CARLYLE REAL ESTATE LTD PARTNERSHIP XIII, 10-K405, 1998-03-31

CARLYLE REAL ESTATE LTD PARTNERSHIP XIII
10-K405, 1998-03-31
REAL ESTATE

Previous: MCDONNELL DOUGLAS FINANCE CORP, 424B3, 1998-03-31

Next: LASER PHOTONICS INC, NT 10-K, 1998-03-31

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, 1997 Commission File Number 0-12791

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

Illinois 36-3207212
(State of organization) (I.R.S. Employer Identification No.)

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

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

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

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

None None

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

LIMITED PARTNERSHIP INTERESTS
(Title of Class)

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

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

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

Documents incorporated by reference: None

<PAGE>

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. . . . . . . . . . . . 15

Item 7A. Quantitative and Qualitative Disclosures
about Market Risk. . . . . . . . . . . . . . 21

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 22

Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . 59

PART III

Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . 59

Item 11. Executive Compensation . . . . . . . . . . . 62

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 64

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 65

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 65

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 70

<PAGE>

PART I

ITEM 1. BUSINESS

Unless otherwise indicated, all references 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.

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") at $1,000 per Interest 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). The
offering closed on May 22, 1984. No holder of Interests (hereinafter,
"Holder" or "Holder of Interests") has made any additional capital
contribution after such date. The Holders of Interests 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 or have been 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, with the
sale of the Partnership's interest in the Carrollwood Station Apartments in
the first quarter of 1998, the Partnership has interests in three remaining
investment properties. Title to Long Beach Plaza is expected to be
transferred to the lender in 1998. The Partnership's other investment
properties consist of its indirect interests in the 237 Park Avenue and
1290 Avenue of the Americas properties. Reference is made to Item 7 for a
further discussion of these properties.

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

<PAGE>

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1997,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (f) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
- ---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Copley Place
multi-use complex
Boston,
Massachusetts. . . 1,220,000
sq.ft. 9/1/83 1/23/97 fee ownership of improve-
n.r.a. ments and leasehold
interest in air rights
(through joint venture
partnership) (c)(e)
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
3. First Tennessee
Plaza
(Plaza Tower)
office building
Knoxville,
Tennessee. . . . . 418,000
sq.ft. 10/26/83 9/19/97 fee ownership of land and
n.r.a. improvements (e)
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)
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

<PAGE>

6. Sherry Lane Place
office building
Dallas, Texas. . . 286,000
sq.ft. 12/1/83 9/12/97 fee ownership of land and
n.r.a. improvements (through joint
venture partnerships)(c)(e)
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 (h) fee ownership of land and
n.r.a. improvements (through joint
venture partnerships)
(c)
10. 1290 Avenue of
the Americas
Building
New York,
New York . . . . . 2,000,000
sq.ft. 7/27/84 (h) fee ownership of land and
n.r.a. improvements (through joint
venture partnerships)
(c)
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)(e)

<PAGE>

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)(f)
13. Michael's (Marshall's)
Aurora Plaza
shopping center
Aurora (Denver),
Colorado . . . . . 123,000
sq.ft. 4/1/83 10/15/97 fee ownership of land and
g.l.a. improvements (e)
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)(g)
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

<PAGE>

18. Eastridge
Apartments
Tucson, Arizona. . 456 units 8/23/83 6/30/94 fee ownership of land and
improvements (through a
joint venture partnership)
19. Rio Cancion
Apartments
Tucson, Arizona. . 380 units 8/18/83 3/31/93 fee ownership of land and
improvements
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
(sold 3/2/98) improvements (through a
joint venture partnership)
(c)(f)(i)
22. Greenwood Creek II
Apartments
Benbrook
(Fort Worth),
Texas. . . . . . . 152 units 3/30/84 4/6/93 fee ownership of land and
improvements
23. The Glades
Apartments
Jacksonville,
Florida . . . . . 360 units 10/9/84 11/21/96 fee ownership of land and
improvements (through a
joint venture partnership)
(e)

<PAGE>

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

(a) The computation of this percentage for properties held at
December 31, 1997 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 the Notes and Schedule III 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 the Notes 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 the Notes for a description of the leasehold
interest in the land on which a portion of this real property investment is
situated.

(e) This property or the Partnership's interest in this property has
been sold. Reference is made to the Notes 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 filed with this annual report for further information
concerning real estate taxes and depreciation.

(g) The venture sold its interest in the property. Reference is made
to the Notes.

(h) The original invested capital percentage for the 237 Park Avenue
Building and the 1290 Avenue of the Americas Building was 4% and 8%,
respectively. Reference is made to the Notes for a description of the
reorganization and restructuring of the Partnership's indirect interests in
these investment properties.

(i) The Partnership sold its interest in the property in 1998.
Reference is made to the Notes for a description of such transaction.

</TABLE>

<PAGE>

The Partnership's real property investments are subject to competi-
tion from similar types of properties (including in certain areas,
properties owned 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. Reference is made to Item 7 below for a discussion of
competitive conditions for certain of its significant investment
properties. Approximate occupancy levels for the properties owned in 1997
are set forth in the table in Item 2 below to which reference is hereby
made. The Partnership has maintained 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, 1997 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.

On January 23, 1997, the Partnership sold its entire partnership
interest in Copley Place Associates. Reference is made to the Notes for
further description of the transaction.

On March 12, 1997, the Partnership sold the remaining land of the
Allied Automotive Center. Reference is made to the Notes for further
description of the transaction.

On September 12, 1997, the Partnership sold the land and related
improvements of the Sherry Lane Place office building. Reference is made
to the Notes for a further description of such transaction.

On September 19, 1997, the Partnership sold the land and related
improvements of the First Tennessee Plaza ("Plaza Tower") office building.
Reference is made to the Notes for a further description of such
transaction.

On October 15, 1997, the Partnership sold the land and related
improvements of the Michael's (Marshall's) Aurora Plaza. Reference is made
to the Notes for a further description of such transaction.

On March 2, 1998, the Partnership sold its interest in the Carrollwood
Station Apartments, as described more fully in the Notes.

Reference is made to the Notes 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 the
Partnership's shopping center investment as of December 31, 1997.

The Partnership has no employees other than 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.

<PAGE>

<TABLE>

ITEM 2. PROPERTIES

The Partnership owns or owned 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 1997 and 1996 for the Partnership's investment properties owned
during 1997:
<CAPTION>
1996 1997
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Michael's (Marshall's)
Aurora Plaza
shopping center
Aurora (Denver),
Colorado . . . . . . . . Retail 95% 96% 96% 96% 96% 92% 96% N/A
2. Carrollwood Station
Apartments
Tampa, Florida . . . . . Residential 96% 98% 97% 96% 96% 97% 97% 98%
3. Long Beach Plaza
shopping center
Long Beach,
California . . . . . . . Retail 55% 55% 55% 55% 48% 49% 34% 59%
4. Sherry Lane Place
office building
Dallas, Texas. . . . . . Legal and
Financial Services 96% 97% 96% 96% 97% 96% N/A N/A
5. Copley Place
multi-use complex
Boston, Massachusetts. . Retail/Business
Machines/Financial
Services 89% 93% 90% 90% N/A N/A N/A N/A

<PAGE>

1996 1997
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
6. First Tennessee Plaza
(Plaza Tower)
office building
Knoxville, Tennessee . . Financial Services 91% 93% 93% 93% 92% 94% N/A N/A
7. 237 Park Avenue
Building
New York, New York . . . Advertising/Insurance/
Paper/Real Estate 98% 98% 98% * * * * *
8. 1290 Avenue of the
Americas Building
New York, New York . . . Men's Clothing
Financial Services 78% 71% 81% * * * * *

<FN>
- -----------------
Reference is made to Item 7, and to the Notes 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.

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.

</TABLE>

<PAGE>

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, 1997 was approximately
$52,009,000). 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 1998.

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
1996 and 1997.

PART II

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

As of December 31, 1997, there were 38,317 record holders of the
365,971.66918 Interests outstanding 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, which may be granted or withheld in its
sole and absolute discretion. 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 or have other rights of a Limited Partner. 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

<PAGE>

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 Holders of Interests.

Reference is made to Item 7 for a discussion of unsolicited tender
offers received from unaffiliated third parties.

<PAGE>

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA

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

DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993

(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

<CAPTION>
1997 1996 1995 1994 1993
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . $ 16,941,329 69,093,943 66,763,349 65,969,277 85,193,793
============ ============ ============ ============ ============
Earnings (loss) before
gains on sale or disposi-
tion of investment
properties . . . . . . . $ (5,592,268) 42,099,222 (25,732,699) (26,022,593) (51,028,194)
Gains (losses) on sale
or disposition of
investment properties,
net of venture partners'
share of ($329,169)
in 1996 and $2,887,659
in 1994. . . . . . . . . 96,019,552 5,484,249 -- 18,364,792 11,083,791
Partnership's share
of gains (losses) on sale
of property or
interest in
property of
unconsolidated
ventures . . . . . . . . -- -- (14,789,529) 1,702,082 7,898,727
------------ ------------ ------------ ------------ ------------
Earnings (loss) before
extraordinary items. . . 90,427,284 47,583,471 (40,522,228) (5,955,719) (32,045,676)
Extraordinary items . . . 55,468,888 -- 15,632,407 996,126 (141,776)
------------ ------------ ------------ ------------ ------------
Net earnings
(loss) . . . . . . . . . $145,896,172 47,583,471 (24,889,821) (4,959,593) (32,187,452)
============ ============ ============ ============ ============

<PAGE>

1997 1996 1995 1994 1993
------------- ------------ ----------- ------------ ------------

Net earnings (loss) per
Interest (b):
Earnings (loss) before
gains on sale or
disposition of invest-
ment properties. . . . $ (14.67) 110.42 (67.47) (68.22) (133.78)
Gains (losses) on sale
or disposition of
investment
properties, net of
venture partners'
share of ($329,169)
in 1996 and $2,887,659
in 1994. . . . . . . . 259.75 14.83 -- 49.66 29.97
Partnership's share
of gains (losses)
on sale of property
or interest in
property of
unconsolidated
ventures . . . . . . . -- -- (39.99) 4.60 21.35
Extraordinary items . . 150.05 -- 42.27 2.69 (.38)
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . $ 395.13 125.25 (65.19) (11.27) (82.84)
============ ============ ============ ============ ============
Total assets. . . . . . . $ 27,600,886 280,595,580 307,460,106 333,577,902 374,787,300
Long-term debt. . . . . . $ 1,479,679 384,098,834 382,303,505 361,563,239 360,881,897
Cash distributions
per Interest (b) . . . . $ 25.00 -- 30.00 -- --
============ ============ ============ ============ ============
<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 Holders of Interests
since the inception of the Partnership have not resulted in taxable income to such Holders of Interests and have
therefore represented a return of capital.

</TABLE>

<PAGE>

SIGNIFICANT PROPERTIES - SELECTED RENTAL AND OPERATING DATA

As of December 31, 1997, only the Long Beach Shopping Center
investment property would be considered by the Partnership to be
significant. However, as more fully described in the Notes, the Long Beach
property is in receivership. Therefore, selected rental and operating data
has not been presented in this Annual Report.

<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

As a result of the public offering of Interests as described in
Item 1, the Partnership had approximately $326,000,000 (after deducting
selling expenses) and other offering costs 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.

In March 1997 some of the Holders of Interests received from a third
party unaffiliated with the Partnership an unsolicited offer to purchase up
to 17,000 Interests (approximately 4.6% of the outstanding Interests) at
$10 per Interest. Such offer expired on April 10, 1997. As of the date of
this report, the Partnership is aware that 1.44% of the Interests have been
purchased by such unaffiliated third party either pursuant to such tender
offer or through negotiated purchases. The board of directors of JMB
Realty Corporation ("JMB"), the Corporate General Partner, has established
a special committee (the "Special Committee") consisting of certain
directors of JMB to deal with all matters relating to tender offers for
Interests, including any and all responses to such tender offers. The
Special Committee has retained independent counsel to advise it in
connection with any tender offers for Interests and has retained Lehman
Brothers Inc. as financial advisor to assist the Special Committee in
evaluating and responding to such tender offers. With respect to the offer
for Interests at $10 per Interest, the Special Committee, on behalf of the
Partnership, recommended against acceptance of this offer on the basis
that, among other things, the offer price was inadequate. It is possible
that other offers for Interests may be made by unaffiliated third parties
in the future, although there is no assurance that any third party will
commence an offer for Interests, the terms of any such offer or whether any
such offer, if made, will be consummated, amended or withdrawn.

At December 31, 1997, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $9,528,000 and short-term
investments of approximately $374,000. These funds are available for
working capital requirements and reserves (including payment of deferred
amounts to affiliates of the Corporate General Partners), and potential
future distributions to the General Partners and Holders. In February
1998, the Partnership made a sales distribution totaling $1,829,858
(approximately $5 per Interest) out of sale proceeds (primarily related to
the sale of Michael's Aurora Plaza). 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 is expected to be transferred to the lender in 1998. In
addition, the Partnership does not consider its indirect interest in
JMB/NYC to be a source of liquidity. In such regard, reference is made to
the Partnership's property-specific discussions below. 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 Partnership had suspended operating cash distributions to the
Holders of Interests and General Partners effective as of the first quarter
of 1992.

The affiliates of the Corporate General Partner 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
$1,321,500 (approximately $4 per Interest) through December 31, 1997. The
Partnership paid $10,000,000 of previously deferred fees during February
1995 and $1,500,000 in April 1997. The remaining deferred amounts did not
bear interest and were paid in 1998.

In March 1998, the Partnership sold its ownership interest in the
joint venture that owns the Carrollwood Station Apartments to the
unaffiliated venture partner for $4,642,140. As a result of the property
specific concerns discussed below, the Partnership does not expect that its
remaining investment properties, Long Beach Plaza, 237 Park Avenue and 1290
Avenue of the Americas, will provide it with any significant cash flow from
either operation or sale or other disposition. Aggregate distribution of
sale or refinancing proceeds received by Holders of Interests over the
entire term of the Partnership will be substantially less than one-fourth
of their original investment. 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 taxable income for Federal
income tax purposes, even though the Holders of Interests 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 such Holder's own tax situation.

Copley Place

On January 23, 1997, through a series of transactions the Partnership
sold its entire partnership interest in Copley Place Associates. The
Partnership received approximately $929,000 of net proceeds after repayment
of the purchase price note, at a discount, and repayment of its portion of
the deficit loans. Reference is made to the Notes for a further
description of such sale.

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.

Old Orchard Urban Venture could have received reimbursement, under
certain conditions, of up to an additional $3,400,000 (of which Orchard
Associates had a 79.1667 interest) of previously incurred development costs
based upon certain future earnings of the property (as defined). In
December 1996, the joint venture received a final settlement of $2,450,000
(of which the Partnership share was $969,796) of such development costs
related to the sale of the Old Orchard Shopping Center.

In 1996, OOUV distributed to Orchard Associates $1,389,210 in proceeds
from the settlement of operating prorations. As a result, Orchard
Associates distributed $694,605 to the Partnership representing its share
of such operating prorations.

<PAGE>

JMB/NYC

In October 1994, the Partnership and its affiliated partners (together
with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered
into an agreement (the "Agreement") with the affiliates (the "Olympia &
York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the
venture partners in the Joint Ventures which owned 237 Park Avenue, 1290
Avenue of the Americas and 2 Broadway Buildings, to resolve certain
disputes among the Affiliated Partners and the Olympia & York affiliates.
In general, the parties agreed to: (i) restructure the first mortgage
loan; (ii) sell the 2 Broadway Building; (iii) reduce or eliminate approval
rights of JMB/NYC with respect to virtually all property management,
leasing, sale or refinancing; (iv) amend the Joint Ventures' agreements to
eliminate any funding obligations by JMB/NYC and (v) establish a new
preferential cash distribution level for the Olympia & York affiliates. In
accordance with the Agreement and in anticipation of the sale of the 2
Broadway Building, the unpaid first mortgage indebtedness previously
allocated to 2 Broadway was allocated in 1994 to 237 Park Avenue and 1290
Avenue of the Americas Buildings.

As part of the Agreement, JMB/NYC and the Olympia & York affiliates
agreed to file a pre-arranged bankruptcy plan for reorganization under
Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring
of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and
the debt encumbering the two properties remaining after the sale of 2
Broadway. 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. Such
sale did not result in any distributable proceeds to JMB/NYC or the Olympia
and York affiliates.

Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue
and 1290 Avenue of the Americas properties were made in April 1996, and in
August 1996, an Amended Plan of Reorganization and Disclosure Statement
(the "Plan") was filed with the Bankruptcy Court for these Joint Ventures.
The Plan was accepted by the various classes of debt and equity holders and
confirmed by the Court on September 20, 1996 and became effective October
10, 1996 ("Effective Date"). The Plan provides that 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, due to the level of
indebtedness remaining on the Properties, the original purchase money notes
payable by JMB/NYC, and the significant preference levels within the
reorganized structure and liabilities of the Partnership, 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.

<PAGE>

The restructuring and reorganization discussed above eliminates any
potential additional obligation of the Partnership in the future to provide
additional funds under its previous joint venture agreements (other than
that related to a certain indemnification agreement provided in connection
with the restructuring). The Affiliated Partners entered into a joint and
several obligation 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 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, it is highly likely that the Partnership's share of
the collateral will be returned (including interest earned) at the
termination of the indemnification agreement.

Long Beach Plaza

The Partnership has not remitted all of the scheduled debt service
payments for the mortgage loan secured by the Long Beach Plaza Shopping
Center 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 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 1995 cash
generated from the property. Title to the property is currently expected
to transfer in 1998 as a formal notice of the lender's intent to realize
upon its security was received by the Partnership in March 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 gain for financial
reporting and Federal income tax purposes with no corresponding
distributable proceeds. Reference is made to the Notes for a further
discussion of this property.

First Tennessee Plaza (Plaza Tower) Office Building

On September 19, 1997, the Partnership sold the land and related
improvements of the First Tennessee Plaza office building for $29,200,000.
Reference is made to the Notes for a further description of such
transaction.

Sherry Lane Place

On September 12, 1997, the Partnership sold the land and related
improvements of the Sherry Lane Place office building for $44,000,000.
Reference is made to the Notes for a further description of such
transaction.

<PAGE>

Carrollwood Apartments

On March 2, 1998, the Partnership sold its ownership interest in the
Carrollwood Apartments to the unaffiliated venture partner for $4,642,140.
Reference is made to the Notes for a further description of such
transaction.

The Glades Apartments

On November 21, 1996, the Partnership sold the land and related
improvements of the Glades Apartments. The sale price of the land and
related improvements was $12,900,000. Reference is made to the Notes for a
further description of the sale.

Michael's (Marshall's) Aurora Plaza

On October 15, 1997 the Partnership sold the land and related
improvements of the Michael's (Marshall's) Aurora Plaza for $6,885,000.
Reference is made to the Notes for a further description of such
transaction.

RESULTS OF OPERATIONS

Significant fluctuations between periods in the accompanying
consolidated financial statements are primarily the result of the sale of
the Partnership's interest in the Copley Place multi-use complex in January
1997, the sales of the Sherry Lane Place and First Tennessee Office
Building in September 1997, the sale of Michael's (Marshall's) Aurora Plaza
in October 1997, and the sale of the Glades Apartments in November 1996.
Reference is made to the Notes in the accompanying consolidated financial
statements for discussions of the sales.

The increase in cash and cash equivalents at December 31, 1997 as
compared to December 31, 1996 is primarily due to the temporary investment
of the proceeds from the sale of Michael's Aurora Plaza in October 1997
until their distribution on February 1998.

The decrease in restricted funds at December 31, 1997 as compared to
December 31, 1996 is primarily due to the use of cash held by the appointed
receiver of the Long Beach Plaza Shopping Center to fund operating deficits
at the property.

The decrease in investment in unconsolidated ventures, at equity at
December 31, 1997 as compared to December 31, 1996 is primarily due to a
reduction of the Partnership's paid-in-capital obligation to Carlyle
Managers, Inc. and Carlyle Investors, Inc.

The increase in accrued interest payable at December 31, 1997 as
compared to December 31, 1996 is due to the continued suspension of debt
service payments on the long-term mortgage loan secured by the Long Beach
Plaza.

The decrease in rental income for the year ended December 31, 1997 as
compared to the year ended December 31, 1996 is primarily due to the sale
of Copley Place, Sherry Lane Place, First Tennessee Plaza, and Marshall's,
as discussed above. The increase in rental income for the year ended
December 31, 1996 as compared to December 31, 1995 is primarily due to
higher average occupancy at Copley Place in 1996.

The decrease in interest income for the year ended December 31, 1997 as
compared to the year ended December 31, 1996 and the decrease in interest
income for the year ended December 31, 1996 as compared to the year ended
December 31, 1995 are primarily due to lower average balances in short term
investments in 1997 and 1996 as a result of the payments of previously
deferred property management and leasing fees and distributions to Holders
of Interests of sale proceeds.

<PAGE>

The decrease in depreciation expense for the year ended December 31,
1997 as compared to December 31, 1996 is primarily due to the
classification of the Partnership's remaining investment properties as held
for sale during 1996 and the corresponding suspension of depreciation in
1997. The decrease in depreciation expense for the year ended December 31,
1996 as compared to the year ended December 31, 1995 is primarily due to
the $13,000,000 value impairment recorded as of January 1, 1996 for the
Long Beach Plaza Shopping Center.

The decrease in property operating expenses for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 is
primarily due to the sales noted above. The increase in property operating
expenses for the year ended December 31, 1996 as compared to December 31,
1995 is primarily due to higher real estate taxes (which are partially
recoverable from tenants) at the Copley Place multi-use complex, as well as
a $700,000 accrual recorded for the repair costs relating to the sub-
terranean termite damage at Carrollwood Apartments in 1996.

The provision for value impairment in the amount of $17,600,000 for
the year ended December 31, 1996 is due to the uncertainty of the
Partnership's ability to recover the net carrying value of the Long Beach
Plaza Shopping Center from future operations or sale.

The Partnership's share of the maximum unfunded obligation under the
indemnification agreement at December 31, 1997 was $4,131,258. During
1996, the Partnership contributed $1,950,802 to JMB/NYC which, along with
additional contributions of $5,852,406 from the other Affiliated Partners
of JMB/NYC, is held in escrow pursuant to the terms of the indemnification
agreement. These funds have been invested by JMB/NYC 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 during 1997 of
$134,252 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 proportionate share of the maximum unfunded obligation under
the indemnification agreement.

The decrease in the Partnership's share of income from unconsolidated
venture for the year ended December 31, 1997 compared to income from
unconsolidated venture of $79,070,546, and the recognition of income from
unconsolidated venture for the year ended December 31, 1996 compared to a
loss of $6,600,158 for the year ended December 31, 1995 is primarily the
result of the restructuring of JMB/NYC's interests in the joint ventures
owning the Properties during 1996. Pursuant to the terms of the Plan,
JMB/NYC converted its general partnership interest in the joint ventures
which owned the Properties to a limited partnership interest and
accordingly no longer has a commitment to provide financial support to the
joint ventures owning the Properties. As a result, during 1996, the
Partnership recognized income from restructuring of $78,704,658 from the
reversal of those previously recognized losses that it is no longer
obligated to fund (net of capital contributions). The Partnership's share
of income from operations of unconsolidated venture during 1996 is
partially offset by loss from operations prior to such reorganization. As
of the Effective Date, the Partnership has discontinued the application of
the equity method of accounting for its indirect interests in the
Properties and additional losses from the investment in unconsolidated
venture will not be recognized.

The gain on sale or disposition of investment properties, net of
venture partners' share of $96,019,552 for the year ended December 31, 1997
consists of gain of $71,276,721 related to the sale of the interest in
Copley Place multi-use complex, a gain of $541,792 related to the sale of
land at the Allied Automotive Center, a gain of $18,174,417 related to the
sale of Sherry Lane Place Office Building, a gain of $5,207,750 related to

<PAGE>

the sale of the First Tennessee Plaza Office Building and a gain of
$818,872 related to the sale of Michael's Aurora Plaza. The gain of
$5,484,249 on the sale or disposition of investment property for the year
ended December 31, 1996 is the result of the sale of the Glades Apartments
and the Partnership's share of the final settlement of reimbursable
development costs related to the sale of Old Orchard Shopping Center, which
was sold in September 1993.

The loss on sale of interest in unconsolidated ventures and the
extraordinary item for the year ended December 31, 1995 is due to the 1995
sale of 2 Broadway and the related gain on the extinguishment of
indebtedness.

The extraordinary items of $55,468,888 for the year ended December 31,
1997 consists of the forgiveness of indebtedness of $55,183,784 on the
purchase price note payable to an affiliate in connection with the sale of
the interest in the Copley Place multi-use complex, and the write off of
unamortized deferred mortgage expense of $285,104 resulting from the sales
of the Sherry Lane Place Office Building and the First Tennessee Plaza
Office Building.

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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

Not applicable.

<PAGE>

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, 1997 and 1996

Consolidated Statements of Operations, years ended December 31,
1997, 1996 and 1995

Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1997, 1996 and 1995

Consolidated Statements of Cash Flows, years ended December 31,
1997, 1996 and 1995

Notes to Consolidated Financial Statements

SCHEDULE
--------

Consolidated Real Estate and Accumulated Depreciation III

SCHEDULES NOT FILED:

All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or related notes.

<PAGE>

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, 1997 and 1996,
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1997, 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 the Notes to the consolidated financial statements, in
1996, the Partnership and its consolidated ventures changed their method of
accounting for long-lived assets and long-lived assets to be disposed of to
conform with Statement of Financial Accounting Standards No. 121.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 25, 1998

<PAGE>

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

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1997 AND 1996

ASSETS
------
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 9,528,301 6,030,217
Short-term investments. . . . . . . . . . . . . . . . . . . . . . . 374,085 374,085
Restricted funds. . . . . . . . . . . . . . . . . . . . . . . . . . 23,218 1,055,386
Interest, rents and other receivables . . . . . . . . . . . . . . . 2,157,413 2,576,860
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 96,133 262,562
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 119,254 11,435,274
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . 12,298,404 21,734,384

Investment properties held for sale or disposition. . . . . . . . 14,917,470 238,208,441
------------ ------------

Investment in unconsolidated ventures, at equity. . . . . . . . . . . 31,957 432,357
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 219,687 5,133,689
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . -- 447,345
Venture partners' deficits in ventures. . . . . . . . . . . . . . . . 133,368 14,639,364
------------ ------------

$ 27,600,886 280,595,580
============ ============

<PAGE>

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

CONSOLIDATED BALANCE SHEETS - CONTINUED

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

1997 1996
------------ -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 40,361,075 39,232,585
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 235,535 3,434,187
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . 1,994,139 4,238,789
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . 109,854 1,633,263
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 18,302,502 17,431,535
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . -- 1,475,510
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . 61,003,105 67,445,869
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 255,538 800,941
Partnership's share of the maximum unfunded
obligation under the indemnification agreement. . . . . . . . . . . 4,131,258 4,265,510
Long-term debt, less current portion. . . . . . . . . . . . . . . . . 1,479,679 384,098,834
------------ ------------
Commitments and contingencies

Total liabilities . . . . . . . . . . . . . . . . . . . . . 66,869,580 456,611,154

Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (18,485,486) (19,776,680)
Cumulative cash distributions . . . . . . . . . . . . . . . . . (1,149,967) (1,149,967)
------------ ------------
(19,634,453) (20,925,647)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . 326,224,167 326,224,167
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (295,750,699) (440,355,677)
Cumulative cash distributions . . . . . . . . . . . . . . . . . (50,107,709) (40,958,417)
------------ ------------
(19,634,241) (155,089,927)
------------ ------------
Total partners' capital (deficits). . . . . . . . . . . . . (39,268,694) (176,015,574)
------------ ------------
$ 27,600,886 280,595,580
============ ============
<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
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>

1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $ 16,385,742 68,293,433 65,729,288
Interest income . . . . . . . . . . . . . . . . . 555,587 800,510 1,034,061
------------ ------------ ------------
16,941,329 69,093,943 66,763,349
------------ ------------ ------------
Expenses:
Mortgage and other interest . . . . . . . . . . . 9,869,385 39,959,842 38,615,594
Depreciation. . . . . . . . . . . . . . . . . . . -- 10,267,305 13,784,147
Property operating expenses . . . . . . . . . . . 10,768,100 39,183,796 35,234,465
Professional services . . . . . . . . . . . . . . 414,224 323,882 647,443
Amortization of deferred expenses . . . . . . . . 661,788 1,570,746 1,421,951
General and administrative. . . . . . . . . . . . 540,647 695,947 781,049
Provision for value impairment. . . . . . . . . . -- 17,600,000 --
------------ ------------ ------------
22,254,144 109,601,518 90,484,649
------------ ------------ ------------
(5,312,815) (40,507,575) (23,721,300)
Partnership's share of the reduction of
the maximum unfunded obligation under
the indemnification agreement . . . . . . . . . . 134,252 -- --
Partnership's share of income (loss) from
unconsolidated ventures (including income
from restructuring of $78,704,658
in 1996). . . . . . . . . . . . . . . . . . . . . (400,400) 79,070,546 (6,600,158)
Venture partners' share of earnings (loss) from
consolidated ventures' operations . . . . . . . . (13,305) 3,536,251 4,588,759
------------ ------------ ------------
Earnings (loss) before gains on
sale or disposition of investment
properties. . . . . . . . . . . . . . . . (5,592,268) 42,099,222 (25,732,699)
Gains (loss) on sale or disposition of investment
properties, net of venture partners'
share of $14,492,690 and ($329,169) in
1997 and 1996, respectively . . . . . . . . . . . 96,019,552 5,484,249 --
Partnership's share of gain (loss) on
sale of property or interest in
property of unconsolidated ventures . . . . . . . -- -- (14,789,529)
------------ ------------ ------------
Earnings (loss) before extraordinary items. 90,427,284 47,583,471 (40,522,228)

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

1997 1996 1995
------------ ------------ ------------
Extraordinary items . . . . . . . . . . . . . . . . 55,468,888 -- 15,632,407
------------ ------------ ------------

Net earnings (loss). . . . . . . . . . . . . $145,896,172 47,583,471 (24,889,821)
============ ============ ============

Net earnings (loss) per limited partnership
interest:
Earnings (loss) before gains on
sale or disposition of investment
properties. . . . . . . . . . . . . . . . . . $ (14.67) 110.42 (67.47)
Gains (loss) on sale or disposition
of investment properties. . . . . . . . . . . 259.75 14.83 --
Partnership's share of gain (loss)
on sale of property or interest
in property of unconsolidated ventures. . . . -- -- (39.99)
Extraordinary items . . . . . . . . . . . . . . 150.05 -- 42.27
------------ ------------ ------------

Net earnings (loss) . . . . . . . . . . . . . $ 395.13 125.25 (65.19)
============ ============ ============

<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 PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<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,
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)

Net earn-
ings (loss). -- 1,738,811 -- 1,738,811 -- 45,844,660 -- 45,844,660
------ ----------- ---------- ----------- ----------- ------------ ----------- -----------

<PAGE>

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,
1996 . . . . 1,000 (19,776,680) (1,149,967)(20,925,647) 326,224,167 (440,355,677) (40,958,417)(155,089,927)

Net earn-
ings (loss). -- 1,291,194 -- 1,291,194 -- 144,604,978 -- 144,604,978

Cash distri-
butions
($25 per
limited
partner-
ship
interest). . -- -- -- -- -- -- (9,149,292) (9,149,292)
------ ----------- ---------- ----------- ----------- ------------ ----------- -----------
Balance
(deficit)
Decem-
ber 31,
1997 . . . .$1,000 (18,485,486) (1,149,967)(19,634,453) 326,224,167 (295,750,699) (50,107,709)(19,634,241)
====== =========== ========== =========== =========== ============ =======================

<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
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $145,896,172 47,583,471 (24,889,821)
Items not requiring (providing) cash or
cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . -- 10,267,305 13,784,147
Amortization of deferred expenses . . . . . . . 661,788 1,570,746 1,421,951
Amortization of discount on long-term debt. . . 166,538 147,795 224,415
Long-term debt - deferred accrued interest. . . 629,639 12,575,684 11,980,846
Partnership's share of income (loss) from
unconsolidated ventures (including income
from restructuring of $78,704,658 in 1996). . 400,400 (79,070,546) 6,600,158
Partnership's share of the reduction of the
maximum unfunded obligation . . . . . . . . . (134,252) -- --
Venture partners' share of ventures'
operations. . . . . . . . . . . . . . . . . . 13,305 (3,536,251) (4,588,759)
Gain on sale or disposition of investment
properties, net of venture partner's share. . (96,019,552) (5,484,249) --
Net asset decrease resulting from the
sale of investment properties . . . . . . . . 442,505 -- --
Extraordinary items . . . . . . . . . . . . . . (55,468,888) -- (15,632,407)
Partnership's share of (gain) loss on
sale of property or interest in property
of unconsolidated ventures. . . . . . . . . . -- -- 14,789,529
Provision for value impairment. . . . . . . . . -- 17,600,000 --
Working capital decrease related to sale of
interest in investment property . . . . . . . (2,318,702) -- --
Changes in:
Restricted funds. . . . . . . . . . . . . . . . 735,933 256,854 (828,006)
Interest, rents and other receivables . . . . . (315,451) 356,584 151,462
Prepaid expenses. . . . . . . . . . . . . . . . 11,823 26,688 29,086
Escrow deposits . . . . . . . . . . . . . . . . 1,729,227 (5,439,699) (126,335)
Accrued rents receivable. . . . . . . . . . . . (30,334) 42,566 24,380
Accounts payable. . . . . . . . . . . . . . . . (1,496,748) 576,025 839,886
Unearned rents. . . . . . . . . . . . . . . . . (266,390) 1,099,239 (17,800)
Accrued interest. . . . . . . . . . . . . . . . 5,421,141 4,476,029 4,140,326
Accrued real estate taxes . . . . . . . . . . . (1,474,691) 321,108 (425,059)
Amounts due to affiliates . . . . . . . . . . . (1,573,492) 789,399 (9,960,695)
Tenant security deposits. . . . . . . . . . . . (386,996) (846,950) 938,939
------------ ------------ ------------
Net cash provided by (used in)
operating activities. . . . . . . . . . (3,377,025) 3,311,798 (1,543,757)
------------ ------------ ------------

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1997 1996 1995
------------ ------------ ------------
Cash flows from investing activities:
Cash proceeds from sale of investment
properties, net of selling expenses . . . . . . 19,329,753 1,651,689 --
Additions to investment properties. . . . . . . . (2,494,608) (4,337,187) (3,246,082)
Net sales and maturities (purchases)
of short-term investments . . . . . . . . . . . -- 2,194,244 16,391,657
Partnership's distributions from
unconsolidated ventures . . . . . . . . . . . . -- 1,679,901 1,186,046
Partnership's contributions to
unconsolidated ventures . . . . . . . . . . . . -- (2,009,693) --
Payment of deferred expenses. . . . . . . . . . . (357,657) (1,575,688) (1,531,975)
------------ ------------ ------------
Net cash provided by (used in)
investing activities. . . . . . . . . . 16,477,488 (2,396,734) 12,799,646
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from refinancing of long-term debt . . . -- -- 14,900,000
Principal payments on long-term debt. . . . . . . (453,087) (793,083) (18,705,089)
Venture partners' contributions to ventures . . . -- -- --
Distributions to limited partners . . . . . . . . (9,149,292) -- (10,983,528)
Distributions to general partners . . . . . . . . -- -- (110,945)
------------ ------------ ------------
Net cash provided by (used in)
financing activities. . . . . . . . . . (9,602,379) (793,083) (14,899,562)
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents. . . . . . . . . . 3,498,084 121,981 (3,643,673)

Cash and cash equivalents,
beginning of year . . . . . . . . . . . 6,030,217 5,908,236 9,551,909
------------ ------------ ------------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . $ 9,528,301 6,030,217 5,908,236
============ ============ ============

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1997 1996 1995
------------ ------------ ------------

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . $ 3,652,067 21,830,425 22,733,319
============ ============ ============
Non-cash investing and financing activities:
Reduction in investment in unconsolidated venture $ 400,000 800,000 --
============ ============ ============
Reduction in amounts due to affiliates. . . . . $ -- (800,000) --
============ ============ ============
Non-cash investing and financing activities:
Activity due to sale of investment properties:
Reduction of fixed assets, net of accumulated
depreciation . . . . . . . . . . . . . . . . . $225,785,579 -- --
Reduction of working capital. . . . . . . . . . 9,495,504 -- --
Reduction of security deposits. . . . . . . . . (158,400) -- --
Reduction of deferred expenses. . . . . . . . . 4,609,869 -- --
Reduction of long-term debt . . . . . . . . . . (386,383,929) -- --
Venture partners' share of gain . . . . . . . . 14,492,690 -- --
Gain on sale or disposition of interest in
investment properties, net of venture partners'
share. . . . . . . . . . . . . . . . . . . . . 96,019,552 -- --
Extraordinary items . . . . . . . . . . . . . . 55,468,888 -- --
------------ ------------ ------------
Cash sales proceeds from sale of investment
properties, net of selling expenses . . . . . $ 19,329,753 -- --
============ ============ ============

<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

DECEMBER 31, 1997, 1996 AND 1995

OPERATIONS AND BASIS OF ACCOUNTING

GENERAL

The Partnership holds (either directly or through joint ventures) an
interest in certain real estate investments. Business activities consist
of rentals to a variety of commercial companies, and the ultimate sale or
disposition of such real estate. Of its four remaining investment
properties at December 31, 1997, one has been sold and another is expected
to be transferred to the lender during 1998. The two other investment
properties of the Partnership at December 31, 1997 are its indirect
interests in the 237 Park Avenue and the 1290 Avenue of the Americas
properties.

The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated ventures - Copley Place
Associates ("Copley Place") (sold January 23, 1997); Carrollwood Station
Associates, Ltd. ("Carrollwood") (sold March 2, 1998), Jacksonville Cove I
Associates, Ltd. ("Glades") (sold November 21, 1996); and Sherry Lane
Associates ("Sherry Lane") (sold September 12, 1997) in which the
Partnership has certain preferential claims and rights as discussed below.
The effect of all transactions between the Partnership and the consolidated
ventures has been eliminated.

The Partnership holds an approximate 25% interest in JMB/NYC Office
Building Associates, L.P. ("JMB/NYC") which in turn owns an indirect
approximate 4.9% interest in commercial real estate in the City of New
York, New York consisting of the 237 Park Avenue and 1290 Avenue of the
Americas properties (the "Properties").

The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's indirect 25%
interest in JMB/NYC through Carlyle XIII Associates, L.P. through the
confirmation and acceptance of the Amended Plan of Reorganization and
Disclosure Statement on October 10, 1996 ("Effective Date"). Accordingly,
the financial statements do not include the accounts of JMB/NYC or Carlyle
XIII Associates, L.P. The share of income from unconsolidated venture in
the accompanying consolidated financial statements includes the
Partnership's proportionate share of the operations of the Properties
through the Effective Date, as well as income from restructuring,
consisting primarily of the reversal of previously recognized losses and
adjustments necessary to record the restructuring. During 1996, the
Partnership reversed those previously recognized losses resulting from its
interest in JMB/NYC that it is no longer obligated to fund due to the
conversion of JMB/NYC's general partnership interest in the joint ventures
which owned the Properties to a limited partnership interest and the terms
of the restructuring. The Partnership has no future funding obligations
(other than that related to a certain indemnification agreement provided in
connection with the restructuring) and has no influence or control over the
day-to-day affairs of the joint ventures which own the Properties
subsequent to the Effective Date. Accordingly, 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.

<PAGE>

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, 1997 and 1996 is summarized as follows:

<PAGE>

1997 1996
------------------------------ ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . $ 27,600,886 32,752,686 280,595,580 66,129,981

Partners' capital accounts
(deficits):
General partners . . . . . . . (19,634,453) (6,247,813) (20,925,647) (29,981,225)
Limited partners . . . . . . . (19,634,241) (78,092,004) (155,089,927) (263,290,961)

Net earnings (loss):
General partners . . . . . . . 1,291,194 23,733,412 1,738,811 976,751
Limited partners . . . . . . . 144,604,978 194,348,248 45,844,660 516,267

Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . . 395.13 531.05 125.25 1.41
============ ============ ============ ============

</TABLE>

<PAGE>

The net earnings (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 and disclosure of
contingent 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.

Certain amounts in the 1995 and 1996 financial statements have been
reclassified to conform with the 1997 presentation.

Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations at cost, which approximates
market. For the purposes of these statements, the Partnership's policy is
to consider all such amounts held with original maturities of three months
or less ($8,528,571 and $5,500,762 at December 31, 1997 and 1996,
respectively) as cash equivalents, which includes investments in an
institutional mutual fund which holds U.S. Government obligations, with any
remaining amounts (generally with original maturities of one year or less)
reflected as short-term investments being held to maturity.

Deferred expenses were 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.

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.

The Partnership acquired, either directly or through joint ventures,
nine apartment complexes, three shopping centers, ten office buildings and
a multi-use complex. Nineteen properties have been sold or disposed of by
the Partnership as of December 31, 1997. All of the remaining properties
owned at December 31, 1997 were operating and held for sale or disposition.

The Partnership's interest in the Carrollwood Apartments was subsequently
sold in March 1998. The cost of the investment properties represents the
total cost to the Partnership or its ventures plus miscellaneous acquisi-
tion costs.

Depreciation on the properties has been provided over the estimated
useful lives of the various components as follows:

YEARS
-----
Building and Improvements -- straight-line . . 30
Personal property -- straight-line . . . . . . 5
==

<PAGE>

Significant betterments and improvements are capitalized and
depreciated over their estimated useful lives. Maintenance and repair
expenses are charged to operations as incurred.

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 in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
requires that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value cannot be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the property's carrying value and the
property's estimated fair value. 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. Adjustments for impairment loss
for such properties (subsequent to the date of adoption of SFAS 121) are
made in each period as necessary to report these properties at the lower of
carrying value or 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 can be no assurance that any
estimated fair value of these properties would ultimately be realized by
the Partnership in any future sale or disposition transaction.

Under the prior accounting policy, provisions for value impairment
were recorded with respect to investment properties whenever the estimated
future cash flows from a property's operations and projected sale were less
than the property's carrying value. The amount of any such impairment loss
recognized by the Partnership was 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 is 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 for financial reporting purposes (comprised of gain on
extinguishment of debt and gain or loss on the sale or disposition of
property) 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.

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 prior
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 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.

The results of operations, net of venture partners' share, for
consolidated properties classified as held for sale or disposition as of
December 31, 1997 or sold or disposed of during the past three years were
$(3,727,014), ($26,672,607) and ($9,611,539), respectively, for the years
ended December 31, 1997, 1996 and 1995. In addition, the accompanying
consolidated financial statements include $0, $581,147 and $194,066,
respectively, of the Partnership's share of total property operations of
$0, $1,162,294 and $388,131 of unconsolidated properties held for sale or
disposition as of December 31, 1997 or sold or disposed of in the past
three years.

<PAGE>

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
represented a mortgage loan which was subordinated to the existing senior
mortgage loan.

During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. These standards became
effective for reporting periods after December 15, 1997. As the
Partnership's capital structure only has general and limited partnership
interests, the Partnership will not experience any significant impact on
its consolidated financial statements.

VENTURE AGREEMENTS - GENERAL

The Partnership at December 31, 1997 is a party to two operating joint
venture agreements. Pursuant to such agreements, the Partnership made
initial capital contributions of approximately $46,094,271 (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 acquired, through the above ventures, one apartment
complex and three office buildings. 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 were financed under various long-term debt arrangements
as described below.

The Partnership in certain cases had a cumulative preferred interest
in net cash receipts (as defined) from the properties. Such preferential
interest related to a negotiated rate of return on contributions made by
the Partnership. After the Partnership received its preferential return,
the venture partner was generally entitled to a non-cumulative return on
its interest in the venture; net cash receipts were generally shared in a
ratio relating to the various ownership interests of the Partnership and
its venture partners. During 1997, 1996 and 1995, one, two 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.

<PAGE>

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.

INVESTMENT PROPERTIES

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). The Partnership has not remitted all of the scheduled 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 note and related accrued interest of approximately $52,009,000 at
December 31, 1997 and approximately $47,624,000 at December 31, 1996 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 decided not to commit any significant additional amounts to the
property. In March 1996, a receiver for the property 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 1998 as a formal
notice of the lender's intent to realize upon its security was received by
the Partnership in March 1997. This will result in the Partnership no
longer having an ownership interest in such property and will result in
gain for financial reporting and Federal income tax purposes to the
Partnership with no corresponding distributable proceeds in 1998.

On adoption of SFAS 121 as described above, the Partnership recorded a
provision for value impairment of $13,100,000 as of January 1, 1996 to
reflect the then estimated fair value of the property based upon the use of
an appropriate capitalization rate on the property's net operating income.
As of July 1, 1996, the Partnership classified this property as held for
sale or disposition in the accompanying consolidated financial statements.
The property was not subject to continuing depreciation. On December 31,
1996, the Partnership recorded an additional provision for value impairment
of $4,500,000 to revise the estimated fair value, less costs to sell, of
the property based on current net operating income.

COPLEY PLACE

On January 23, 1997, through a series of transactions, the Partnership
sold its entire partnership interest in Copley Place Associates as
described below.

The Partnership acquired in 1983, through a joint venture ("Copley
Place Associates") with the developer, an interest in a portion of Copley
Place, a multi-use complex in Boston, Massachusetts. Initially, the
Partnership purchased its joint venture 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. The purchase price note
(the "Note") with an original balance of $20,000,000, bore interest at
11.5% per annum on a compounded basis. The unpaid balance of the Note at
December 31, 1996 was $88,554,145. The Partnership had 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.

As a result of such transaction, and subsequent assignments, the Note was
held by an affiliate of the Corporate General Partner at December 31, 1996.

<PAGE>

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 had loaned approximately $13,648,000 through
December 31, 1996 to fund its required obligation. The loans (the "Deficit
Loans") accrued interest at the contract rate based on the joint venture
partner's line of credit. The line of credit bore interest at a floating
rate (averaging 7.57% per annum at December 31, 1996). The outstanding
principal and accrued interest were to be repaid from future available cash
flow, as defined. During 1996 and 1995, the joint venture paid
approximately $225,000 and $1,518,000, respectively, of accrued interest on
these loans. In May 1996, the venture used approximately $945,000 of
Copley Place pre-loan modification cash reserves to repay a 1996 advance of
approximately $720,000 from the joint venture partner with the remaining
balance applied to accrued interest on the operating deficit loans
discussed above.

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

The joint venture agreement further provided that, in general, upon
any sale or refinancing of the complex the first $60,000,000 of net
proceeds would be distributed equally between the Partnership and the joint
venture partner. The Partnership would 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, 1996 was
$12,000,000). The Partnership would then be entitled to receive the next
$190,000,000 plus an amount equal to certain interest which had been paid
or was payable to the developer and its successors on the Note. The joint
venture partner would have been entitled to receive the next $190,000,000
plus an amount equal to certain interest paid to it on the Note, with any
remaining proceeds distributable equally to the Partnership and the joint
venture partner. However, the Partnership was obligated to use its share
of any sale or refinancing proceeds to satisfy, in full, the 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 7-1/2%
per annum through August 1998. The contract rate was lowered to 10% per
annum through August 1993 and, further reduced to 8-1/2% per annum through
August 1998. After each monthly payment, the difference between the
contract interest rate on the outstanding principal balance on the loan,
including the difference between deferred interest and interest paid at the
applicable pay rate (as defined), was added to the principal balance and
accrued interest at the contract interest rate. On September 1, 1996, the
joint venture elected to pay mortgage interest using the contract rate of
8.5% rather than the pay rate of 7.5%. All outstanding principal,
including the unpaid deferred interest, was due and payable on August 31,
1998. Any cash flow from the property, after all capital and leasing
expenditures, but before payment of a portion of the property management
fees, was escrowed for the purpose of paying for future capital and leasing
requirements.

As a result of the debt modification, the property produced cash flow
since 1993. This cash flow had been escrowed for future potential capital
and leasing requirements as set forth in the loan modification.

From and after 1986, substantially all of the joint venture partner's
interest in the joint venture was owned by the Corporate General Partner.
An affiliate of the Corporate General Partner managed the portion of the
complex owned by the joint venture.

<PAGE>

During 1996, the Partnership and Copley Place Associates had committed
to a plan to sell the property, and therefore, classified the property as
held for sale at October 1, 1996. The property was not subject to
continued depreciation as of such date. In 1996, the joint venture
determined that receivables due from an affiliate were uncollectible. As a
result, the joint venture wrote off these amounts in 1996.

The Partnership's outstanding obligations on the Note and for the
Deficit Loans, and the projected continuing accruals of additional interest
on such amounts made it unlikely that the Partnership's interest in Copley
Place Associates would ever be sold for an amount which would result in any
net proceeds to the Partnership. In order to provide the Partnership with
incentive to consummate the sale of its interest, the joint venture
partner, the holder of the Note and the Partnership executed an agreement
whereby the net proceeds were distributed in a manner which permitted the
Partnership to satisfy its obligations relative to the Note and the Deficit
Loans and still realize some modest cash proceeds. In addition, the holder
of the Note agreed on a discounted payoff of the Note. In general, the
Partnership received $43,900,000 of sale proceeds, of which $34,000,000 was
remitted to the holder of the Note as payment in full satisfaction of the
Note. As a result, the Partnership was relieved of an approximately
$55,000,000 obligation. The Partnership's obligation under the Deficit
Loans were next satisfied in full out of the Partnership's remaining sale
proceeds. After the repayment of the Note and Deficit Loans, as discussed
above, the Partnership's remaining net proceeds amounted to approximately
$929,000, all of which was received in cash at closing. The Partnership
has retained these funds as necessary working capital reserves.

The effect on the Partnership's consolidated financial statements as a
result of the sale was to eliminate the Partnership's investment in Copley
Place Associates and to recognize a gain on sale of the Partnership's
interest in the consolidated venture of approximately $71,277,000 and a
gain on the forgiveness of indebtedness of approximately $55,184,000 for
financial reporting purposes in 1997. The Partnership also recognized a
gain on the sale of approximately $171,500,000 for Federal income tax
purposes in 1997.

JMB/NYC

JMB/NYC is a limited partnership among Carlyle-XIII Associates, L.P.,
Carlyle-XIV Associates, L.P. and Property Partners, L.P. as limited
partners and Carlyle Managers, Inc. as the sole general partner. The
Partnership is a 20% shareholder of Carlyle Managers, Inc. and related to
this investment, the Partnership has an obligation to fund, on demand,
$200,000 (reduced from $600,000 during 1996) 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, $200,000 (reduced
from $600,000 during 1996) 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.

<PAGE>

approval rights of JMB/NYC with respect to virtually all property
management, leasing, sale or refinancing; (iv) amend the Joint Ventures'
agreements to eliminate any funding obligations by JMB/NYC and (v)
establish a new preferential cash distribution level for the Olympia & York
affiliates. In accordance with the Agreement and in anticipation of the
sale of the 2 Broadway Building, the unpaid first mortgage indebtedness
previously allocated to 2 Broadway was allocated in 1994 to 237 Park Avenue
and 1290 Avenue of the Americas.

In September 1995, the sale of the 2 Broadway Building was completed. Such
sale did not result in any distributable proceeds to JMB/NYC or the Olympia
& York affiliates.

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
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.

<PAGE>

The provisions of the indemnification agreement generally prohibit the
Affiliated Partners from taking any 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, it is highly likely that the Partnership's share of
the collateral will be returned (including interest earned) at the
termination of the indemnification agreement.

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.

OOUV could have received reimbursement, under certain conditions, of
up to an additional $3,400,000 (of which Orchard Associates had a 79.1667%
interest) of previously incurred development costs based upon certain
future earnings of the property (as defined). In December 1996, OOUV
received a final settlement of $2,450,000 (of which the Partnership's share
was $969,796) of such development costs related to the sale of the Old
Orchard Shopping Center.

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
Associates its share of the pre-sale settlement with Federated Department
Stores of $288,452. As a result, Orchard Associates distributed to the
Partnership its share of the settlement of $144,226. In 1996, OOUV
distributed to Orchard Associates proceeds of $1,389,210 from the
settlement of operating prorations. As a result, Orchard Associates
distributed $694,605 to the Partnership representing its share of such
operating prorations. The Partnership intends to retain these funds for
working capital purposes.

OOUV and Orchard Associates had also entered into a contribution
agreement whereby they 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 the potential future
distribution of $3,400,000 as described above) in accordance with their
pre-contribution percentage interests. In December 1996, Orchard received
its share of the earn out provision of $2,450,000, as discussed above, and
distributed to each of the respective partners their share ($969,796 to the
Partnership) of such amount. The Partnership recognized a gain of $870,837
for financial reporting purposes and for Federal income tax purposes in
1996.

SHERRY LANE PLACE OFFICE BUILDING

Pursuant to a contract entered into in July, 1997, on September 12,
1997, the Partnership, through Sherry Lane Associates, sold the Sherry Lane
Place Office Building to an unaffiliated third party for $44,000,000
(before selling costs and prorations) all of which was paid in cash at
closing. After repayment of the mortgage notes securing the property
(approximately $41,171,000, including contingent interest (as defined)),
the Partnership realized net proceeds of approximately $2,653,000. The
sale resulted in a gain of approximately $18,300,000 to the Partnership in
1997 for financial reporting purposes. The Partnership recognized a gain
of approximately $29,600,000 for Federal income tax purposes in 1997.
Pursuant to the Sherry Lane Associates venture agreement, substantially all
of the net proceeds from the sale has been distributed to the Partnership.
In connection with the sale of this property and as is customary in such
transactions, Sherry Lane Associates agreed to certain representations and
warranties, with a stipulated survival period which expired December 15,
1997 with no liability to the Partnership.

<PAGE>

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 bore a contract interest rate of 8% per annum
for the period retroactive from January 1, 1993 through December 31, 1994,
and increased to 8.5% per annum for the period from January 1, 1995 through
April 1, 1998. Interest only was 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,
had a zero pay and accrual rate. All excess cash flow above debt service
on the first note was to be applied first against accrued interest on the
first note and then as contingent interest on the second note (as defined).

The Partnership had committed to a plan to sell or dispose of Sherry
Lane Place office building, and accordingly, as of December 31, 1996, the
Partnership classified this property as held for sale or disposition in the
accompanying Consolidated Financial Statements, and therefore, the property
was not subject to continued depreciation after such date.

CARROLLWOOD STATION APARTMENTS

In September 1993, the joint venture refinanced with an unaffiliated
third party lender the existing $7,200,000 mortgage loan with a new loan in
the amount of $7,455,000, which was scheduled to mature in August 1998. 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 has been
subsequently funded by the operations of the joint venture. At
December 31, 1997, the escrow account balance is approximately $108,000 and
no amounts have been withdrawn. As of the date of sale of the
Partnership's interest in the property as described below, any rights of
the Partnership to the escrow were assigned to the unaffiliated venture
partner.

In April 1996, the property manager (an affiliate of the Partnership's
joint venture partner in the property) of the apartment complex notified
the Partnership of potential sub-terranean termite damage at the property.
This damage was discovered as a result of a wood replacement project that
was undertaken to prepare the property to market for sale. The property
manager obtained three competitive bids to repair the damage, each of which
totaled approximately $1,400,000 (all bids were received prior to the tear
out and reconstruction of the prototype building as discussed below). The
exterminating company that had been treating the property for several years
was notified of the extensive damage and was negotiating with the property
manager and the venture partners its liability regarding the damage. In
August 1996, the joint venture, in conjunction with the exterminating
company, reached an agreement whereby one of the complex's twenty-seven
buildings was chosen as a prototype building to better survey the termite
damage. This building was analyzed and repaired at a total cost of
$69,430. The joint venture and the exterminating company then commenced
negotiating regarding a possible settlement for the entire complex. In
December 1996, the exterminating company notified the Partnership of its
desire to schedule a mediation between the parties in order to resolve
certain disputes regarding the repair costs. On March 19, 1997, the joint
venture and the exterminating company settled these issues and agreed on a
settlement in the amount of $637,500, which was received by the joint
venture in full in April 1997. Such amount and the related costs of repair
have been reflected in the accompanying consolidated financial statements.
Upon receipt of the settlement amount, the joint venture commenced the
tear-out and reconstruction of the remainder of the property, which was
completed in July 1997. The amount received from the settlement covered
substantially all costs of repair.

<PAGE>

The joint venture committed to a plan to sell or dispose of
Carrollwood Station Apartments. Accordingly, as of December 31, 1996, the
joint venture classified this property as held for sale or disposition in
the accompanying Consolidated Financial Statements, and therefore, the
property was not subject to continued depreciation after such date.

In October 1997, the joint venture reached an agreement in principle
for the sale of Carrollwood Station Apartments to an unaffiliated buyer.
In December 1997, the Partnership entered into a contract with the
unaffiliated buyer. As provided in the Carrollwood joint venture
agreement, the unaffiliated venture partner, Lincoln Property Company No.
600, Ltd. ("Lincoln"), held the right of first refusal to purchase the
Partnership's interest in Carrollwood in the event the Partnership secured
a buyer for the Property. On March 2, 1998, Lincoln purchased the
Partnership's interest in Carrollwood for $4,642,140, which approximates
the share of proceeds that the Partnership would have received from a sale
to the unaffiliated buyer. The sale of the Partnership's interest will
result in a gain to the Partnership for both financial reporting and
Federal income tax purposes in 1998 of approximately $5,000,000 and
$8,000,000, respectively.

MICHAEL'S (MARSHALL'S) AURORA PLAZA

The long-term note secured by the Michael'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. The Partnership
initiated discussions with the first mortgage lender for a short-term
extension of the mortgage loan. The lender agreed to a short-term loan
extension until June 2, 1997 with the payment of a loan extension fee (paid
on November 1, 1996) equal to 1.25% of the outstanding balance of
approximately $5,368,000 or $67,100. In June 1997, the Partnership
initiated discussions with the lender for a further extension of the
mortgage loan. The mortgage note was extended by the lender on a short-
term basis to allow the Partnership to complete the negotiations to sell
the property as described below. During the extension period, the annual
interest rate increased to 9.375% through September 1, 1997 then reverted
to the original 9.02% per annum rate through the date of sale.

As of December 31, 1996, the Partnership committed to a plan to sell
or dispose of Michael's Aurora Plaza. Accordingly, the Partnership
classified this property as held for sale or disposition in the
accompanying Consolidated Financial Statements, and therefore, the property
was not subject to continued depreciation after such date. In August 1997,
the Partnership entered into a contract to sell the property to an
unaffiliated buyer. Pursuant to the contract, on October 15, 1997, the
Partnership sold the land and related improvements of the Michael's Aurora
Plaza. The sale price was $6,885,000 all of which was paid in cash at
closing (net of selling costs). The Partnership used a substantial portion
of the proceeds to repay the existing mortgage note of approximately
$5,045,000, and the Partnership realized net proceeds of approximately
$1,600,000. In February 1998, the Partnership made a sales distribution
totaling $1,829,858 (approximately $5 per Interest) out of sales proceeds
related to the sale of Michael's and prior undistributed sales proceeds.
The sale resulted in a gain in 1997 to the Partnership of approximately
$819,000 for financial reporting purposes and approximately $4,176,000 for
Federal income tax purposes. In addition, in connection with the sale of
this property and as is customary in such transactions, the Partnership
agreed to certain representations and warranties, with a stipulated
survival period which expires June 15, 1998. Although it is not expected,
the Partnership may ultimately have some liability under such
representations and warranties.

<PAGE>

FIRST TENNESSEE PLAZA (PLAZA TOWER)

The first mortgage loan secured by the First Tennessee Plaza office
building property matured on November 1, 1994. 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 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.

The Partnership committed to a plan to sell or dispose of First
Tennessee Plaza office building. Accordingly, as of December 31, 1996, the
Partnership classified this property as held for sale or disposition in the
accompanying Consolidated Financial Statements, and therefore, the property
was not subject to continued depreciation after such date. On September
19, 1997, the Partnership sold the land, related improvements, and personal
property of the First Tennessee Plaza Office Building to an unaffiliated
third party for $29,200,000 (before selling costs and prorations) all of
which was paid in cash at closing. After repayment of the mortgage note
securing the property (approximately $15,079,000), the Partnership realized
net proceeds of approximately $13,462,000. The sale resulted in a gain of
approximately $5,347,000 to the Partnership in 1997 for financial reporting
purposes. The Partnership recognized a gain of approximately $20,131,000
for Federal income tax purposes in 1997.

In connection with the sale of this property and as is customary in
such transactions, the Partnership agreed to certain representations and
warranties, with a stipulated survival period which expired December 15,
1997 with no liability to the Partnership.

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.

The Partnership had 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 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 was to be purchased by the buyer after the environmental
clean-up was completed. During 1996, the Partnership was informed that
certain regulatory agencies approved the clean-up of the site that had been
performed and approved the shut-down of the clean-up operation. On March
12, 1997, the Partnership sold the Parcel for approximately $682,000. The
sale of this Parcel resulted in a gain for financial reporting and Federal
income tax purposes of approximately $542,000 in 1997.

THE GLADES APARTMENTS

The joint venture had been marketing the Glades Apartments for sale.
The property was classified as held for sale or disposition as of April 1,
1996, and therefore, was not subject to continued depreciation after such
date. In July 1996, the joint venture signed a letter of intent to sell
the property to an unaffiliated third party.

<PAGE>

On November 21, 1996, the Partnership sold the land and related
improvements of the Glades Apartments. The sale price was $12,900,000
(before selling costs). The sale price was represented by the buyer's
assumption of the first mortgage loan which, at closing, had an outstanding
principal balance of $9,640,000, the payoff of the second mortgage which,
at closing, had an outstanding principal balance of $1,187,420, and
approximately $298,450 in brokerage commissions and selling expenses in
connection with the sale. The balance of the purchase price was paid in
cash at closing. The Partnership recognized a gain of $4,616,259 for
financial reporting purposes and $8,135,436 for Federal income tax purposes
in 1996.

<PAGE>

<TABLE>
LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1997 and 1996:
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
11.5% purchase price note payable to an affiliate;
secured by Partnership's interest in the joint venture
that owned Copley Place multi-use complex in Boston,
Massachusetts; accruing interest through August 31,
1998 when the entire balance was payable (satisfied
in January, 1997 at sale) . . . . . . . . . . . . . . . . . . . . . $ -- 88,554,145

8.5% mortgage note (the note has been modified; 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 through August 31, 1996 and $1,562,215
thereafter (assumed by the purchaser of the property
in January, 1997) . . . . . . . . . . . . . . . . . . . . . . . . . -- 219,052,858

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, (retired at sale
of the property in September, 1997) . . . . . . . . . . . . . . . . -- 14,900,000

8.5% 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), (retired at sale of the
property in September, 1997). . . . . . . . . . . . . . . . . . . . -- 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,
(retired at sale of the property in September, 1997). . . . . . . . -- 18,003,538

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,734,354 33,734,354

<PAGE>

1997 1996
----------- -----------
Other mortgage loans:
Long Beach Plaza Shopping Center, non-interest bearing, (net
of $8,520,321 and $8,686,860 unamortized discount at 12%
at December 31, 1997 and 1996, respectively), due 2014. . . . . . 1,479,679 1,313,140

Michael's (Marshall's) Aurora Plaza Shopping Center, 8.375%;
payable in monthly installments of principal and
interest until November 1, 1996 and subsequently
extended to the sale date of the property (October 15,
1997) when the remaining principal balance was paid
from proceeds of the sale . . . . . . . . . . . . . . . . . . . . -- 5,282,757

Carrollwood apartment complex, 7.45%, due August
1998 (retired in full at sale of the Partnership's
interest in the property in March 1998) . . . . . . . . . . . . . 6,626,721 6,842,195

Other (satisfied in January 1997) . . . . . . . . . . . . . . . . . -- 13,648,432
------------ -----------
Total debt. . . . . . . . . . . . . . . . . . . . . . . . . 41,840,754 423,331,419
Less current portion of long-term debt. . . . . . . . . . . 40,361,075 39,232,585
------------ -----------
Total long-term debt. . . . . . . . . . . . . . . . . . . . $ 1,479,679 384,098,834
============ ===========

</TABLE>

<PAGE>

In addition, accrued interest of $18,274,822 and $13,889,356 is in
default related to the mortgage note secured by the Long Beach Shopping
Center at December 31, 1997 and 1996, respectively, which is not included
in the above long-term debt. Included in the above total long-term debt is
$0, $84,795,053 and $72,714,370 for 1997, 1996 and 1995, 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:

1998 . . . . . . . . . . . . . . $ 40,361,075
1999 . . . . . . . . . . . . . . --
2000 . . . . . . . . . . . . . . --
2001 . . . . . . . . . . . . . . --
2002 . . . . . . . . . . . . . .
============

PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Holders
of Interests and 4% to the General Partners. Profits from the sale of
investment 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 Holders of Interests.

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 Holders of Interests 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
Holders of Interests and 15% to the General Partners. However, prior to
such distributions being made, the Holders of Interests are entitled to
receive 99% of net sale or refinancing proceeds and the General Partners
are entitled to receive 1% until the Holders of Interests (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 Holders' 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
Holders' 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 Holders of Interests 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 Holders of Interests pursuant to (i) and (ii) above. The Holders of
Interests have not received and are not expected to receive 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.

<PAGE>

MANAGEMENT AGREEMENTS

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

The Partnership entered into an agreement with an affiliate of the
seller for the operation and management of Michael's Aurora Plaza (prior to
its sale in October 1997) 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, First Tennessee Plaza
(Plaza Tower) office building in Knoxville, Tennessee (prior to its sale in
September 1997), Sherry Lane Place office building in Dallas, Texas (prior
to its sale in September 1997), and Glades Apartments in Jacksonville,
Florida (prior to its sale in November 1996) 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
was acting as the property manager of the Plaza Tower office building
through the date of sale the Glades Apartments in Jacksonville, Florida,
and the Sherry Lane office building on the same terms that existed prior to
the assignment.

LEASES - AS PROPERTY LESSOR

At December 31, 1997, the Partnership and its consolidated ventures
principal assets are one shopping center and one apartment complex. The
Partnership sold its interest in the apartment complex in March, 1998. 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, was depreciated over the estimated useful lives until the date
such property was classified as held for sale pursuant to SFAS 121 as
described above. 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
investment, a substantial portion of the ability of retail tenants to honor
their leases is dependent upon the retail economic sector.

Cost or carrying value and accumulated depreciation of the leased
assets are summarized as follows at December 31, 1997:

Shopping center:
Carrying value . . . . . . . . $ 26,202,593
Accumulated depreciation . . . 16,925,470
------------
9,277,123
------------
Apartment complex:
Cost . . . . . . . . . . . . 9,281,629
Accumulated depreciation . . . 3,641,282
------------
5,640,347
------------
Total. . . . . . . . . $ 14,917,470
============

<PAGE>

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:

1998. . . . . . . . . . . . $1,638,259
1999. . . . . . . . . . . . 1,419,428
2000. . . . . . . . . . . . 1,223,672
2001. . . . . . . . . . . . 1,132,186
2002. . . . . . . . . . . . 1,083,316
Thereafter. . . . . . . . . 3,017,783
----------
Total . . . . . . . . . . . $9,514,644
==========

Additional rent based upon percentages of tenants' sales volumes
included in rental income aggregated $17,689, $725,568 and $675,043, for
the years ended December 31, 1997, 1996 and 1995, respectively.

LEASES - 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 1997,
1996 and 1995 under the above operating lease was $533,181, $424,783 and
$633,548, respectively, and consisted exclusively of minimum rent.

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 was an
affiliate of the Corporate General Partner and continued 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, 1997, 1996 and 1995 are as
follows:

<PAGE>

UNPAID AT
DECEMBER 31,
1997 1996 1995 1997
-------- --------- --------- ------------
Property management
and leasing fees . . . . $ 89,060 1,575,148 1,459,783 1,321,500
Insurance commissions . . 70,890 67,579 65,185 --
Reimbursement (at cost)
for accounting services. 36,297 23,862 164,441 13,313
Reimbursement (at cost)
for portfolio manage-
ment services. . . . . . 43,856 40,841 74,396 11,274
Reimbursement (at cost)
for legal services . . . 18,423 18,386 9,267 2,750
Reimbursement (at cost)
for administrative
charges and other out-
of-pocket expenses . . . 164 91,596 208,625 63
-------- --------- --------- ---------

$258,690 1,817,412 1,981,697 1,348,900
======== ========= ========= =========

Payment of certain pre-1993 property management and leasing fees
payable under the terms of the management agreements ($1,321,500,
approximately $4 per Interest) at December 31, 1997 has been deferred. All
amounts currently payable do not bear interest and were paid in 1998. 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
and an additional $1,500,000 in April 1997. The amounts unpaid at December
31, 1997 were paid in 1998.

Reference is made to the JMB/NYC discussion above regarding the
Partnership's obligation to fund, on demand, $200,000 and $200,000 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, 1997, these
obligations bore interest at 5.93% per annum and cumulative interest
accrued on these obligations was $272,639.

The affiliated joint venture partner was obligated through
December 31, 1991 to loan amounts (the "Deficit Loans") to pay for any
operating deficits (as defined) of Copley Place. Through December 31,
1996, the affiliated joint venture partner had loaned approximately
$13,648,000 at an interest rate based on its line of credit, which bore
interest at a floating rate (averaging 7.57% per annum at December 31,
1996). During 1996, approximately $1,234,000 of interest accrued on these
loans, and the joint venture paid approximately $225,000 of accrued
interest (including a portion accrued from a prior year) on these loans.
As of January 23, 1997, these Deficit Loans were paid in full as discussed
above.

<PAGE>

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

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997

<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 PROVISION LAND AND BUILDINGS
ENCUM- LEASEHOLD AND BUILDINGS AND FOR VALUE LEASEHOLD AND
DESCRIPTION BRANCE INTEREST IMPROVEMENTS IMPROVEMENTS IMPAIRMENT(d) INTEREST IMPROVEMENTS TOTAL(f)
- -------------------- ----------- -------------------------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
APARTMENT
BUILDING:
Tampa,
Florida
(c). . . . .$6,626,7211,092,010 7,408,618 781,001 -- 1,092,010 8,189,619 9,281,629

<PAGE>

COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (a) ACQUISITION AT CLOSE OF PERIOD (b)
------------------------- ------------- -----------------------------------
LAND AND BUILDINGS LAND PROVISION LAND AND BUILDINGS
ENCUM- LEASEHOLD AND BUILDINGS AND FOR VALUE LEASEHOLD AND
DESCRIPTION BRANCE INTEREST IMPROVEMENTS IMPROVEMENTS IMPAIRMENT(d) INTEREST IMPROVEMENTS TOTAL(f)
- -------------------- ----------- -------------------------- ----------- ---------- ------------ ----------
SHOPPING
CENTER:
Long Beach,
Califor-
nia. . . . .$35,214,0333,801,066 42,765,277 (2,763,750) (17,600,000) 1,179,046 25,023,547 26,202,593
------------ ---------- ----------- ----------- ----------- ---------- ----------------------

Total . . .$41,840,7544,893,076 50,173,895 (1,982,749) (17,600,000) 2,271,056 33,213,166 35,484,222
============ ========== =========== ========== =========== ========== ======================

</TABLE>

<PAGE>

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

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1997
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DESCRIPTION DEPRECIATION(g) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
- ----------- ---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
APARTMENT BUILDING:
Tampa, Florida (c) . . . 3,641,282 1984 12/16/83 5-30 years 201,114
SHOPPING CENTER:
Long Beach, California . 16,925,470 1982 6/22/83 5-30 years 508,022
----------- ----------

Total. . . . . . . . $20,566,752 709,136
=========== ==========

<PAGE>

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

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997

<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, 1997 for Federal income tax purposes was
$52,703,663.

(d) A provision for value impairment of $13,100,000 was recorded January 1, 1996 at the Long Beach Plaza
investment property. On December 31, 1996, the Partnership recorded an additional provision for value impairment of
$4,500,000, as more fully described in the Notes.

(e) During 1996, all the Partnership's remaining consolidated investment properties were classified as held
for sale or disposition, as more fully described in the Notes.

</TABLE>

<PAGE>

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

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997

(f) Reconciliation of real estate carrying costs:

Balance at beginning of period . . . . . . . . . $407,809,347 433,222,805 429,976,723
Additions during period. . . . . . . . . . . . . 2,494,608 4,337,187 3,246,082
Reductions during period . . . . . . . . . . . . (374,819,733) (12,150,645) --
Provisions for value impairment. . . . . . . . . -- (17,600,000) --
------------ ------------ ------------

Balance at end of period . . . . . . . . . . . . $ 35,484,222 407,809,347 433,222,805
============ ============ ============

(g) Reconciliation of accumulated depreciation:

Balance at beginning of period . . . . . . . . . $169,600,906 163,309,553 149,525,406
Depreciation expense . . . . . . . . . . . . . . -- 10,267,305 13,784,147
Reductions during period . . . . . . . . . . . . (149,034,154) (3,975,952) --
------------ ------------ ------------

Balance at end of period . . . . . . . . . . . . $ 20,566,752 169,600,906 163,309,553
============ ============ ============

</TABLE>

<PAGE>

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 1997 and 1996.

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, directly or indirectly, 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 purchases and
sales of real property must be approved by the Associate General Partner of
the Partnership, ABPP Associates, L.P., an Illinois limited partnership
with JMB as its sole general partner. The limited partners of ABPP
Associates, L.P. are generally officers, directors and affiliates of JMB or
its affiliates.

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:

<PAGE>

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 3, 1998. 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 3,
1998. 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-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.-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.-VII ("JMB Income-VII"), 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")) 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-XI, Carlyle-XII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-
XVII, JMB Income-VII, JMB Income-X, JMB Income-XI, JMB Income-XII, JMB
Income-XIII, Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income
Plus, Carlyle Income Plus-II and IDS/BIG. Certain of such officers are
also officers and the sole director of Carlyle Managers, Inc., the sole
general partner of JMB/NYC.

<PAGE>

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 60) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is also a director of Urban Shopping Centers,
Inc. ("USC, 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 60) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is also a principal of Walton Street Real Estate
Fund I, L.P. and a director of USC, Inc. He is a member of the Bar of the
State of Illinois and a Certified Public Accountant.

Burton E. Glazov (age 59) 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 56) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.

A. Lee Sacks (age 64) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.

John G. Schreiber (age 51) 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 Advisors L.P., an
affiliate of the Blackstone Group, L.P. Mr. Schreiber is a director of
USC, Inc., a Trustee of Amli Residential Property Trust, and a director of
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 48) 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 50) 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 45) 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 49) 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 62) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.

<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance.

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires, among others, executive officers of the Corporate General Partner
to file reports of changes in beneficial ownership of Interests on Form 4
or Form 5 with the Securities and Exchange Commission ("SEC"). Such
persons are also required by SEC rules to furnish the Partnership a copy of
such reports filed with the SEC. H. Rigel Barber and Gary Nickele did not
file two required reports each (one Form 4 and one Form 5) to reflect the
change in their respective beneficial ownership of Interests during 1997
resulting from one transaction.

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 Holders of Interests, and a
share of profits or losses. Reference is made to the Notes for a
description of such distributions and allocations. In 1997, the General
Partners received no distributions and the Corporate General Partner
received no management fee. The General Partners received a share of
Partnership gains for Federal income tax purposes aggregating $24,171,365
in 1997.

The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership,
as described in the Notes. The relationship of the Corporate General
Partner (and its directors and officers) to its affiliates is set forth
above in Item 10.

Payment of certain pre-1993 property management and leasing fees
payable under the terms of the management agreements ($1,321,500,
approximately $4 per $1,000 interest) at December 31, 1997 had been
deferred. All amounts currently payable do not bear interest and were paid
in 1998. In 1997, the Partnership paid $1,500,000 of previously deferred
management and leasing fees to an affiliate of the General Partner.

JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned insurance brokerage commissions in 1997 aggregating $70,890
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, 1997. Such commissions are at rates set by insurance
companies for the classes of coverage provided.

An affiliate of the General Partners provided property management and
leasing services at one of the Partnership's properties during 1997 and
earned property management and leasing commissions of $89,060, all of which
was paid. As set forth in the Prospectus of the Partnership, 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.

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 1997, the Corporate General Partner of the
Partnership or its affiliates were due reimbursement for such out-of-pocket
expenses in the amount of $164, of which $63 was unpaid at December 31,
1997. The General Partners are also entitled to reimbursements for
portfolio management, legal and accounting services. Such costs for 1997
were $43,856, $18,423 and $36,297, respectively, of which $11,274, $2,750
and $13,313, respectively, was unpaid at December 31, 1997.

<PAGE>

The Partnership had obligations to fund, on demand, $200,000 and
$200,000 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,
1997, these obligations bore interest at 5.93% per annum and interest
accrued on these obligations was $272,639.

The affiliated joint venture partner in Copley Place Associates was
obligated through December 31, 1991 to loan amounts to pay for any
operating deficits (as defined) of Copley Place. Through December 31,
1996, the affiliated joint venture partner had loaned approximately
$13,648,000 at an interest rate based on its line of credit, which bore
interest at a floating rate (averaging 7.57% per annum at December 31,
1996). During 1996, approximately $1,234,000 of interest accrued on these
loans, and the joint venture paid approximately $225,000 of accrued
interest (including a portion accrued from a prior year) on these loans.
As of January 23, 1997, these Deficit Loans were paid in full as discussed
below.

The consideration paid by the Partnership for its interest in Copley
Place Associates included a purchase price note with an original principal
balance of $20,000,000 and bearing interest at 11.5% per annum (the
"Note"). The unpaid balance of the Note at December 31, 1996 was
$88,554,145 and was payable to an affiliate of the Corporate General
Partner. In connection with the sale of its interest in Copley Place
Associates to an unaffiliated third party, the Partnership entered into an
agreement with the affiliated joint venture partner and the holder of the
note whereby the net proceeds from the sale of the Partnership's interest
were distributed in a manner which permitted the Partnership to satisfy its
obligations relative to the note and the Deficit Loans and still realize
some modest cash proceeds. In addition, the holder of the Note agreed on a
discounted payoff of the Note. In general, the Partnership received
$43,900,000 of sale proceeds, of which $34,000,000 was remitted to the
holder of the Note as payment in full satisfaction of the Note. As a
result, the Partnership was relieved of an approximately $55,000,000
obligation. The Partnership's obligation under the Deficit Loans were
next satisfied in full out of the Partnership's remaining sale proceeds.
After the repayment of the Note and Deficit Loans, as discussed above, the
Partnership's remaining net proceeds amounted to approximately $929,000,
all of which was received in cash at closing.

<PAGE>

<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 59.99897 Interests Less than 1%
Partner, its officers directly (1)
and directors and the
Associate General
Partner as a group
<FN>

(1) Includes 54.99897 Interests owned by certain officers for which each such officer has sole 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>

<PAGE>

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-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.

4-A. 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-B.* 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 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-B. 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-C. 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.

<PAGE>

10-D. 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-E. Second Amended and Restated Articles of
Partnership of JMB/NYC Office Building Associates, L.P. 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-F. 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-G. 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-H. $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-I. $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-J. 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-K. 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-L. 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.

<PAGE>

10-M. 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-N. Agreement of Sale between 2 Broadway Associates,
L.P. and 2 Broadway Acquisition Corp. dated August 10, 1995, is hereby
incorporated by reference to the Partnership's Report for December 31, 1995
on Form 10-K (File No. 0-12791) dated March 25, 1996.

10-O. 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, is hereby incorporated by reference to the
Partnership's Report for December 31, 1995 on Form 10-K (File No. 0-12791)
dated March 25, 1996.

10-P. 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, is hereby incorporated by
reference to the Partnership's Report for December 31, 1995 on Form 10-K
(File No. 0-12791) dated March 25, 1996.

10-Q. Disclosure Statement for the Second Amended Joint
Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C. dated August 9, 1996 is hereby incorporated by reference
to the Partnership's Report for September 30, 1996 on Form 10-Q (File No.
0-12791) dated November 8, 1996.

10-R. Consent of Director of Carlyle-XIV Managers, Inc.
(known as Carlyle Managers, Inc.) dated October 31, 1996 is hereby
incorporated by reference to the Partnership's Report for December 31, 1996
on Form 10-K (File No. 0-12791) dated March 21, 1997.

10-S. Consent of Director of Carlyle-XIII, Managers,
Inc. (known as Carlyle Investors, Inc.) dated October 31, 1996 is hereby
incorporated by reference to the Partnership's Report for December 31, 1996
on Form 10-K (File No. 0-12791) dated March 21, 1997.

10-T. Allonge to demand note between Carlyle Real
Estate Limited Partnership - XIII and Carlyle Managers, Inc. dated October
31, 1996 is hereby incorporated by reference to the Partnership's Report
for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997.

<PAGE>

10-U. Allonge to demand note between Carlyle Real
Estate Limited Partnership - XIII and Carlyle Investors, Inc., dated
October 31, 1996 is hereby incorporated by reference to the Partnership's
Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March
21, 1997.

10-V. Indemnification agreement between Property
Partners, L.P., Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates,
L.P. dated as of October 10, 1996 is hereby incorporated by reference to
the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-
12791) dated March 21, 1997.

10-W. Agreement of Limited Partnership of 237/1290
Lower Tier Associates, L.P. dated as of October 10, 1996 is hereby
incorporated by reference to the Partnership's Report for December 31, 1996
on Form 10-K (File No. 0-12791) dated March 21, 1997.

10-X. Amended and Restated Limited Partnership
Agreement of 237/1290 Upper Tier Associates, L.P. dated as of October 10,
1996 is hereby incorporated by reference to the Partnership's Report for
December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997.

10-Y Purchase Agreement and amendments thereto between
Sherry Lane Associates and Cottonwood Realty Services, L.L.C. dated July 7,
1997 is incorporated herein by reference to the Partnership's Report for
September 12, 1997 on Form8-K (file No. 0-12791) dated September 26, 1997.

10-Z Purchase Agreement and amendments thereto between
Carlyle Real Estate Limited Partnership - XIII and Parkway Properties, L.P.
dated August 20, 1997 is incorporated herein by reference to the
Partnership's Report for September 19, 1997 on Form 8-K (File No. 0-12791)
dated October 3, 1997.

10-AA Purchase Agreement and Joint Escrow Instructions
between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate
Services, Inc. dated August 4, 1997 is incorporated herein by reference to
the Partnership's Report for October 15, 1997 on Form 8-K (File No. 0-
12791) dated October 30, 1997).

10-BB Letter agreement related to the Purchase
Agreement between Carlyle Real Estate Limited Partnership - XIII and GDA
Real Estate Services, Inc. dated September 3, 1997 is incorporated herein
by reference to the Partnership's Report for October 15, 1997 on Form 8-K
(File No. 0-12791) dated October 30, 1997).

21. List of Subsidiaries.

24. Powers of Attorney.

27. Financial Data Schedule.

<PAGE>

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) The following reports on Form 8-K were filed since the
beginning of the last quarter of the period covered by this report.

(i) The Partnership's Report on Form 8-K (File No.
0-12791) for October 15, 1997 (describing the sale of the Michael's
(Marshall's) Aurora Plaza) was filed. This report was dated October 30,
1997 and includes a discussion of the sale (Item 2) and narrative pro forma
financial information with respect to the sale (Item 7).

(ii) The Partnership's Report on Form 8-K (File No.
0-12791) for September 19, 1997 (describing the sale of the First Tennessee
Plaza Office Building in Knoxville, Tennessee) was filed. This report was
dated October 3, 1997 and includes a discussion of the sale (Item 2) and
narrative pro forma financial information with respect to the sale (Item
7).

----------------

* 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 1997 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.

<PAGE>

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, 1998

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, 1998

NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1998

H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1998

GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1998

GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1998

By: A. LEE SACKS*
A. Lee Sacks, Director
Date: March 25, 1998

By: STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 25, 1998

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

GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1998

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII

EXHIBIT INDEX

Document
Incorporated
By Reference Page
------------ ----
3-A. Amended and Restated Agreement of
Limited Partnership set forth as
Exhibit A to the Prospectus Yes

4-A. Mortgage loan documents secured by the
Copley Place multi-use complex Yes

4-B. Remodification of mortgage loan documents
secured by Copley Place multi-use complex. Yes

10-A. Acquisition documents related to the
Copley Place multi-use complex Yes

10-B. Documents related to the sale of Allied
Automotive Center. Yes

10-C. Agreement of Limited Partnership of
Carlyle-XIII Associates L.P. Yes

10-D. Documents relating to the sale of
its interest in the Old Orchard
Urban Venture Yes

10-E. Second Amended and Restated Articles
of Partnership of JMB/NYC Office
Building Associates, L.P. Yes

10-F. Amended and Restated Certificate
of Incorporation of Carlyle-XIV
Managers, Inc. Yes

10-G. Amended and Restated Certificate
of Incorporation of Carlyle-XIII
Managers, Inc. Yes

10-H. $600,000 demand note between
Carlyle-XIII Associates, Ltd. and
Carlyle Managers, Inc. Yes

10-I. $600,000 demand note between
Carlyle-XIII Associates, Ltd. and
Carlyle Investors, Inc. Yes

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII

EXHIBIT INDEX - CONTINUED

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

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

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

10-N. Agreement of Sale between 2 Broadway
Associates, L.P. and 2 Broadway
Acquisition Corp. dated August 10, 1995 Yes

10-O. Agreement of Conversion of 1290
Associates into 1290 Associates,
L.L.C. dated October 10, 1995 Yes

10-P. Agreement of Conversion of 237 Park
Avenue Associates into 237 Park Avenue
Associates, L.L.C. dated October 10,
1995 Yes

10-Q. Disclosure statement for the Second
Amended Joint Plan of Reorganization
of 237 Park Avenue Associates, L.L.C.
and 1290 Associates, L.L.C. dated
August 9, 1996 Yes

10-R. Consent of Director of Carlyle-XIV
Managers, Inc. (known as Carlyle
Managers, Inc.) dated October 31,
1996 Yes

10-S. Consent of Director of Carlyle-XIII,
Managers, Inc. (known as Carlyle
Investors, Inc.) dated October 31,
1996 Yes

10-T. Allonge to demand note between
Carlyle Real Estate Limited
Partnership-XIII and Carlyle
Managers, Inc. dated October 31,
1996 Yes

10-U. Allonge to demand note between
Carlyle Real Estate Limited
Partnership-XIII and Carlyle
Investors, Inc., dated
October 31, 1996 Yes

10-V. Indemnification agreement between
Property Partners, L.P., Carlyle-XIII
Associates, L.P. and Carlyle-XIV
Associates, L.P. dated as of
October 10, 1996 Yes

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII

EXHIBIT INDEX - CONTINUED

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

10-W. Agreement of Limited Partnership of
237/1290 Lower Tier Associates, L.P.
dated as of October 10, 1996 Yes

10-X. Amended and Restated Limited
Partnership of 237/1290 Upper
Tier Associates, L.P. dated
as of October 10, 1996 Yes

10-Y. Purchase Agreement and amendments
thereto between Sherry Lane
Associates and Cottonwood Realty
Services, L.L.C. dated as of
July 7, 1997 Yes

10-Z. Purchase Agreement and amendments
thereto between Carlyle Real Estate
Limited Partnership - XIII and
Parkway Properties, L.P. dated
as of August 20, 1997 Yes

10-AA. Purchase Agreement and Joint Escrow
Instructions between Carlyle Real
Estate Limited Partnership - XIII and
GDA Real Estate Services, Inc. dated
August 4, 1997 Yes

10-BB. Letter of Agreement related to the
Purchase Agreement between Carlyle
Real Estate Limited Partnership - XIII
and GDA Real Estate Services, Inc.
dated September 3, 1997 Yes

21. List of Subsidiaries No

24. Powers of Attorney No

27. Financial Data Schedule No

- ------------------

* Previously filed as exhibits to the Partnership's Registration
Statement on Form S-11 (as amended) under the Securities Exchange Act of
1933 and the Partnership's prior Reports on Form 8-K and Form 10-K of the
Securities Exchange Act of 1934.

EXHIBIT 21

LIST OF SUBSIDIARIES

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 20% shareholder in Carlyle
Managers, Inc. and 20% shareholder in Carlyle Investors, Inc. Reference is
made to the Notes 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, 1997, 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 30th day of January, 1998.

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, 1997,
and any and all amendments thereto, the 30th day of January, 1998.

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

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

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

<PAGE>

EXHIBIT 24

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 30th day of January, 1998.

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

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, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997

<CASH> 9,528,301
<SECURITIES> 374,085
<RECEIVABLES> 2,396,018
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,298,404
<PP&E> 14,917,470
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,600,886
<CURRENT-LIABILITIES> 61,003,105
<BONDS> 1,479,679
<COMMON> 0
0
0
<OTHER-SE> (39,268,694)
<TOTAL-LIABILITY-AND-EQUITY> 27,600,886
<SALES> 16,385,742
<TOTAL-REVENUES> 16,941,329
<CGS> 0
<TOTAL-COSTS> 11,429,888
<OTHER-EXPENSES> 954,871
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,869,385
<INCOME-PRETAX> (5,312,815)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,592,268)
<DISCONTINUED> 96,019,552
<EXTRAORDINARY> 55,468,888
<CHANGES> 0
<NET-INCOME> 145,896,172
<EPS-PRIMARY> 395.13
<EPS-DILUTED> 395.13

</TABLE>