SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended
September 30, 1998 Commission file #0-12791
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(Exact name of registrant as specified in its charter)
Illinois 36-3207212
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . 15
Item 3. Defaults upon Senior Securities. . . . . . . . . . 15
Item 5. Other Information. . . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 17
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 2,668,068 9,528,301
Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . 249,985 374,085
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . 116,918 23,218
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . 1,304,849 2,157,413
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 32,611 96,133
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 119,254
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 4,372,431 12,298,404
------------ ------------
Investment properties held for sale or disposition. . . . . . . . . . . 9,277,123 14,917,470
------------ ------------
Investment in unconsolidated ventures, at equity. . . . . . . . . . . . 31,957 31,957
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,050 219,687
Venture partners' deficits in ventures. . . . . . . . . . . . . . . . . -- 133,368
------------ ------------
$ 13,796,561 27,600,886
============ ============
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(a limited partnership)
and Consolidated Ventures
Consolidated Balance Sheets (Continued)
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . $ 33,734,354 40,361,075
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . 182,867 235,535
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . 717,652 1,994,139
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,204 109,854
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 21,563,921 18,302,502
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . 178,341 --
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . 56,483,339 61,003,105
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 182,422 255,538
Partnership's share of the maximum unfunded
obligation under the indemnification agreement. . . . . . . . . . . . 4,030,569 4,131,258
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . 1,618,304 1,479,679
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 62,314,634 66,869,580
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (18,577,858) (18,485,486)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (1,149,967) (1,149,967)
------------ ------------
(19,726,825) (19,634,453)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . . 326,224,167 326,224,167
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (293,943,477) (295,750,699)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (61,071,938) (50,107,709)
------------ ------------
(28,791,248) (19,634,241)
------------ ------------
Total partners' deficits. . . . . . . . . . . . . . . . . . . . (48,518,073) (39,268,694)
------------ ------------
$ 13,796,561 27,600,886
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . $ 960,044 3,939,927 3,495,245 14,784,053
Interest income . . . . . . . . . . . . . . . . 73,044 88,832 390,362 290,718
Other income. . . . . . . . . . . . . . . . . . -- -- 186,043 --
----------- ----------- ----------- -----------
1,033,088 4,028,759 4,071,650 15,074,771
----------- ----------- ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . 1,153,095 4,037,230 3,616,852 9,348,164
Property operating expenses . . . . . . . . . . 1,105,582 3,517,703 3,529,761 9,861,605
Professional services . . . . . . . . . . . . . 18,582 27,441 192,468 250,829
Amortization of deferred expenses . . . . . . . 7,172 89,833 21,516 546,831
General and administrative. . . . . . . . . . . 88,796 104,714 462,002 554,075
----------- ----------- ----------- -----------
2,373,227 7,776,921 7,822,599 20,561,504
----------- ----------- ----------- -----------
(1,340,139) (3,748,162) (3,750,949) (5,486,733)
Partnership's share of the reduction of
the maximum unfunded obligation under
the indemnification agreement . . . . . . . . . 33,563 33,563 100,689 100,690
Venture partners' share of earnings (loss) from
ventures' operations. . . . . . . . . . . . . . -- (508) (401) (6,078)
----------- ----------- ----------- -----------
Earnings (loss) before gain on sale or
disposition of investment properties
or interest in investment property. . . (1,306,576) (3,715,107) (3,650,661) (5,392,121)
Gain on sale or disposition of investment
properties or interest in investment property,
net of venture partner's share. . . . . . . . . -- 23,382,167 5,365,511 95,553,572
----------- ----------- ----------- -----------
Earnings (loss) before extraordinary items (1,306,576) 19,667,060 1,714,850 90,161,451
Extraordinary items . . . . . . . . . . . . . . . -- 285,104 -- 55,468,888
----------- ----------- ----------- -----------
Net earnings (loss) . . . . . . . . . . . $(1,306,576) 19,952,164 1,714,850 145,630,339
=========== =========== =========== ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
Net earnings (loss) per
limited partnership interest:
Earnings (loss) before gain on sale
or disposition of investment properties
or interest in investment property. . $ (3.43) (9.74) (9.58) (14.14)
Gain on sale or disposition of invest-
ment properties or interest in
investment property, net of venture
partners' share . . . . . . . . . . . -- 63.25 14.51 258.46
Extraordinary items . . . . . . . . . . -- .77 -- 150.04
------------ ---------- ----------- -----------
Net earnings (loss) . . . . . . . . $ (3.43) 54.28 4.93 394.36
============ ========== =========== ===========
Cash distributions per limited
partnership interest. . . . . . . . . . $ -- -- 30.00 --
============ ========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,714,850 145,630,339
Items not requiring (providing) cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 21,516 546,831
Amortization of discount on long-term debt. . . . . . . . . . . . . . . 138,625 123,022
Partnership's share of the reduction of the maximum
unfunded obligation under the indemnification agreement . . . . . . . (100,689) (100,690)
Venture partners' share of ventures' operations . . . . . . . . . . . . 401 6,078
Gain on sale or disposition of investment properties or interest
in investment property, net of venture partners' share. . . . . . . . (5,365,511) (95,553,572)
Long-term debt - deferred accrued interest. . . . . . . . . . . . . . . -- 443,264
Provision for value impairment. . . . . . . . . . . . . . . . . . . . . -- 629,639
Working capital decrease related to sale of interest in
investment property . . . . . . . . . . . . . . . . . . . . . . . . . -- (2,318,702)
Extraordinary item. . . . . . . . . . . . . . . . . . . . . . . . . . . -- (55,468,888)
Changes in:
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . (93,700) 305,235
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . 905,451 529,973
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,522 (43,350)
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,674 1,351,634
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . -- (30,334)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,719 (1,477,655)
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . (1,276,487) (1,033,774)
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,650) (105,612)
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,261,419 4,326,225
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . 178,341 (617,032)
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (73,116) (385,268)
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . . (310,635) (3,242,637)
------------ -----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
1998 1997
------------ -----------
Cash flows from investing activities:
Proceeds from sale of investment properties or interest
in investment property, net of selling expenses . . . . . . . . . . . . 4,642,140 17,708,785
Net sales and maturities (purchases) of short-term investments. . . . . . 124,100 --
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (97,746) (2,371,171)
Partnership's contributions to unconsolidated ventures. . . . . . . . . . -- (600)
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 6,351 (259,014)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . 4,674,845 15,078,000
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (37,494) (428,091)
Distribution to venture partner . . . . . . . . . . . . . . . . . . . . . (222,720) --
Distribution to limited partners. . . . . . . . . . . . . . . . . . . . . (10,964,229) --
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . . (11,224,443) (428,091)
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . . (6,860,233) 11,407,272
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 9,528,301 6,030,217
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 2,668,068 17,437,489
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 355,433 5,212,682
============ ===========
Non-cash investing and financing activities:
Reduction of fixed assets, net of accumulated depreciation. . . . . . . $ -- 219,612,370
Reduction of working capital. . . . . . . . . . . . . . . . . . . . . . -- 9,495,504
Reduction of security deposits. . . . . . . . . . . . . . . . . . . . . -- (158,400)
Reduction of deferred expenses. . . . . . . . . . . . . . . . . . . . . -- 4,582,946
Reduction of long-term debt . . . . . . . . . . . . . . . . . . . . . . -- (381,338,785)
Venture partners' share of gain . . . . . . . . . . . . . . . . . . . . -- 14,492,690
Gain on sale or disposition of interest in investment properties,
net of venture partners' share. . . . . . . . . . . . . . . . . . . . -- 95,553,572
Extraordinary items . . . . . . . . . . . . . . . . . . . . . . . . . . -- 55,468,888
------------ ------------
Cash sales proceeds from sale of investment properties,
net of selling expenses . . . . . . . . . . . . . . . . . . . . . $ -- 17,708,785
============ ============
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
1998 1997
------------ -----------
Sale of interest in investment property:
Gain on sale of interest in investment property . . . . . . . . . . . $ 5,365,511 --
Basis in investment property. . . . . . . . . . . . . . . . . . . . . (723,371) --
------------ ------------
Cash proceeds from sale of interest
in investment property. . . . . . . . . . . . . . . . . . . . . $ 4,642,140 --
============ ============
Net assets and venture partner's
deficit in venture written off at sale
of interest in investment property. . . . . . . . . . . . . . . . . . $ 355,705 --
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1997,
which are included in the Partnership's 1997 Annual Report on Form 10-K
(File No. 0-12791) filed on March 21, 1998, as certain footnote disclosures
which would substantially duplicate those contained in such audited
financial statements have been omitted from this report. Capitalized terms
used but not defined in this quarterly report have the same meanings as in
the Partnership's 1997 Annual Report on Form 10-K.
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.
The Partnership adopted 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" as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell or dispose of such property and active marketing activity has
commenced or is expected to commence in the near term or the Partnership
has concluded that it may dispose of the property by no longer funding
operating deficits or debt service requirements of the property thus
allowing the lender to realize upon its security. In accordance with
SFAS 121, any properties identified as "held for sale or disposition" are
no longer depreciated.
As of September 30, 1998, the Partnership and its consolidated
ventures have or have previously committed to plans to sell or dispose of
all their remaining investment properties. Accordingly, all consolidated
properties have been classified as held for sale or disposition in the
accompanying consolidated financial statements as of the respective date of
such plan's adoption. The net results of operations for the nine months
ended September 30, 1998 and 1997 for consolidated properties classified as
held for sale or disposition or sold or disposed of during the past two
years were ($3,747,281) and ($4,435,039), respectively.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates, including the reimbursement for salaries and salary-
related expenses of its employees and certain of its officers, and for
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 September 30, 1998 and for
the nine months ended September 30, 1998 and 1997 were as follows:
<PAGE>
Unpaid at
September 30,
1998 1997 1998
-------- --------- -------------
Property management
and leasing fees . . . . . . $106,751 119,950 --
Insurance commissions . . . . 18,791 83,702 --
Reimbursement (at cost)
for out-of-pocket salary
and salary-related
expenses related to the
on-site and other costs
for the Partnership and
its investment properties. . 91,306 81,807 18,920
-------- ------- -------
$216,848 285,459 18,920
======== ======= =======
All property management fees and leasing fees are being paid
currently. In February 1998, the Partnership paid approximately $1,322,000
of previously deferred management and leasing fees to an affiliate of the
General Partners.
The Partnership is obligated to fund, on demand, $200,000 and $200,000
to Carlyle Managers, Inc. and Carlyle Investors, Inc., respectively, for
additional paid-in capital (reflected in amounts due to affiliates in the
accompanying consolidated financial statements). As of September 30, 1998,
these obligations bore interest at 5.35% per annum and interest accrued on
these obligations was $298,732, after payment of $2,000 in 1998.
JMB/NYC
As a result of the 1996 restructuring, JMB/NYC has an indirect limited
partnership interest which, before taking into account significant
preferences to other partners, equals approximately 4.9% of the reorganized
and restructured ventures owning 237 Park and 1290 Avenue of the Americas
(the "Properties"). Neither O&Y nor any of its affiliates has any direct
or indirect continuing interest in the Properties. The new ownership
structure gives control of the Properties to an unaffiliated real estate
investment trust ("REIT"), which is owned primarily by holders of the first
mortgage debt which encumbered the Properties prior to the bankruptcy.
JMB/NYC has, under certain limited circumstances, through January 1, 2001
rights of consent regarding sale of the Properties or the consummation of
certain other transactions that significantly reduce indebtedness of the
Properties. In general, at any time on or after January 2, 2001, an
affiliate of the REIT has the right to purchase JMB/NYC's interest in the
Properties for certain amounts relating to the operations of the
Properties. There can be no assurance that such REIT affiliate will not
exercise such right on or after January 2, 2001. If such REIT affiliate
exercises such right to purchase, for the reasons discussed below, it is
unlikely that such purchase would result in any significant distributions
to the partners of the Partnership. Additionally, at any time, JMB/NYC has
the right to require such REIT affiliate to purchase the interest of
JMB/NYC in the Properties for the same price at which such REIT affiliate
can require JMB/NYC to sell such interest as described above.
Pursuant to the indemnification agreement, the Affiliated Partners are
jointly and severally obligated to indemnify, through a date no later than
January 2, 2001, the REIT to the extent of $25 million to ensure their
compliance with the terms and conditions relating to JMB/NYC's indirect
limited partnership interest in the restructured and reorganized joint
ventures that own the Properties. The Affiliated Partners contributed
approximately $7.8 million (of which the Partnership's share was
approximately $1.9 million) to JMB/NYC which was deposited into an escrow
<PAGE>
account as collateral for such indemnification. These funds have been
invested in stripped U.S. Government obligations with a maturity date of
February 15, 2001. The Partnership's share of the reduction of the maximum
unfunded obligation under the indemnification agreement recognized as
income, is a result of interest earned on amounts contributed by the
Partnership and held in escrow by JMB/NYC. Such income earned reduces the
Partnership's share of the maximum unfunded obligation under the
indemnification agreement, which is reflected as a liability in the
accompanying financial statements.
The provisions of the indemnification agreement generally prohibit the
Affiliated Partners from taking actions that could have an adverse effect
on the operations of the REIT. Compliance, therefore, is within the
control of the Affiliated Partners and non-compliance with such provisions
by either the Partnership or the other Affiliated Partners is highly
unlikely. Therefore, the Partnership expects its share of the collateral
to be returned (including interest earned) at the termination of the
indemnification agreement.
The Partnership has discontinued the application of the equity method
of accounting for the indirect interests in the Properties and additional
losses from the investment in unconsolidated venture will not be
recognized. Should the unconsolidated venture subsequently report income,
the Partnership will resume applying the equity method on its share of such
income only after such income exceeds net losses not previously recognized.
While the Partnership is not expected to terminate in the near term,
it currently appears unlikely that any significant distributions will be
made by the Partnership at any time due to the level of indebtedness
remaining on the Properties, the original purchase money notes payable by
JMB/NYC, the significant preference levels within the reorganized joint
ventures and the liabilities of the Partnership.
CARROLLWOOD STATION APARTMENTS
In December 1997, the Partnership on behalf of the joint venture,
entered into a contract with an unaffiliated third party to sell the
property. Pursuant to the joint venture agreement, the unaffiliated
venture partner held the right of first refusal to purchase the
Partnership's interest in the joint venture in the event the Partnership
secured a buyer for the property. On March 2, 1998, the unaffiliated
venture partner purchased the Partnership's interest in the joint venture
for $4,642,140, which approximates the share of proceeds that the
Partnership would have received from a sale to the proposed purchaser of
the property. As of the date of the sale, the Partnership was relieved
from any further obligations under the joint venture agreement. The
Partnership recognized a gain of approximately $5,400,000 for financial
reporting purposes and expects to recognize a gain of approximately
$8,300,000 for Federal income tax purposes in 1998.
LONG BEACH PLAZA
The Partnership has not remitted the required debt service payments
for the mortgage loan secured by the Long Beach Plaza Shopping Center since
June 1993. Accordingly, the combined balances of the mortgage notes and
related accrued interest of approximately $55,298,000 at September 30, 1998
and approximately $52,009,000 at December 31, 1997 are in default and 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
<PAGE>
Partnership decided not to commit any significant additional amounts to the
property. In March 1996, a receiver was appointed for the benefit of the
lender. The Partnership anticipates that title to the property may be
transferred in 1998 as a formal notice of the lender's intent to realize
upon its security was received by the Partnership in March, 1997. Such
transfer would result in the Partnership no longer having an ownership
interest in the property and would result in a gain for financial reporting
and Federal income tax purposes to the Partnership with no corresponding
distributable proceeds in 1998.
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments and adjustments to
reflect the treatment given certain transactions in the Partnership's 1997
Annual Report) necessary for a fair presentation have been made to the
accompanying figures as of September 30, 1998 and for the three and nine
months ended September 30, 1998 and 1997.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying consolidated
financial statements for additional information concerning certain of the
Partnership's investment properties.
At September 30, 1998, the Partnership and its consolidated venture
had cash and cash equivalents of approximately $2,668,000. These funds are
available for payment of the Partnership's expenses and liabilities, and
for reserves and potential future distributions to the General Partners and
Holders of Interests. In February 1998, the Partnership made a
distribution to the Holders of Interests totaling approximately $1,830,000
($5 per Interest) out of sale proceeds (primarily related to the sale of
Michael's Aurora Plaza). In February 1998, the Partnership paid
approximately $1,322,000 of previously deferred management and leasing fees
to an affiliate of the General Partners. Additionally, in May 1998 the
Partnership made a distribution of approximately $9,134,000 ($25 per
Interest) to Holders of Interests from the proceeds of the sale of the
Partnership's interest in the Carrollwood Station Associates as well as
proceeds from prior sales. The Partnership does not expect to spend other
than nominal amounts in 1998 for tenant improvements as the Partnership's
interest in the Carrollwood Apartments, the only remaining source of
liquidity at December 31, 1997, was sold in 1998, and title to Long Beach
Plaza, which is under control of a receiver, may be transferred to the
lender in 1998. In connection with the sale of Michael's Aurora Plaza in
October 1997, as is customary in such transactions, the Partnership had
agreed to certain representations and warranties, with a stipulated
survival period which expired June 15, 1998 with no liability to the
Partnership. The Partnership does not consider its indirect interest in
JMB/NYC to be a source of liquidity. Reference is made to the
Partnership's property-specific discussions in the notes. The
Partnership's and its ventures' mortgage obligations are separate non-
recourse loans secured individually by the investment properties and are
not obligations of any other investment, and the Partnership and its
ventures are not personally liable for the payment of the mortgage
indebtedness.
<PAGE>
The Holders of Interests will receive substantially less than one-
fourth of their original investment from all distributions of sale and
refinancing proceeds over the entire term of the Partnership. However, in
connection with sales or other dispositions (including a transfer to a
lender) of the Partnership's remaining investment properties (or interests
therein), Holders of Interests will recognize a substantial amount of
income for Federal income tax purpose even though they do not receive cash
distributions as a result of such sales or dispositions. For certain
Holders of Interests such taxable income may be offset by their suspended
passive activity losses (if any). Each Holder's tax consequences will
depend on his own tax situation.
In connection with the liquidation and termination of the Partnership,
the Corporate General Partner may form a liquidating trust, in which all of
the Partnership's remaining assets, subject to liabilities, would be
transferred. The initial trustees of the liquidating trust would be
individuals who are officers of the Corporate General Partner. Each Holder
of Interests in the Partnership would, upon the establishment of the
liquidating trust, be deemed to be the beneficial owner of a comparable
share of the aggregate beneficial interests in the liquidating trust. It
is anticipated that the liquidating trust, if formed, would permit the
realization of substantial cost savings in administrative and other
expenses until any remaining assets of the Partnership are collected or
liquidated and residual liabilities (including contingent liabilities) of
the Partnership are paid or otherwise determined to be extinguished and any
remaining funds are distributed to the beneficial owners of the liquidating
trust. The liquidating trust would be expected to be in existence for a
period not to exceed three years, subject to extension under certain
circumstances. The formation of a liquidating trust is subject to certain
contingencies, and there is no assurance that the liquidating trust will be
formed.
RESULTS OF OPERATIONS
Significant variances between periods reflected in the accompanying
consolidated financial statements are the result of the sale of the
Partnership's interest in Carrollwood Station Associates on March 2, 1998
and in the Copley Place multi-use complex in January 1997, and the sale of
the Sherry Lane Place and First Tennessee Office Buildings in September
1997 and the sale of Michael's Aurora Plaza in October 1997.
The decrease in cash and cash equivalents at September 30, 1998 as
compared to December 31, 1997 is primarily due to the distributions to the
Holders of Interests in May 1998 and the payment of previously deferred
management and leasing fees to an affiliate of the General Partners.
The decrease in prepaid expenses at September 30, 1998 as compared to
December 31, 1997 is primarily due to the timing of payments for insurance
at the Long Beach Plaza.
The decrease in amounts due to affiliates at September 30, 1998 as
compared to December 31, 1997 is primarily due to the payment of previously
deferred management and leasing fees payable to an affiliate of the General
Partners in the first quarter of 1998.
The increase in interest income for the nine months ended September
30, 1998 as compared to the same period in 1997 is primarily due to a
higher average cash balance available for temporary investment in 1998,
prior to the distribution to Holders of Interest in May 1998.
The increase in other income for the nine months ended September 30,
1998 as compared to the same period in 1997 is primarily due to the 1998
sale of stock which was received as a settlement of claims against a tenant
in bankruptcy. The claim originated from the Partnership's interest in the
Old Orchard Venture prior to it being sold in August 1993.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. 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 September 30, 1998 was approximately
$55,298,000). 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 may be
transferred to Teachers or its designee in 1998.
The Partnership is not subject to any other material legal
proceedings.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Reference is made to the subsection entitled "Long Beach Plaza" in
Notes to Consolidated Financial Statements filed with this report for a
discussion of the default under the mortgage loan secured by Long Beach
Plaza, which discussion is hereby incorporated by reference.
<PAGE>
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate physical occupancy levels by quarter for the Partnership's
investment properties owned during 1998.
<CAPTION>
1997 1998
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Carrollwood Station
Apartments
Tampa, Florida (a) . . . . . 96% 97% 97% 98% N/A N/A N/A
2. Long Beach Plaza
shopping center
Long Beach, California . . . 48% 49% 34% 59% 60% 59% 60%
3. 237 Park Avenue Building
New York, New York . . . . . * * * * * * *
4. 1290 Avenue of the Americas
Building
New York, New York . . . . . * * * * * * *
<FN>
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.
An "*" indicates that the joint venture which owns the property was restructured. Reference is made to the
Notes for further information regarding the reorganized and restructured ventures.
(a) The Partnership's interest in this property was sold on March 2, 1998 by the Partnership as described
further in the Notes.
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3-A. Amended and Restated Agreement of Limited Partnership set
forth as Exhibit A to the Prospectus and which is hereby incorporated by
reference.
3-B. Acknowledgement of rights and duties of the General
Partners of the Partnership between ABPP Associates, L.P. (a successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 is hereby incorporated herein by reference to the
Partnership's Report for September 30, 1996 on Form 10-Q (File No. 0-12791)
dated November 8, 1996.
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 during the last quarter of the
period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: November 11, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: November 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,668,068
<SECURITIES> 249,985
<RECEIVABLES> 1,454,378
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,372,431
<PP&E> 9,277,123
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,796,561
<CURRENT-LIABILITIES> 56,483,339
<BONDS> 1,618,304
<COMMON> 0
0
0
<OTHER-SE> (48,518,073)
<TOTAL-LIABILITY-AND-EQUITY> 13,796,561
<SALES> 3,495,245
<TOTAL-REVENUES> 4,071,650
<CGS> 0
<TOTAL-COSTS> 3,551,277
<OTHER-EXPENSES> 654,470
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,616,852
<INCOME-PRETAX> (3,750,949)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,650,661)
<DISCONTINUED> 5,365,511
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,714,850
<EPS-PRIMARY> 4.93
<EPS-DILUTED> 4.93
</TABLE>
