to close title hereunder if the Title Company or another
title company licensed to do business in New York and selected by Seller
will insure Purchaser's title to the Land and Improvements in the amount of
the Purchase Price under an ALTA owner's standard form policy (1992 form)
subject only to the Permitted Exceptions, and in such case Purchaser shall
accept such title insurance and pay the premiums therefor. In the event of
Seller' election to take action to remove, remedy or comply with such
liens, encumbrances or other objections or if Seller shall have failed to
satisfy any other conditio to Closing contained in this Agreement or if
Seller for any other reason elects not to close on the scheduled Closing
Date, then, in any such instance, Seller shall be entitled, by notice to
Purchaser, to adjourn the Closing one or more times for an aggregate period
not to exceed ninety (90) days, and Purchaser's obligations hereunder shall
remain in full force and effect in the meantime. If for any reason
whatsoever (except for Seller's

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default under paragraph (b) below) Seller shall not have succeeded in
removing, remedying or complying with such liens, encumbrances or other
objections at the expiration of any such adjournment or if for any reason
whatsoever (except as set forth in Section 7.2 below) Seller shall have
failed to satisfy any other condition to Closing contained in this
Agreement at the expiration of any such adjournment, and, in either case,
shall not elect or shall not be entitled to further adjourn the Closing,
and if Purchaser shall still be unwilling to waive the same and to
consummate the Closing without abatement or reduction of the Purchase Price
or credit or allowance of any kind, this Agreement shall be, and be deemed
to be, canceled, the Deposit shall be promptly returned to Purchaser, and
the parties shall have no further obligations under this Agreement except
those which are expressly stated to survive the termination thereof.

(b) The acceptance of the Deed (as hereinafter defined) by
Purchaser shall be deemed to be a full performance and discharge of every
obligation on the part of Seller to be performed under this Agreement,
except those, if any, which are specifically stated herein to survive the
Closing. If on the closing Date there are any liens or encumbrances
affecting the Property subject to which Purchaser is not obligated to
accept title, Seller may use any portion of the Purchase Price payable
pursuant to Section 2.2 above to satisfy same, provided Seller shall have
delivered instruments in recordable form sufficient to release of record
any such liens or encumbrances which constitute recorded instruments,
together with the cost of recording or filing said instruments, and the
Title Company shall agree to omit such lien or encumbrance as an objection
to title. Seller shall use good faith efforts to obtain an order from the
bankruptcy court having jurisdiction that would enable Seller to transfer
title to the Property to Purchaser free and clear of all liens,
encumbrances and other matters that are not Permitted Exceptions. During
the period between the date hereof and the Closing Date, Seller shall not
grant any additional liens to secure debt (other than any mortgage liens it
may grant or confirm in connection with the mortgage financing currently
encumbering the Property); provided, however, that the creation of
involuntary liens against the Property shall not constitute a breach of
Seller's obligations under this sentence.

(c) Any title insurance Purchaser may obtain with respect to
the purchase of the Property shall be obtained from the Title Company,
provided the Title Company is willing to issue the same in accordance with
the terms hereof.

ARTICLE IV: COVENANTS; ASSUMPTION OF BROKERAGE AGREEMENTS;
REPRESENTATIONS

4.1 SELLER'S COVENANTS. Seller covenants that during the period
between the date hereof and the Closing Date:

(a) The Improvements will be maintained in their present
condition, subject, however, to normal wear and tear, damage by fire or
other casualty; provided, however, in no event will seller be obligate to
expend more than $25,000 in the aggregate to make any repairs or
replacements to the Improvements. Nothing herein shall be deemed to limit
the installation or alteration of tenant improvements.

-9-
(b) Without the prior written consent of Purchaser (which
shall not be unreasonably withheld), Seller shall not enter into any
agreement with respect to the use, occupancy, operation or maintenance of
the Property and which would be binding on Purchaser, including, without
limitation, Leases and employment, management, service, maintenance and
union agreements, or amend, renew or extend any such agreement presently in
effect in any material respect, (i) unless such new agreement or amendment
can be cancelled on not more than thirty (30) days' notice, (ii) except for
agreement or amendments required by law or required to perform emergency
repairs or improvements, and (iii) except for union agreements.

(c) Subject to Section 4.2 (d) and the further provisions of
this Section 4.1 (c), Purchaser and its authorized representatives will be
given reasonable access to the Property during ordinary business hours,
provided that, any such person given access shall be accompanied by a
representative of Seller. Purchaser hereby agrees to indemnify and hold
Seller harmless from and against any and all claims, liabilities, losses
and expenses, including reasonable attorneys' fees, court costs and
disbursements, for physical damage to the Property or any other property or
personal injury to any person arising out of or incurred in connection with
the performance of any such inspection or any other entry onto the Property
by Purchaser or its representatives which indemnification shall survive (i)
the termination or cancellation of this Agreement for any reason and (ii)
the Closing. Purchaser shall maintain or cause to be maintained, at
Purchaser's expense, a policy of commercial general liability insurance,
with contractual liability covering Purchaser's indemnification obligations
contained in this paragraph, and with a combined single limit of not less
than $1,000,000 commercial general liability with a $2,000,000 aggregate
and $10,000,000 umbrella liability, insuring Purchaser and Seller and
Seller's Affiliates, as additional insured, against any injuries or damages
to persons or property that may result from or are related to (a)
Purchaser's and/or Purchaser's Representatives' entry to the Property, (b)
any investigations or other activities conducted thereon, and (c) any and
all other activities undertaken by Purchaser and/or Purchaser's
Representatives, in such forms and with an insurance company licensed in
the State of New York and rated by Best's Insurance Reports and having a
rating of not less than A-VII, and deliver a certificate of insurance
representing such coverage to Seller prior to the first entry on the
Property. As used in this Agreement, the term, the term "SELLER'S
AFFILIATES" shall mean any disclosed or undisclosed officer, director,
employee, trustee, shareholder, partner, principal, parent, subsidiary or
other affiliate of Seller. The term "PURCHASER'S REPRESENTATIVES" shall
mean any of Purchaser's directors, officers, employees, affiliates,
partners, brokers, agents or other representatives, including, without
limitation, attorneys, accountants, contractors, engineers and financial
advisors.

(d) Seller shall maintain in full force and effect Seller's
existing insurance coverage with respect to the Property or substantially
similar coverage.

(e) Seller shall perform its obligations under the last two
sentences of Section 3.2 (b) above.

Whenever in this Agreement Seller is required to obtain
Purchaser's approval or consent, Purchaser shall, within five (5) business
days after request therefore, notify Seller of its

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approval or disapproval. If Purchaser fails to respond within said five
(5) business day period Purchaser shall be deemed to have granted approval
or consent.

4.2 PURCHASER'S COVENANTS

(a) Purchaser covenants and agrees that Purchaser (i) knows,
and has examined, inspected and investigated to the full satisfaction of
Purchaser the physical nature and condition of the Property, (ii) has
independently investigated, analyzed and appraised the value and
profitability of the Property and (iii) has reviewed the Title Report, the
Survey and such other documents and materials as Purchaser has deemed
advisable. Purchaser acknowledges that, except as specifically set forth
in this Agreement neither Seller nor any real estate broker, agent,
employee, servant, consultant or representative of Seller has made any
representations whatsoever regarding the subject matter of this Agreement
or the transaction contemplated hereby, including without limitation,
representations as to the physical nature or condition of the Property,
zoning laws, building codes, laws and regulations, environmental matters,
the violation of any laws, ordinances, rules, regulations or orders of any
Governmental Authority, water, sewer or other utilities, rents or other
income, expenses applicable to the Property, capital expenditures, leases,
existing or future operations of the Property or any other matter or thing
affecting or related to the Property or the operation thereof, except as
herein specifically set forth, and Purchaser further agrees to accept the
Property in its "as is" condition and "with all faults" on the date hereof
subject to reasonable wear and tear and, subject to the provisions of
Section 8.1 below, loss by casualty or condemnation. In executing,
delivering and/or performing this Agreement Purchaser has not relied upon
and does not rely upon, and Seller shall not be liable or bound in any
manner by, express or implied warranties, guaranties, promises, statements,
representations or information pertaining to any of the matters set forth
above in this paragraph made or furnished by Seller or by any real estate
broker, agent, employee, servant or any other person representing or
purporting to represent Seller to whomever made or given, directly or
indirectly, verbally or in writing, unless such warranties, guaranties,
promises, statements, representations or information are expressly and
specifically set forth herein.

(b) Purchaser covenants and agrees that neither Purchaser nor
Purchaser's Representatives shall make any oral or written contact with any
of Seller's tenants, occupants, vendors, employees, consultants or
contractors, or any other entity or person affiliated with the Property in
any manner concerning the Property prior to the Closing Date without
obtaining Seller's prior written consent in each instance.

(c) Purchaser expressly acknowledges that, except as
expressly set forth in this Agreement, neither Seller, nor any person
acting on behalf of Seller, nor any person or entity which prepared or
provided any of the "Evaluation Materials" (as such term is defined in the
Solicitation of Offers Package pursuant to which this Agreement is being
executed), nor any direct or indirect officer, director, partner,
shareholder, employee, agent, representative, accountant, advisor,
attorney, principal, affiliate, consultant, contractor, successor or assign
of any of the foregoing parties (Seller and all of the other parties
described in the preceding portions of this sentence (other than Purchaser)
shall be referred to herein collectively as the EXCULPATED PARTIES) has
made any oral or written representations or warranties, whether expressed
or implied, by operation of law or otherwise, with respect to the Property,
the zoning and other laws,

-11-
regulations rules applicable thereto or the compliance by the Property
therewith, the revenues and expenses generated by or associated the
Property, or any Evaluation Materials. Purchaser further acknowledges that
all Evaluation Materials relating to the Property which have been provided
by any of the Exculpated Parties have been provided without any warranty or
representation, expressed or implied as to their content, suitability for
any purpose, accuracy, truthfulness or completeness and Purchaser shall not
have any recourse against Seller or any of the other Exculpated Parties in
the event of any errors therein or omissions therefrom. Purchaser is
acquiring the Property based solely on its own independent investigation
and inspection of the Property and not in reliance on any information
provided by Seller or any of the other Exculpated Parties, including,
without limitation, any information contained in the Evaluation Materials.

(d) Purchaser acknowledges that any access it is given to the
Property (whether pursuant to Section 4.1 (c) above or otherwise) shall be
solely for the purpose of connection with the ownership of the Property
after acquisition of same by Purchaser and shall neither be a basis for
evaluating the purchase and sale herein agreed to by Purchaser, nor shall
it be a contingency or condition to the performance of Purchaser's
obligations hereunder. The results of any such access (whether evidencing
latent or patent defects in the Property, the existence or nonexistence of
any hazardous materials or substances, the tenants of the Property or the
leases affecting the Property, economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
air quality, topography, drainage, soil, subsoil of the Property, the
utilities serving the Property, any zoning, environmental or building laws,
rules or regulations affecting the Property, or otherwise disclosing any
condition which is undesirable or in violation of any law or governmental
rule, regulation, ordinance or order) shall not be grounds for any release
of Purchaser's obligations hereunder or the time for the performance of
same, any amendment or modification of this Agreement or any abatement in
the Purchase Price. Purchaser agrees to indemnify, defend and hold
harmless Seller for any and all loss, cost, liability or expense
(including, without limitation, attorneys' fees, court costs and
disbursements) arising out of any acts or omissions or Purchaser or its
agents, contractors or representatives in connection with its access to the
Property provided for in this Section.

(e) Seller shall not be obligated to pay any sums or perform
any work to any portion of the Property including, but not limited to any
work which may now or hereafter be required to cause the Property to be in
compliance with the requirements of the Americans with Disabilities Act or
any other laws.

4.3 ASSUMPTION OF BROKERAGE OBLIGATIONS. At Closing, Purchaser
shall assume all of Seller's obligations under paragraph 11 of the
brokerage agreement dated December 14, 1990 between O&Y Management Corp. as
agent for 2 Broadway Associates and Peter Berkley & Company, Inc. (relating
to space leased by Corporate Solutions, Inc.); under paragraph 10 of the
brokerage agreement between O&Y Management Corp. as agent for 2 Broadway
Associates and Edward S. Gordon Company, Inc. (relating to space leased by
RAS Securities) and under paragraph 3 of the brokerage agreement dated as
of January 16, 1995 between O&Y Management Corp. as agent for 2 Broadway
Associates and Edward S. Gordon Company, Inc.

-12-
(relating to space leased by Prentice-Hall, Inc.) copies of which brokerage
agreements have been furnished to Purchaser. Such assumptions shall be
pursuant to an instrument substantially in the form annexed hereto as
EXHIBIT E.

4.4 REPRESENTATIONS.

(a) Seller represents that the schedule of leases for the
Improvements attached as EXHIBIT F hereto is true and correct in all
material respects as of the date hereof, provided that to the extent any
information set forth thereon conflicts with the provisions of any Lease or
other documentation delivered to Purchaser, the rent roll shall be deemed
modified to reflect the correct information.

(b) Seller represents that the schedule of Contracts set
forth as EXHIBIT G hereto is true and correct in all material respects,
provided that to the extent any information set forth thereon conflicts
with the provisions of any Contract or other documentation delivered to
Purchaser, the schedule shall be deemed modified to reflect such correct
information.

ARTICLE V: THE CLOSING

5.1 TIME AND PLACE OF CLOSING. Subject to the other terms and
conditions of this Agreement, including any adjournment rights provided for
herein, the (the "CLOSING") of the transactions contemplated hereby shall
be held on the fifteenth day after the date hereof (the "CLOSING DATE "),
or if such day is not a business day, then on the next succeeding business
day. The Closing shall take place at the offices of Fried, Frank, Harris,
Shriver & Jacobson, One New York Plaza, New York, New York, or at such
other location in New York, New York as seller may designate upon not less
than two (2) business days notice.

5.2 ACTS TO BE PERFORMED BY SELLER. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser the following items:

(a) a recordable bargain and sale deed without covenants
against grantor's acts in New York statutory form (the "DEED"), executed
and acknowledged by Seller, in the form attached as EXHIBIT H hereto,
conveying to Purchaser the Land and Improvements subject to the Permitted
Exceptions and such other liens, encumbrances and other matters as
Purchaser may be willing to waive or Seller shall be deemed to have
remedied, as described in Section 3.2(a) above;

(b) a recordable assignment (the "GROUND LEASE ASSIGNMENT"),
without recourse or warranty, in New York statutory form, of Seller's
interest as lessor and lessee under the Ground Lease, in the form attached
as EXHIBIT I hereto, which shall include Purchaser's assumption of Seller's
obligations thereunder accruing from and after the Closing Date and a
general release by Purchaser of any claims it may have relating to the
Ground Lease against Seller (and its predecessors-in-interest) thereunder;

(c) an assignment (the "ASSIGNMENT OF LEASES AND CONTRACTS")
of all right, title and interest of Seller under the Leases and Contracts
(to the extent assignable) which are in

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effect on the Closing Date without, recourse or warranty, in the form
attached as EXHIBIT J hereto, which shall include Purchaser's assumption of
Seller's obligations under the Leases and Contracts accruing from and after
the Closing Date;

(d) a bill of Sale ("BILL OF SALE") in the form attached as
EXHIBIT K hereto, conveying Seller's right title and interest in and to the
Personal Property;

(e) a nonforeign affidavit in the form of EXHIBIT L hereto,
executed by Seller;

(f) the Proration Agreement, executed by Seller;

(g) all existing surveys, blueprints, drawings, plans and
specifications for or with respect to the Property or any part thereof, to
the extent in Seller's possession;

(h) keys to the Improvements in Seller's possession;

(i) the RET Return, the RPT Return and the Gains Tax
Document, executed and acknowledged by Seller, together with the payment,
if any, required by Section 2.5 above;

(j) any instruments required to be executed by Seller under
Section 4.3 of this Agreement;

(k) such further instruments as may be necessary to record
the Deed and the Ground Lease Assignment;

(l) a copy of the order of the bankruptcy court having
jurisdiction approving the sale of the Property to Purchaser;

(m) a letter to Tenants, advising them of the sale to
Purchaser and directing them to make all payments to Purchaser or its
designee; and

(n) an instrument from Seller releasing Purchaser from any
claims under the Ground Lease for the period prior to the Closing.

5.3 ACTS TO BE PERFORMED BY PURCHASER. At the Closing, Purchaser
shall deliver or cause to be delivered to Seller (or to the Title Company,
as so specified):

(a) the payment of the Purchase Price to be made in
accordance with Section 2.2 above;

(b) the Ground Lease Assignment, executed by Purchaser;

(d) the Proration Agreement, executed by Purchaser;

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(e) the RET Return, the RPT Return and the Gains Tax Document
executed and acknowledged by Purchaser, together with the payments, if any,
require by Section 2.5 above;

(f) any instruments required to be executed by Purchaser
under Sections 2.4, 4.3 and 8.17 of this Agreement.

ARTICLE VI: CONDITIONS PRECEDENT TO PURCHASER'S AND
SELLER'S OBLIGATIONS TO CLOSE

6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. Purchaser's obligation
to consummate the transactions contemplated hereunder is conditioned upon
satisfaction of each of the following conditions at or prior to the Closing
(or such earlier date as is specified with respect to a particular
condition):

(a) Seller shall have made the deliveries required pursuant
to Section 5.2 above;

(b) Seller shall not have failed to perform or comply in any
material respect with any of its agreements, conditions, covenants or
obligations in the manner and within the time periods provided under this
Agreement, and all of Seller's representations and warranties shall gave
been true and correct in all material respects as of the date when made;
and

(c) the Title Company (or, as Seller's election, another
title company licensed to do business in New York) shall gave delivered to
Purchaser a commitment to issue the Title Policy, in an amount at least
equal to the Purchase Price, insuring Purchaser's fee title to the Land and
the Improvements subject only to the Permitted Exceptions and any of the
matters waived by Purchaser.

6.2 CONDITIONS TO SELLER'S OBLIGATIONS. Seller's obligation to
consummate the transactions contemplated hereunder is conditioned upon the
satisfaction of each of the following conditions at or prior to the Closing
(or such earlier date as is specified with respect to a particular
condition):

(a) Purchaser shall have made the deliveries required
pursuant to Section 5.3 above; and

(b) Purchaser shall not have failed to perform or comply in
any material respect with any of its agreements, conditions or obligations
in the manner and by the dates and within the time periods provided under
this Agreement and all of Purchaser's representations and warranties shall
have been true and correct in all material respects as of the date when
made.

6.3 TERMINATION. In the event that any of the above conditions are
not satisfied by the party to this Agreement (or a third party, as
applicable) specified to satisfy such condition at or

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prior to the Closing (or such earlier date as is specified with respect to
a particular condition), then the party to this Agreement whose obligations
are conditioned upon the satisfaction of such condition may terminate this
Agreement by notice delivered to the other party at or prior to the
Closing; provided, however, if the failure to satisfy such condition is due
to the default of the party required to satisfy the same, the other party
may pursue its remedies under Article VII. In the event of any termination
of this Agreement, the lien of the Purchaser against the Property shall
wholly cease and, in addition to any other obligations of the parties which
are expressly stated herein to survive such termination, the parties'
respective obligations to instruct the Title Company to return the Deposit,
shall survive.

ARTICLE VII: TERMINATION, DEFAULT AND REMEDIES

7.1 PERMITTED TERMINATION. Subject to the provisions of Section
3.2, if this Agreement is terminated (or deemed terminated) by either party
pursuant to a right expressly given it to do so hereunder, but not by
reason of the default of the other party, then this Agreement shall be
deemed, and be, canceled, the Deposit shall be promptly returned to the
Purchaser, and the parties shall have no further obligations under this
Agreement, except for those which are expressly stated to survive the
termination thereof.

7.2 DEFAULT BY SELLER

(a) Seller shall be in default hereunder if Seller shall fail
to comply with or perform within the time limits and in the manner required
in this Agreement in any material respect any covenant, agreement or
obligation on its part to be complied with or performed and any condition
to the performance by Seller of such obligations have been satisfied.

(b) Except as hereinafter specifically provided to the
contrary, if Seller shall be in default hereunder, Purchaser (in lieu of
prosecuting an action for damages or proceeding with any other legal course
of conduct, the right to bring such actions or proceedings being
expressly and voluntarily waived by Purchaser, to the extent legally
permissible, following and upon advice of its counsel) shall have the right
(i) to seek to obtain specific performance of Seller's obligations
hereunder, provided that any action for specific performance shall be
commenced within sixty (60) days after such default, or (ii) to promptly
receive a return of the Deposit. If Purchaser fails to commence an action
for specific performance within sixty (60) days after such default,
Purchaser's sole remedy shall be to receive a return of the Deposit. Upon
such return and delivery, this Agreement shall terminate and neither party
hereto shall have any further obligations under this Agreement other than
those which ar expressly stated to survive the termination thereof.

7.3 DEFAULT BY PURCHASER.

(a) Purchaser shall be in default hereunder if Purchaser
shall fail to comply with or perform within the time limits and in the
manner required in this Agreement in any material respect any covenant,
agreement or obligation on its part to be complied with or performed and
any conditions to the performance by Purchaser of its obligations hereunder
have been satisfied. In the event of a default by Purchaser hereunder,
Seller may terminate this

-16-
Agreement by notice to Purchaser at or prior to the Closing, in which event
Seller shall be entitled to receive the Deposit as liquidated damages in
full satisfaction of any claims against Purchaser hereunder; provided,
however, that the foregoing shall not limit any claims that Seller may have
against Purchaser based on Purchaser's failure to comply with any post-
Closing obligation or any instrument delivered at Closing.

(b) As an inducement to Seller to enter into this Agreement,
Purchaser agrees that notwithstanding anything to the contrary expressly or
by implication provided in this Agreement, (i) time shall be of the essence
with respect to the performance by Purchaser of its obligations under this
Agreement by the dates and within the time periods set forth in this
Agreement, (ii) the failure of Purchaser to perform its obligations under
this Agreement by the dates and within the time periods set forth in this
Agreement shall be a material default under this Agreement, and (iii)
Purchaser shall not be entitled to any adjournment(s) of the times or dates
by which Purchaser is required to perform its obligations under this
Agreement; except that Purchaser may request one or more adjournments of
the Closing Date, provided that the aggregate period of time the Closing
may be adjourned by reason thereof shall not exceed five (5) business days.

ARTICLE VIII: MISCELLANEOUS

8.1 CASUALTY AND CONDEMNATION. Seller and Purchaser each waive the
provisions of all applicable laws, ordinances, rules and regulations of any
Governmental Authority relating to the occurrence of a casualty or taking
by condemnation or right of eminent domain between the date hereof and the
Closing including, without limitation, Section 5-1311 of the New York
General Obligations Law, and Seller and Purchaser each agree that the
provisions of this Section 8.1 shall control in lieu thereof. Seller
agrees to give Purchaser prompt notice of any fire or other casualty
affecting the Land or the Improvements between the date hereof and the date
hereof and the Closing or of any taking by condemnation or right of eminent
domain of all or any portion of the Land or the Improvements. If prior to
the Closing there shall occur:

(a) material damage to the Property caused by fire or other
casualty, which for purposes hereof shall be deemed damage which would cost
in excess of $5,000,000 to repair and restore to as good a condition as
that existing on the day prior to such fire or other casualty, as
reasonably estimated by Seller's independent architect or contractor having
an office in New York County; or

(b) the taking by condemnation or right of eminent domain of
more than ten percent (10%) of the rentable area of the Improvements or of
such portion of the sidewalk abutting the Property that materially and
permanently interferes with access to the Improvements or the use and
operation thereof;

then in any such event, either party may, at its option, terminate this
Agreement by notice to the other given within twenty (20) days after
Purchaser has received the notice referred to above (including, in the case
of fire or casualty, a written estimate from Seller's architect or engineer
reasonably itemizing the amount of damages) but no later than one day
before the Closing Date

-17-
in which event the provisions of Section 7.1 shall be applicable. If such
damage or taking is not material or, if material, neither party elects to
terminate this Agreement, then the Closing shall take place as provided
herein without abatement of the Purchase Price, and there shall be assigned
to Purchaser at the Closing all interest of Seller in and to any insurance
proceeds or condemnation awards which may be payable and/or Seller shall
pay to Purchaser all amount thereof that have been paid to Seller on
account of any such occurrence (minus any amounts theretofore expended by
Seller towards the cost of repair and restoration or for making the
Property safe and secure pending such repair and restoration), plus the
amount of any "deductible" provided in Seller's casualty insurance policy.

8.2 BROKERAGE. Purchaser and Seller each represents to the other
that it has not dealt with any broker or finder in connection with this
Agreement or the transactions contemplated hereby other than Cushman &
Wakefield Inc. and NO OTHER BROKER, the party identified as Offeror's
Cooperating Broker in paragraph 4 of the Offer Letter. Each party shall
indemnify the other and hold the other harmless from any claim, loss,
liability, damage, cost or expense (including, without limitation,
reasonable attorneys' fees, disbursements and court costs) paid or incurred
by such party by reason of any claim to any broker's, finder's or other fee
in connection with this Agreement or the transaction contemplated hereby if
such claim is based on dealing with the indemnifying party. Seller agrees
to pay to the brokers(s) specified in this section such compensation,
commissions or charges to which they are entitled pursuant to separate
agreements between such parties. The parties' obligations under this
Section 8.2 shall survive the termination of this Agreement.

8.3 NOTICES. Any notice or other communication that is required
or permitted to be given under the terms of this Agreement (each, a
"NOTICE"), shall be in writing and shall be deemed to have been duly given
when (a) deposited in the United States mail, postage prepaid for certified
or registered mail, with return receipt requested, (b) by overnight courier
service, with return receipt requested, or (c) when personally delivered,
in each case to the parties hereto at the following addresses or at such
other address as any party hereto shall hereafter specify by (10) days'
prior Notice given and received in the manner provided in this Section 8.3
to the other parties described in this Section 8.3.

If to Seller:

c/o Olympia & York Companies (U.S.A.)
237 Park Avenue
New York, New York 10017
Attn: Managing Attorney

with a copy to:

Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Joshua Mermelstein, Esq.

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and to :

Weil, Gotshal & Manges
767 5th Avenue
New York, New York 10153
Attention: Edward Sutherland, Esq.

If to Purchaser:

2 BROADWAY ACQUISITION CORP.
354 5TH AVE.
N.Y N.Y 10018
ATTN: JACK BASCH/RANDY SHAPIRO

A Notice shall be deemed to have been duly received (and the time
period in which a response thereto is required shall commence), (x) if sent
by registered or certified mail or by overnight courier, on the date set
forth on the return receipt, or (y) if personally delivered, on the date of
such delivery. The inability to make delivery because of changed address
of which no Notice was given, or rejection or refusal to accept any Notice
offered for delivery, shall be deemed to be receipt of the Notice as of the
date of such inability to deliver or rejection or refusal to accept. Any
Notice may be given by counsel for the party giving same.

8.4 GOVERNING LAW. The laws of the State of New York (without
giving effect to any principles of conflicts of laws) shall govern the
validity, enforcement and interpretation of this Agreement.

8.5 INTEGRATION: MODIFICATION: WAIVER. This Agreement
constitutes the complete and final expression of the agreement of the
parties relating to the Property and the transactions contemplated hereby,
and supersedes all previous contracts, agreements and understandings of the
parties, either oral or written, relating to the Property or the
transactions contemplated hereby. This Agreement cannot be modified, or
any of the terms hereof waived, except by an instrument in writing executed
by the party against whom enforcement of the modification or waiver is
sought. Any other documents delivered to Seller in connection with
Purchaser's submission of an offer for the purchase of the Property (I.E.,
confidentiality agreement, request shall remain in full force and effect,
and shall survive the termination of this Agreement. In the event any of
the provisions of this Agreement conflict with any of the provisions of the
[Purchaser Offer], which specifically relate to the terms of this
Agreement, then the provisions of this Agreement shall control.

8.6 COUNTERPART EXECUTION. This Agreement may be executed in
several counterparts, each of which shall be fully effective as an original
and all of which together shall constitute one and the same instrument.

8.7 HEADING: CONSTRUCTION. The headings which have been used
throughout this Agreement have been inserted for convenience of reference
only and should not be construed in

-19-
interpreting this Agreement. Words of any gender used in this Agreement
shall include any other gender and words in the singular shall include the
plural, and vice versa, unless the context requires otherwise. The words
"herein", "hereof", "hereunder" and other similar compounds of the words
"here" when used in this Agreement shall refer to the entire Agreement and
not to any particular provision or section. As used in this Agreement, the
term "BUSINESS DAY" means every day other than (i) Saturdays and Sundays,
(ii) all days observed by the Federal or New York State governments as
legal holidays, (iii) all days on which commercial banks in New York State
are required by law to be closed and (iv) the following Jewish holidays:
Rosh Hashanah (first day) and Yom Kippur.

8.8 BINDING EFFECT: ASSIGNMENT.

(a) The delivery of this Agreement shall not be deemed an
offer. This Agreement shall be binding upon and inure to the benefit of
Seller and Purchaser, and their respective heirs, personal representatives,
successors and permitted assigns upon, and only upon, the execution and
exchange of this Agreement by and between Seller and Purchaser.

(b) Purchaser may not assign or otherwise transfer this
Agreement or any rights hereunder, without first obtaining Seller's written
consent thereto which consent Seller may grant or withhold in its sole and
absolute discretion. An assignment or transfer of this Agreement shall not
relieve the Purchaser named herein of any of its obligations hereunder.
Notwithstanding the foregoing, Purchaser shall have the right to assign or
otherwise transfer (directly, by transfer of stock or in any other indirect
manner) all (but not a portion) of its interest in this Agreement without
the prior consent of Seller to an affiliate of Purchaser. As used herein
the term "affiliate" means an entity controlled by, or which controls or
which is under common control with, Purchaser. Any transfer in violation
of the foregoing shall be void and shall be deemed a material breach by
Purchaser of its obligations under this Agreement.

(c) No assignment by Purchaser of this Agreement pursuant to
paragraph (b) above shall be effective unless Purchaser simultaneously
notifies Seller of such transfer, the assignee assumes all of the
obligations of Purchaser hereunder pursuant to a written instrument in form
and substance reasonably satisfactory to the Seller, and Purchaser complies
with the requirements of Section 2.5(d)(ii) above.

8.9 EXHIBITS. All references to Exhibits contained herein are
references to Exhibits attached hereto, all of which are made a part hereof
for all purposes the same as if set forth herein verbatim, it being
expressly understood that if any Exhibit attached hereto which is to be
executed and delivered at Closing contains blanks, the same shall be
completed correctly and in accordance with the terms and provisions
contained herein and as contemplated herein prior to or at the time of
execution and delivery thereof.

8.10 RECORDATION.

Purchaser shall not file or record this Agreement or any copy
or memorandum thereof in any recording or register's offices. Any such
filing or recording shall constitute a material default hereunder by
Purchaser.

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8.11 APPROVAL. Whenever a party is required no to unreasonably
withhold its consent, and if no specific period of time is set forth in
which a response shall be given, such party shall also not unreasonably
delay the same.

8.12 SURVIVAL.

(a) Except as specifically provided below, none of the
provisions of this Agreement shall survive the Closing.

(b) The provisions of Section 2.3(g) shall survive the
Closing for a period of one year.

(d) The provisions of the following Sections of this
Agreement shall survive the Closing for the period of time set forth in the
applicable statute of limitations: 2.4, 2.5, 4.1(c), 4.2, and Article VIII
(except that the provisions of Section 8.2 shall not survive the Closing).

8.13 SEVERABILITY. If any provision of this Agreement or the
application thereof shall be invalid or unenforceable to any extent, then
the other provisions of this Agreement shall not be affected thereby and
shall be enforced to the greatest extent of the law.

8.14 NON-RECOURSE. Notwithstanding anything herein to the contrary,
without limiting any other limitation hereunder with respect to Seller's
liability (including those set forth in Article VII), Purchaser agrees that
its recourse for the payment and performance of all the obligations and
liabilities of the Seller under this Agreement and any instrument executed
or delivered in connection therewith shall be limited to the assets of
Seller, and no recourse shall be had or suit or claim brought against any
direct or indirect partner or shareholder of Seller, or any officer,
director, beneficiary, trustee, employee, advisor or consultant of such
other party or any such partner or shareholder.

8.15 SELLER'S ACCESS TO BOOKS AND RECORDS. For a period of two (2)
years after the Closing, Purchaser shall give Seller and its
representatives access, during normal business hours and upon reasonable
prior notice to Purchaser, to such books, accounts, records and Leases
relating to the Property (including the right, at Seller's expense, to make
photostatic copies of same) as are reasonably necessary to enable Seller to
verify the rights and obligations of Seller and Purchaser pursuant to
Sections 2.3 and 2.4 and to enable Seller to respond to any tax inquiries
or audits, including with respect to the Gains Tax Law or to comply with
any other obligations to Governmental Authorities.

8.16 NO CONSEQUENTIAL DAMAGES. Notwithstanding anything to the
contrary contained herein, neither party to this Agreement shall be liable
for any consequential damages incurred by the other party.

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8.17 EMPLOYEE ARRANGEMENTS.

(a) EMPLOYMENT BY AND BENEFITS OF PURCHASER. Purchaser
agrees to offer to employ as of the Closing each employee of the Seller at
the Property as of the date hereof listed on EXHIBIT M or any successor to
any such employee hired, or transferred to the Property, by Seller prior to
the Closing (the "EMPLOYEES") at the wages, hours and working conditions
and other terms and benefits as they existed immediately prior to the
Closing.

(b) PURCHASER TO JOIN REALTY ADVISORY BOARD ON LABOR
RELATIONS, INC. As of the Closing , the Purchaser agrees to join the
Realty Advisory Board on Labor on Labor Relations, Inc. and to give written
notice thereof as required under the Collective Bargaining Agreements (as
hereinafter defined).

(c) HOURLY EMPLOYEES: COLLECTIVE BARGAINING AGREEMENTS. As
of the Closing, Purchaser, as the successor employer to Seller with respect
to the Property, will assume and continue all terms and conditions of the
collective bargaining agreements listed on EXHIBIT O (the "Collective
Bargaining Agreements") applicable to each Employee upon the consummation
of the transactions contemplated by this Agreement, will recognize the
seniority and vacation status of each of the Employees, will take all
required actions with respect to such Collective Bargaining Agreements as
may be required by any laws, ordinances, rules and regulations of any
Governmental Authority or such Collective Bargaining Agreements and shall
assume, pay and perform when due any and all liabilities and obligations of
Seller under such Collective Bargaining Agreements to be performed from and
after the Closing. Consistent with the foregoing, Purchaser agrees to
execute and deliver to Seller a letter, substantially in the form annexed
hereto as EXHIBIT N, agreeing to take all steps necessary to effectuate the
assumption of the Collective Bargaining Agreements.

8.18 INDEMNIFICATION. Without limiting any of the indemnifications
elsewhere set forth in this Agreement or in any of the documents or
instruments to be delivered pursuant hereto or in connection herewith,
Purchaser shall indemnify and hold seller and its direct and indirect
partners and shareholders and its and their officers, directors,
beneficiaries, trustees, employees, advisors and consultants from and
against all claims, losses, damages, liabilities, costs, expenses
(including reasonable attorneys' fees) which any of the foregoing persons
or entities may suffer or incur as a result of which arise (directly or
indirectly) out of (i) any existing violations of law at the Property or
(ii) the ownership or operation of the Property after the Closing Date.

8.19 THIRD PARTY BENEFICIARY. This Agreement is an agreement solely
for the benefit of Seller and Purchaser (and their permitted successors
and/or assigns) and the parties acknowledge and agree that no other person,
party or entity shall have any rights hereunder nor shall any other person,
party or entity be entitled to rely upon the terms, covenants and
provisions contained herein.

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IN WITNESS WHEREOF. Seller and purchaser have executed this Agreement as
of the date first written above.

SELLER:

2 BROADWAY ASSOCIATES, L.P.

By: O&Y Building Corp.,
a general partner

By: JOHN A. MOORE
Name: John A. Moore
Title: Senior Vice President-Finance

PURCHASER:

2 BROADWAY ACQUISITION CORP.

By: JACK BASCID
Name: Jack Bascid
Title: Vice President

-23-

AGREEMENT OF CONVERSION

1290 ASSOCIATES

INTO

1290 ASSOCIATES, L.L.C.

AGREEMENT, dated as of October 10, 1995, among JMB/NYC Office Building
Associates, L.P., an Illinois limited partnership ("INVESTOR"), O&Y Equity
Company, L.P., a Delaware limited partnership ("EQUITY"), and O&Y NY
Building Corp., a Delaware corporation ("BUILDING").

W I T N E S S E T H:

WHEREAS, JMB/NYC Office Building Associates, O & Y Equity Corp., FAME
Associates and Olympia & York Holdings Corporation entered into a Second
Amended and Restated Agreement of General Partnership of 1290 Associates, a
New York general partnership (the "PARTNERSHIP"), dated as of July 27, 1984
(the "ORIGINAL AGREEMENT"), as amended by (i) a First Amendment to Second
Amended and Restated Agreement of General Partnership, dated as of December
29, 1986, (ii) a letter agreement dated as of January 1, 1992, (iii) a
Second Amendment to Second Amended and Restated Agreement of General
Partnership, dated as of January 1, 1994 and (iv) a letter agreement dated
October 14, 1994 (the "OCTOBER 1994 LETTER") (as so amended, the
"PARTNERSHIP AGREEMENT");

WHEREAS, as of the date hereof, Investor, Equity and Building are the
partners of the Partnership; and

WHEREAS, the partners of the Partnership desire to convert the
Partnership into a New York limited liability company as provided herein.

NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:

1. The Partnership is hereby converted into, and shall hereafter be,
a limited liability company (the "LLC") formed under the laws of the State
of New York, pursuant to the New York Limited Liability Company Law. The
name of the LLC hall be "1290 ASSOCIATES, L.L.C.". The parties hereto
shall be the members of the LLC, and their interests in the Partnership are
hereby converted into membership interests in the LLC

2. The respective interests of the parties hereto as members in the
LLC shall be the same as were their respective interests as partners in the
Partnership, and their respective rights and obligations as members of the
LLC (including, without limitation, their respective Capital Accounts and
their respective obligations under Section 8.8 of the Original Agreement)
shall be the same were their respective rights and obligations as partners
in the Partnership, except, in each case, as provided in Paragraph 3
hereof.

3. The operating agreement of the LLC (the OPERATING AGREEMENT")
shall be the Partnership Agreement, modified as follows:

(a) The terms "PARTNERSHIP" and "PARTNER" (whether or not
capitalized, in the singular and plural forms, and whether used alone or as
part of other defined terms) shall be read, respectively, as "LLC" or
"MEMBER".

(b) The term "CO-PARTNER" shall refer to Equity and Building,
collectively.

(d) Building and Investor shall be the managers of the LLC
(the "MANAGERS") so long as they are Members, and when either ceases to be
a Member, its successor-in-interest shall be a Manager; provided that their
respective rights, duties, powers and authority with respect to the
management and operation of the LLC and its property shall be as set forth
in the Partnership Agreement, as modified by the other subparagraphs of
this Paragraph 3.

(e) All right, power and authority of Co-Partner (and of O&Y
Equity), pursuant to the Partnership Agreement (including, without
limitation, the October 1994 Letter) and/or applicable law, to make
decisions and elections, to exercise options, to give or withhold consents
or approvals, and to propose, take or veto any other actions, shall be
vested in and exercised by Building alone. Equity shall have no such
right, power or authority, and the joinder or consent by Equity shall not
be required for any decision of or action by the LLC (or for any decision
of or action by Building, or Building and Investor together, on behalf of
the LLC). The foregoing provisions of this subparagraph (e) shall not
affect the rights, powers or authority of Investor.

(f) The bankruptcy (as such term is defined in the Original
Agreement) of a Manager shall cause a dissolution of the LLC. However,
notwithstanding anything to the contrary that may be required by law in the
absence of this subparagraph (f), the

bankruptcy of Equity (including, without limitation, the filing by Equity
of a voluntary petition under Chapter 11 of Title 11 of the U.S.Code) (i)
shall not be a "Dissolution Event" (and is hereby excluded from the events
listed in Section 8.1A of the Partnership Agreement), (ii) shall not cause
a dissolution of the LLC and (iii) shall not give rise to any rights or
options in favor of Investor (and, without limitation, shall not give
Investor any of the rights or options described in Section 8.2 of the
Original Agreement); and the LLC and its business (and each member's rights
and obligations with respect thereto) shall continue, upon the terms of the
Operating Agreement, despite such filing.

(g) Section 4.2C of the Partnership Agreement shall be
deleted in its entirety and replaced by the following:

"Section 4.2C. MEMBERS' INTERESTS IN LLC PROFITS FOR
PURPOSES OF SECTION 752 OF THE INTERNAL REVENUE CODE. The Members hereby
agree that the following shall determine their respective shares of the
liabilities of the LLC for purposes of Section 752 of the Internal Revenue
Code of 1986, as amended (the "CODE").

(1) CURRENTLY. As of January 1, 1994 and until there
shall have occurred a "Material Modification" (as defined in Section 2
hereof) of a liability of the LLC, the Members' respective shares of the
liabilities of the LLC pursuant to Section 752 of the Code shall be as
follows:

(a) As to that portion of the liabilities of the
LLC that was reflected on the books of the predecessor to the LLC (such
predecessor is herein called the "PARTNERSHIP") immediately prior to the
effective date of the Assumption Agreement dated as of October 14, 1994 by
the Partnership in favor of Equity, Building and Investor (individually)
(the "PARTNERSHIP ASSUMPTION AGREEMENT"):

Co-Partner 53.5%

Investor 46.5%

(b) As to that portion of the liabilities of the
LLC that was reflected on the books of the Partnership solely as a result
of the Partnership Assumption Agreement, the amount of the liabilities
assumed by each Partner in accordance with the terms of the Partnership
Assumption Agreement

(2) MATERIAL MODIFICATION OF LLC LIABILITIES. The Members
agree that, if at any time following the date of this Agreement, there
shall occur with respect to a liability of the LLC a "Material
Modification" (as hereinafter defined), as of the date of such Material
Modification: (x) the provisions of Section 4.2C(1) hereof shall continue
to apply to all liabilities of the LLC as to which a Material Modification
shall not theretofore have occurred; and (y) with respect to each liability
of the LLC as to which a Material Modification shall have occurred (a
"MODIFIED LIABILITY"):

(a) The Members' respective shares of each such Modified
Liability pursuant to Section 1.752-3 (a) (1) and Section 1.752-3(a) (2) of
the Regulations shall be computed in accordance with such provisions of the
Regulations (as determined by the agreement of Building and Investor);

(b) The Members' respective shares of the portion of
each such Modified Liability that constitutes an "excess nonrecourse
liability" pursuant to Section 1.752-3(a)(3) of the Regulations (as
determined by the agreement of Building and Investor) shall be as follows:

(i) As to that portion of such Modified Liability that
was reflected on the books of the LLC immediately prior to the effective
date of the Assumption Agreement:

Co-Partner 53.5%

Investor 46.5%

(ii) As to that portion of such Modified Liability that
was reflected on the books of the Partnership solely as a result of the
Partnership Assumption Agreement, the amount of such Modified Liability
assumed by each Partner in accordance with the terms of the Partnership
Assumption Agreement.

For purposes of this Section 2, a "MATERIAL MODIFICATION" to a
liability shall have occurred if the liability shall have been modified and
the terms of the new debt instrument differ 'materially either in kind or
in extent' (within the meaning of section 1.1001-1(a) of the

Regulations) from the terms of the old debt instrument, as
determined by the agreement of Building and Investor."

(h) Notwithstanding any contrary provisions of the
Partnership Agreement, including, but not limited to, Section 3.2 thereof,
before any other distributions of Net Financing Proceeds or Net Sale
Proceeds shall be distributed to any Member, all Net Sale Proceeds and Net
Financing Proceeds shall be distributed to Investor and Co-Partner in the
ratio of their respective Distributive Percentages until the aggregate
distributions pursuant to this subparagraph (h) shall amount to $300,000.
Any Net Financing Proceeds or Net Sale Proceeds remaining after the
foregoing distributions under this subparagraph (h), shall be distributed
as provided in the Partnership Agreement. In connection with the
foregoing, the parties hereby agree as follows:

(1) The Partnership is indebted to Investor in the
amount of $89,575 on account of certain legal fees and expenses incurred by
Investor prior to September 1, 1994. As consideration for the benefits to
Investor under the foregoing provisions of the subparagraph (h), Investor
hereby waives its claim for payment of such legal fees and expenses. The
foregoing shall not constitute a waiver of or limitation on any other
rights or claims of Investor, including, but not limited to, its right to
payment for legal fees and expenses incurred subsequent to August 31, 1994.

The parties hereto agree that the waiver of such claim by Investor is full
and fair consideration for, and has at least equivalent value to, the
rights and benefits received by Investor under this subparagraph (h).
However, in the event that by non-appealable adjudication of a count of
competent jurisdiction, any or all of the rights of Investor as hereinabove
set forth in this subparagraph (h) shall be set aside or declared invalid,
then Investor's aforesaid waiver of its right to payment for legal fees and
expenses shall be automatically cancelled and Investor's right to payment
for the same shall be reinstated.

(2) Not withstanding any contrary provisions of
the Partnership Agreement, including, but not limited to, paragraph 6 of
the Summary of Terms attached to the October 1994 Letter, the distributions
to Investor pursuant to this subparagraph (h) will not be applied to
payment of the "JMB Notes" (as defined in said paragraph 6 of the October
1994 Letter), but instead shall be paid directly to Investor.

4. Except as specifically set forth in this Agreement or in any
other written agreement executed by the parties hereto (including, without
limitation, the October 1994 Letter), each of the parties hereto reserves
all rights and claims with respect to

the LLC and each other party hereto arising prior to the date hereof under
the Partnership Agreement, and nothing contained in this Agreement shall be
deemed to be or to effect a waiver of any such rights or claims.

5. References to the Partnership in the October 1994 Letter
(including the Summary of Terms annexed thereto) shall be deemed to refer
to the LLC where relevant to the period after the date hereof (and
references therein to the Partners and partnership agreement of the
Partnership shall, as applied to the LLC, be deemed to refer to the Members
and Operating Agreement of the LLC). In addition, with respect to the
Summary of Terms, the provisions of paragraphs 3(g) and 3(h) hereof shall
apply to, and be included in, any partnership agreement or operating
agreement or amendment to an existing partnership agreement or operating
agreement for any Partnership, "Conversion Partnership", "New Partnership"
or LLC which may be entered into as contemplated by the Summary of Terms
(the provisions of said paragraph 3(g) being in lieu of the first sentence
of paragraph 2 of Exhibit "A: of the Summary of Terms). Accordingly, and
without limitation on the foregoing, the distributions provided in said
paragraph 3(h) shall be made prior to any distributions of Net Financing
Proceeds or Net Sale Proceeds with respect to the "Preference Amounts" or
"New Preference Amounts" or interest thereon. The quoted terms in this
Paragraph 5 have the meanings specified in the Summary of Terms. Nothing
herein, however, shall affect the terms of the next-to-last paragraph of
the October 1994 Letter.

6. This Agreement may be executed in one or more counterparts, each
of which shall constitute an original and all of which taken together shall
constitute one agreement.

7. No modification or waiver of any of the provisions of this
Agreement shall be effective unless the same shall be in writing signed by
all of the parties hereto.

8. This Agreement shall be governed by the laws of the State of New
York.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

By: Carlyle Managers, Inc.
General Partner

By:
Name:
Title:

O&Y EQUITY COMPANY, L.P.

By: O&Y Equity General Partner Corp.,
General Partner

By:
Name:
Title:

O&Y NY BUILDING CORP.

By:
Name:
Title:

AGREEMENT OF CONVERSION

237 PARK AVENUE ASSOCIATES

INTO

237 PARK AVENUE ASSOCIATES, L.L.C.

AGREEMENT, dated as of October 10, 1995, among JMB/NYC Office
Building Associates, L.P., an Illinois limited partnership ("INVESTOR"),
O&Y Equity Company, L.P., a Delaware limited partnership ("EQUITY"), and
O&Y NY Building Corp., a Delaware corporation ("BUILDING").

WITNESSETH:

WHEREAS, JMB/NYC Office Building Associates, O&Y Equity Corp., FAME
Associates and Olympia & York Holdings Corporation entered into a First
Amended and Restated Agreement of General Partnership of 237 Park Avenue
Associates, a New York general partnership (the "PARTNERSHIP"), dated as of
August 14, 1984 (the "ORIGINAL AGREEMENT"), as amended by (i) a First
Amendment to First Amended and Restated Agreement of General Partnership,
dated as of December 29, 1986, (ii) a letter agreement dated as of January
1, 1992, (iii) a Second Amendment to First Amended and Restated Agreement
of General Partnership, dated as of January 1, 1994 and (iv) a letter
agreement dated October 14, 1994 (the "OCTOBER 1994 LETTER") (as so
amended, the "PARTNERSHIP AGREEMENT");

WHEREAS, as of the date hereof, Investor, Equity and Building are the
partners of the Partnership; and

WHEREAS, the partners of the Partnership desire to convert the
Partnership into a New York limited liability company as provided herein.

NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:

1. The Partnership is hereby converted into, and shall hereafter
be, a limited liability company (the "LLC") formed under the laws of the
State of New York, pursuant to the New York Limited Liability Company Law.
The name of the LLC shall be "237 PARK AVENUE ASSOCIATES, L.L.C.". The
parties hereto shall be the members of the LLC, and their interests in the
Partnership are hereby converted into membership interest in the LLC.

2. The respective interest of the parties hereto as members in the
LLC shall be the same as were their respective interests as partners in the
Partnership, and their respective rights and obligations as members of the
LLC (including, without limitation, their respective Capital Accounts and
their respective obligations under Section 8.8 of the Original Agreement)
shall be the same as were their respective rights and obligations as
partners in the Partnership, except, in each case, as provided in Paragraph
3 hereof.

3. The operating agreement of the LLC (the "OPERATING AGREEMENT")
shall be the Partnership Agreement, modified as follows:

(b) The term "CO-PARTNER" shall refer to Equity and Building,
collectively.

(e) All right, power and authority of Co-Partner ( and of O&Y
Equity), pursuant to the Partnership Agreement (including, without
limitation, the October 1994 Letter) and/or applicable law, to make
decisions and elections, to exercise options, to give or withhold consents
or approvals, and to propose, take or veto any other actions, shall be
vested in the exercised by Building alone. Equity shall have no such
right, power or authority, and the joinder or consent by Equity shall not
be required for any decision of or action by the LLC (or for any decision
of or action by Building, or Building and Investor together, on behalf of
the LLC). The foregoing provisions of this subparagraph (e) shall not
affect the rights, powers or authority of Investor.

bankruptcy of Equity (including, without limitation, the filing by Equity
of a voluntary petition under Chapter 11 of Title 11 of the U.S. Code) (i)
shall not be a "Dissolution Event" (and is hereby excluded from the events
listed in Section 8.1A of the Partnership Agreement), (ii) shall not cause
a dissolution of the LLC and (iii) shall not give rise to any rights or
options in favor of Investor (and, without limitation, shall not give
Investor any of the rights or options described in Section 8.2 of the
Original Agreement); and the LLC and its business (and each member's rights
and obligations with respect thereto) shall continue, upon the terms of the
Operating Agreement, despite such filing.

(g) Section 4.2C of the Partnership Agreement shall be
deleted in its entirety and replaced by the following:

Section 4.2C MEMBERS' INTERESTS IN LLC PROFITS FOR
PURPOSES OF SECTION 752 OF THE INTERNAL REVENUE CODE. The Members hereby
agree that the following shall determine their respective shares of the
liabilities of the LLC for purposes of Section 752 of the Internal Revenue
Code of 1986, as amended (the "CODE").

(1) CURRENTLY. As of January 1, 1994 and until there
shall have occurred a Material Modification" (as defined in Section 2
hereof) of a liability of the LLC, the Members's respective shares of the
liabilities of the LLC pursuant to Section 752 of the Code shall be as
follows:

(a) As to the portion of the liabilities of
the LLC that was reflected on the books of the predecessor the LLC (such
predecessor is herein called the "PARTNERSHIP") immediately prior to the
effective date of the Assumption Agreement dated as of October 14, 1994 by
the Partnership in favor of Equity, Building and Investor (individually)
The "PARTNERSHIP ASSUMPTION AGREEMENT"):

Co-Partner 53.5%

Investor 46.5%

(b) As to that portion of the liabilities
of the LLC that was reflected on the books of the Partnership solely as a
result of the Partnership Assumption Agreement, the amount of the
liabilities assumed by each Partner in accordance with the terms of the
Partnership Assumption Agreement.

(a) The Members' respective shares of each such
Modified Liability pursuant to Section 1.752-3 (a)(1) and Section 1.752-
3(a) (2) of the Regulations shall be computed in accordance with such
provisions of the Regulations (as determined by the agreement of the
Building and Investor);

(b) The Members' respective shares of the portion
of each such Modified Liability that constitutes an "excess nonrecourse
liability" pursuant to Section 1.752-3 (a) (3) of the Regulations (as
determined by the agreement of Building and Investor) shall be as follows:

(i) As to that portion of such Modified Liability
that was reflected on the books of the LLC immediately prior to the
effective date of the Assumption Agreement:

Co-Partner 53.5%

Investor 46.5%

(ii) As to that portion of such Modified Liability
that was reflected on the books of the Partnership solely as a result of
the Partnership Assumption Agreement, the amount of such Modified Liability
assumed by each Partner in accordance with the terms of the Partnership
Assumption Agreement.

For purposes of this Section 2, a "MATERIAL MODIFICATION"
to a liability shall have occurred in the liability shall have been
modified and the terms of the new debt instrument differ 'materially either
in kind or in extent' (within the meaning of Section 1.1001-1(a) of the

Regulations) from the terms of the old debt instrument,
as determined by the agreement of Building and Investor."

(h) Notwithstanding any contrary provisions of the
Partnership Agreement, including, but not limited to, Section 3.2 thereof,
before any other distributions of Net Financing Process or Net Sale
Proceeds shall be distributed to any Member, all Net Sale Proceeds and Net
Financing Process shall be distributed to Investor and Co-Partner in the
ratio of their respective Distributive Percentages until the aggregate
distributions pursuant to this subparagraph (h) shall amount to $200,000.
Any Net Financing Process or Net Sale Proceeds remaining after the
foregoing distributions under this subparagraph (h), shall be distributed
as provided in the Partnership Agreement. In connection with the
foregoing, the parties hereby agree as follows:

(1) The Partnership is indebted to Investor in
the amount of $59,716 on account of certain legal fees and expenses
incurred by Investor prior to September 1, 1994. As consideration for the
benefits to Investor under the foregoing provisions of this subparagraph
(h), Investor hereby waives its claim for payment of such legal fees and
expenses. The foregoing shall not constitute waiver of or limitation on
any other rights or claims of Investor, including, but not limited to, its
right to payment for legal fees and expenses incurred subsequent to August
31, 1994. The parties hereto agree that the waiver of such claim by
Investor is full and fair consideration for, and has at least equivalent
value to, the rights and benefits received by Investor under this
subparagraph (h). However, in the event that by non-appealable
adjudication of a court of competent jurisdiction, any or all of the rights
of Investor as hereinabove set forth in this subparagraph (h) shall be set
aside or declared invalid, then Investor's aforesaid waiver of its right to
payment for legal fees and expenses shall be automatically cancelled and
Investor's right to payment for the same shall be reinstated.

(2) Notwithstanding any contrary provision of the
Partnership Agreement, including, but not limited to, paragraph 6 of the
Summary of Terms attached to the October 1994 Letter, the distributions to
Investor pursuant to this subparagraph (h) will not be applied to payment
of the "JMB Notes" (as defined in said paragraph 6 of the October 1994
Letter), but instead shall be paid directly to Investor.

the LLC and each other party hereto arising prior to the date hereof under
the Partnership Agreement, and nothing contained in this Agreement shall be
deemed to be or effect a waiver of any such rights or claims.

5. Reference to the Partnership in the October 1994 Letter
(including the Summary of Terms annexed thereto) shall be deemed to refer
to the LLC where relevant to the period after the date hereof (and
references therein to the partners and partnership agreement of the
Partnership shall, as applied to the LLC, be deemed to refer to the Members
and Operating Agreement of the LLC). In addition, with respect to the
Summary of Terms, the provisions of paragraphs 3 (g) and 3 (h) hereof shall
apply to, and be included in, any partnership agreement or operating
agreement or amendment to an existing partnership agreement or operating
agreement for any Partnership, "Conversion Partnership", "New Partnership"
or LLC which may be entered into as contemplated by the Summary of Terms
(the provisions of said paragraph 3(g) being in lieu of the first sentence
of paragraph 2 of Exhibit "A" of the Summary of Terms). Accordingly, and
without limitation on the foregoing, the distributions provided in said
paragraph 3(h) shall be made prior to any distributions of Net Financing
Proceeds or Net Sale Proceeds with respect to the "Preference Amounts" or
"New Preference Amounts" or interest thereon. The quoted terms in this
Paragraph 5 have the meanings specified in the Summary of Terms. Nothing
herein, however, shall affect the terms of the next-to-last paragraph of
the October 1994 Letter.

6. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original and all of which taken together
shall constitute one agreement.

7. No modification or waiver of any of the provisions of this
Agreement shall be effective unless the same shall be in writing signed by
all of the parties hereto.

8. This Agreement shall be governed by the laws of the State of
New York.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

BY: Carlyle Managers, Inc.
General Partner

By:
Name: Stuart Chatman
Title: President

O&Y EQUITY COMPANY, L.P.

By: O&Y Equity General Partner Corp.,
General Partner

By:
Name: John A. Moore
Title: Senior Vice President -
Finance

O&Y NY BUILDING CORP.

By:
Name: John A. Moore
Title: Senior Vice President -
Finance

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 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 officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1995, 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 5th day of February, 1996.

H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer

GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer

The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1995,
and any and all amendments thereto, the 5th day of February, 1996.

GARY NICKELE
-----------------------
Gary Nickele

GAILEN J. HULL
-----------------------
Gailen J. Hull

DENNIS M. QUINN
-----------------------
Dennis M. Quinn

EXHIBIT 24

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 5th day of February, 1996.

NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm

JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin

A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks

STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
A. Lee Sacks

GARY NICKELE
-----------------------
Gary Nickele

GAILEN J. HULL
-----------------------
Gailen J. Hull

DENNIS M. QUINN
-----------------------
Dennis M. Quinn

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

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

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995

<CASH> 5,908,236
<SECURITIES> 2,568,329
<RECEIVABLES> 10,756,290
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,232,855
<PP&E> 433,222,805
<DEPRECIATION> 163,309,553
<TOTAL-ASSETS> 307,460,106
<CURRENT-LIABILITIES> 61,957,398
<BONDS> 382,303,505
<COMMON> 0
0
0
<OTHER-SE> (223,599,045)
<TOTAL-LIABILITY-AND-EQUITY> 307,460,106
<SALES> 65,729,288
<TOTAL-REVENUES> 66,763,349
<CGS> 0
<TOTAL-COSTS> 50,440,563
<OTHER-EXPENSES> 1,428,492
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,615,594
<INCOME-PRETAX> (23,721,300)
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,732,699)
<DISCONTINUED> (14,789,529)
<EXTRAORDINARY> 15,632,407
<CHANGES> 0
<NET-INCOME> (24,889,821)
<EPS-PRIMARY> (65.19)
<EPS-DILUTED> (65.19)

</TABLE>