CARLYLE REAL ESTATE LTD PARTNERSHIP XIV /IL/, 10-Q, 1994-08-15

CARLYLE REAL ESTATE LTD PARTNERSHIP XIV /IL/
10-Q, 1994-08-15
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarter ended June 30, 1994 Commission file number 2-88687

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

Illinois 36-3256340
(State of organization) (IRS Employer Identification No.)

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

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

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

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Item 1. Financial Statements. . . . . . . . . . . . . . . . . . . 3

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 25

PART II OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 35

Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . 35

Item 5. Other Information . . . . . . . . . . . . . . . . . . . . 36

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 37

<TABLE>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

CONSOLIDATED BALANCE SHEETS

JUNE 30, 1994 AND DECEMBER 31, 1993

(UNAUDITED)

ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,701,810 2,830,985
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,263,046 16,190,375
Restricted funds (note 4(b)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553,925 1,903,509
Interest, rents and other receivables (net of allowance for doubtful accounts of $784,289 and
$816,356 at June 30, 1994 and December 31, 1993, respectively) . . . . . . . . . . . . . . . . . 735,568 647,505
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 158,107
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,329 540,794
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,876,678 22,271,275
------------ ------------
Investment properties, at cost:
Land and leasehold interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,788,810 10,788,810
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,203,873 147,556,586
------------ ------------
158,992,683 158,345,396
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,035,891 44,635,592
------------ ------------
Total investment properties, net of accumulated depreciation . . . . . . . . . . . . . . . 111,956,792 113,709,804
------------ ------------
Investment in unconsolidated ventures, at equity (notes 1, 2 and 8). . . . . . . . . . . . . . . . . 11,299,793 9,517,271
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,492,545 2,514,464
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,311,092 1,503,871
------------ ------------
$148,936,900 149,516,685
============ ============

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

CONSOLIDATED BALANCE SHEETS - CONTINUED

LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
JUNE 30, DECEMBER 31,
1994 1993
------------ ------------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,115,233 28,107,327
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 964,323 835,762
Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700,176 2,447,554
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,238,420 3,729,532
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925,619 804,760
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297,097 800,195
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,240,868 36,725,130
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342,819 292,009
Investment in unconsolidated ventures, at equity (notes 1, 2 and 8). . . . . . . . . . . . . . . . . 160,099,528 148,714,348
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,404,539 1,412,837
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,019,916 98,747,743
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297,107,670 285,892,067

Partners' capital accounts (deficits) (note 1):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,655,014) (19,183,198)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,235,319) (1,235,319)
------------ ------------
(20,889,333) (20,417,517)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . . . . . . . . 351,746,836 351,746,836
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(442,872,892) (431,549,320)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,155,381) (36,155,381)
------------ ------------
(127,281,437) (115,957,865)
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . . . . . . . . . . . . (148,170,770) (136,375,382)
------------ ------------
Commitments and contingencies (notes 2, 3, 4 and 5)
$148,936,900 149,516,685
============ ============

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 1994 AND 1993

(UNAUDITED)

<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
1994 1993 1994 1993
------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,346,767 6,566,205 10,862,606 12,706,365
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . 233,609 62,273 438,067 124,842
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 400,000 400,000 400,000
------------ ---------- ----------- ----------
5,980,376 7,028,478 11,700,673 13,231,207
------------ ---------- ----------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . 3,386,303 4,681,229 6,748,387 9,431,456
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202,369 1,463,484 2,400,299 2,926,954
Property operating expenses. . . . . . . . . . . . . . . . . . . 2,743,180 3,200,146 5,635,726 6,216,553
Professional services. . . . . . . . . . . . . . . . . . . . . . 172,232 228,384 412,729 530,199
Amortization of deferred expenses. . . . . . . . . . . . . . . . 106,852 107,928 208,354 210,593
General and administrative . . . . . . . . . . . . . . . . . . . 151,328 113,930 248,658 216,551
------------ ---------- ----------- ----------
7,762,264 9,795,101 15,654,153 19,532,306
------------ ---------- ----------- ----------
Operating loss . . . . . . . . . . . . . . . . . . . . . (1,781,888) (2,766,623) (3,953,480) (6,301,099)
Partnership's share of loss from operations of
unconsolidated ventures
(notes 1, 2 and 8) . . . . . . . . . . . . . . . . . . . . . . . (3,832,800) (4,732,255) (7,841,909) (10,160,100)
Venture partner's share of venture's operations. . . . . . . . . . -- (3,114) -- 22,472
------------ ---------- ----------- ----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . .$ (5,614,688) (7,501,992) (11,795,389) (16,438,727)
============ ========== =========== ==========
Net loss per limited partnership interest (note 1) . . .$ (13.44) (17.96) (28.23) (39.35)
============ ========== =========== ==========
Cash distributions per limited partnership interest. . .$ -- -- -- --
============ ========== =========== ==========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 1994 AND 1993

(UNAUDITED)
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(11,795,389) (16,438,727)
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,299 2,926,954
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208,354 210,593
Amortization of deferred rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,677 73,677
Amortization of discount on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 304,713 283,771
Partnership's share of operations of unconsolidated ventures . . . . . . . . . . . . . . . . . . 7,841,909 10,160,100
Venture partner's share of venture's operations. . . . . . . . . . . . . . . . . . . . . . . . . -- (22,472)
Changes in:
Restricted funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,349,584 996,888
Interest, rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88,063) 2,742,344
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,107 18,986
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (81,535) (98,873)
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192,779 148,604
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,561 620,055
Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252,622 --
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (503,098) (888,999)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,491,112) (1,458,551)
Deferred interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,314,289 1,326,356
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,859 (67,223)
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,810 (1,533)
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,298) (6,845)
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . . . . 429,068 525,105
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments . . . . . . . . . . . . . . . . . . (1,072,671) 135,273
Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (647,287) (219,210)
Partnership's distributions from unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . 2,467,000 --
Partnership's contributions to unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . . (706,250) (1,087,107)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (260,112) (24,651)
------------ -----------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . (219,320) (1,195,695)
------------ -----------

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1994 1993
------------ -----------

Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (338,923) (364,711)
------------ -----------

Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . (338,923) (364,711)
------------ -----------

Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . $ (129,175) (1,035,301)
============ ===========

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,620,497 9,279,880
============ ===========
Non-cash investing and financing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- --
============ ===========

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1994 AND 1993

(UNAUDITED)

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1993 which are
included in the Partnership's 1993 Annual Report on Form 10-K (File No. 2-
88687) filed on March 28, 1994 (the "Annual Report"), as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.

(1) BASIS OF ACCOUNTING

The accompanying consolidated financial statements include the accounts
of the Partnership and its consolidated venture, Mariners Pointe Associates
("Mariners Pointe"). The effect of all significant transactions between the
Partnership and its consolidated venture has been eliminated.

The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's interests
in Orchard Associates (note 2(b)); JMB/Piper Jaffray Tower Associates
("JMB/Piper") and JMB Piper Jaffray Tower Associates II ("JMB/Piper II"); 900
3rd Avenue Associates ("JMB/900"); 1090 Vermont Avenue, N.W. Associates
Limited Partnership ("1090 Vermont"); Maguire/Thomas Partners - South Tower
("South Tower"); and the Partnership's indirect (through Carlyle-XIV
Associates, L.P.) interest in JMB/NYC Office Building Associates, L.P.
("JMB/NYC").

Certain amounts in the 1993 consolidated financial statements have been
reclassified to conform with the 1994 presentation.

The Partnership records are maintained on the accrual basis of accounting
as adjusted for Federal income tax reporting purposes. The accompanying
consolidated financial statements have been prepared from such records after
making appropriate adjustments to present the Partnership's accounts in
accordance with generally accepted accounting principles ("GAAP") and to
consolidate the accounts of the ventures as described above. Such adjustments
are not recorded on the records of the Partnership. The effect of these items
is summarized as follows for the six months ended June 30:
<TABLE>
<CAPTION>
1994 1993
---------------------- ---------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
----------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net loss . . . . . . . . . $11,795,389 11,461,406 16,438,727 11,959,705
Net loss per limited
partnership interest . . $ 28.23 27.44 39.35 28.63
=========== ========== ========== ==========
</TABLE>
The net loss per limited partnership interest is based upon the limited
partnership interests outstanding at the end of each period. Deficit capital
accounts will result, through the duration of the Partnership, in the
recognition of net gain for financial reporting and income tax purposes.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 its unconsolidated ventures are considered cash flow from
operating activities to the extent of the Partnership's cumulative share of
net earnings. In addition, the Partnership records amounts held in U.S.
government obligations at cost which approximates market. For the purposes of
these statements, the Partnership's policy is to consider all such amounts
held with original maturities of three months or less ($2,675,977 and
$1,555,066 at June 30, 1994 and December 31, 1993, respectively) as cash
equivalents with any remaining amounts (generally with original maturities of
one year or less) reflected as short-term investments being held to maturity.

As more fully discussed in note 2(c), due to the potential sale of the 2
Broadway building at a sales price significantly below its net carrying value
and due to discussions with the Olympia & York affiliates regarding the
reallocation of the unpaid first mortgage indebtedness currently allocated to
2 Broadway, the 2 Broadway venture made a provision for value impairment on
such investment property of $192,627,560 at December 31, 1993. The provision
for value impairment was allocated $136,534,366 and $56,093,194 to the Olympia
& York affiliates and to JMB/NYC, respectively. Such provision was allocated
to the partners to reflect their respective ownership percentages before the
effect of the non-recourse promissory notes including the related accrued
interest. The Partnership's share of the provision was $28,046,598.

Due to the uncertainty of the South Tower venture's ability to recover
the net carrying value of the Wells Fargo Center - IBM Tower investment
property through future operations and sale, the South Tower venture made a
provision for value impairment on such investment property of $67,479,871.
Such provision at September 30, 1993 was recorded to effectively reduce the
net carrying value of the investment property to the then outstanding balance
of the related non-recourse financing. The Partnership's share of such
provision was $22,493,290.

(2) VENTURE AGREEMENTS

(a) General

The Partnership at June 30, 1994 is a party to seven operating joint
venture agreements. Pursuant to such agreements, the Partnership made initial
capital contributions of approximately $192,607,000 (before legal and other
acquisition costs and its share of operating deficits as discussed below).
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. Five of the
joint venture agreements (JMB/NYC (through an interest in Carlyle-XIV
Associates, L.P.), JMB/Piper, JMB/Piper II, JMB/900 and South Tower) are,
directly or indirectly, with partnerships (JMB/Manhattan Associates, Ltd.
("JMB/Manhattan"), Carlyle Real Estate Limited Partnership-XIII ("C-XIII") and
Carlyle Real Estate Limited Partnership-XV ("C-XV")) sponsored by the
Corporate General Partner or its affiliates. These five joint ventures have
entered into a total of six property joint venture agreements.

The Partnership has acquired, through the above ventures, interests in
one apartment complex and seven office buildings. The venture properties have
been financed under various long-term debt arrangements.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

(b) 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.

At sale, OOUV and an unaffiliated third party contributed the Old Orchard
shopping center and $60,366,572 in cash (before closing costs and prorations),
respectively, to a newly formed limited partnership. Immediately at closing,
the new partnership distributed to OOUV $60,366,572 in cash (before closing
costs and prorations) in redemption of approximately 89.5833% of OOUV's
interest in the new partnership. OOUV, the limited partner, has retained a
10.4167% interest in the new limited partnership after such redemption. OOUV
is also entitled to receive up to an additional $4,300,000 based upon certain
events (as defined) and may earn up to an additional $3,400,000 based upon
certain future earnings of the property (as defined), none of which has been
earned or received as of the date of this report.

Contemporaneously with the formation of the new limited partnership, OOUV
redeemed Orchard Associates' ("Orchard") interest in OOUV for $56,689,747
(before closing costs and prorations). This transaction has resulted in
Orchard having no ownership interest in the property as of the effective date
of the redemption agreement. Orchard recognized a gain of $15,797,454 for
financial reporting purposes ($7,898,727 allocable to the Partnership) and
recognized a gain for Federal income tax reporting purposes of $32,492,776
($16,246,388 allocable to the Partnership) in 1993.

OOUV and Orchard have also entered into a contribution agreement whereby
they have agreed to share future gains and losses which may arise with respect
to potential revenues and liabilities from events which predated the
contribution of the property to the new venture (including, without
limitation, potential future distributions to OOUV of the $4,300,000 and
$3,400,000 amounts as described above) in accordance with their pre-
contribution percentage interests. Upon receipt of all or a portion of these
contingent amounts, Orchard and the Partnership would expect to recognize
additional gain for Federal income tax and financial reporting purposes in the
year of such receipts. However, there can be no assurance that any portion of
these contingent amounts will be received.

The Partnership owns indirectly through Carlyle-XIV Associates, L.P. and
JMB/NYC, an interest in (i) the 237 Park Avenue Associates venture which owns
an existing 23-story office building, (ii) the 1290 Associates venture which
owns an existing 44-story office building, and (iii) the 2 Broadway Associates
and 2 Broadway Land Company ventures which own an existing 32-story office
building (together "Three Joint Ventures" and individually a "Joint Venture").

All of the buildings are located in New York, New York. In addition to
JMB/NYC, the partners of the Three Joint Ventures include O & Y Equity
Company, L.P. and O & Y NY Building Corp. (hereinafter sometimes referred to
as the "Olympia & York affiliates"), both of which are affiliates of Olympia
and York Developments, Ltd. (hereinafter sometimes referred to as "O&Y").

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

JMB/NYC is a joint venture among Carlyle-XIV Associates, L.P. (of which
the Partnership holds a 99% limited partnership interest), Property Partners,
L.P. and Carlyle-XIII Associates, L.P. as limited partners and Carlyle
Managers, Inc. as the sole general partner. Effective March 25, 1993, the
Partnership became a 40% shareholder of Carlyle Managers, Inc. Related to
this investment, the Partnership has an obligation to fund, on demand,
$1,200,000 of additional paid-in capital to Carlyle Managers, Inc. (reflected
in amounts due to affiliates in the accompanying financial statements). The
terms of the JMB/NYC venture agreement generally provide that JMB/NYC's share
of the Three Joint Ventures' annual cash flow, sale or refinancing proceeds,
operating and capital costs (to the extent not covered by cash flow from a
property) and profit and loss will be distributed to, contributed by or
allocated to the Partnership in proportion to its (indirect) share of capital
contributions to JMB/NYC. In March 1993, JMB/NYC, originally a general
partnership, was converted to a limited partnership, and the Partnership's
interest in JMB/NYC, which previously had been held directly, was contributed
to Carlyle-XIV Associates, L.P. As a result of these transactions, the
Partnership currently holds, indirectly as a limited partner of Carlyle-XIV
Associates, L.P., an approximate 50% limited partnership interest in JMB/NYC.
The sole general partner of Carlyle-XIV Associates, L.P. is Carlyle Investors,
Inc., of which the Partnership became a 40% shareholder effective March 25,
1993. Related to this investment, the Partnership has an obligation to fund,
on demand, $1,200,000 of additional paid-in capital (reflected in amounts due
to affiliates in the accompanying financial statements). The general partner
in each of JMB/NYC and Carlyle-XIV Associates, L.P. is an affiliate of the
Partnership. For financial reporting purposes, the allocation of profits and
losses of JMB/NYC to the Partnership is 50%.

JMB/NYC purchased a 46.5% interest in each of the Three Joint Ventures
for approximately $173,600,000, subject to a long-term first mortgage loan
which has been allocated among the individual Joint Ventures. A portion of
the purchase price is represented by four 12-3/4% promissory notes (the
"Purchase Notes") which have an aggregate outstanding principal balance of
$34,158,225 at June 30, 1994 and December 31, 1993. Such Purchase Notes,
which contain cross-default provisions, and are non-recourse to JMB/NYC, are
secured by JMB/NYC's interests in the Three Joint Ventures, and such Purchase
Note relating to the purchase of the interest in the ventures owning the 2
Broadway Building is additionally secured by JMB/NYC's interest in $19,000,000
of distributable sale proceeds from the other two Joint Ventures. A default
under the Purchase Notes would include, among other things, a failure by
JMB/NYC to repay a Purchase Note upon acceleration of the maturity, and could
cause an immediate acceleration of the Purchase Notes for the other ventures.
Beginning in 1992, the Purchase Notes provide for monthly interest only
payments on the principal and accrued interest based upon the level of
distributions payable to JMB/NYC discussed below. If there are no
distributions payable to JMB/NYC or if the distributions are insufficient to
cover monthly interest on the Purchase Notes, then the shortfall interest (as
defined) accrues and compounds monthly. Interest accruals total $85,987,889
at June 30, 1994. During 1993 and for the six months ended June 30, 1994, no
payments were made on the Purchase Notes. All of the principal and accrued
interest on the Purchase Notes is due in 1999 or, if earlier, on the sale or
refinancing of the related property. As discussed more fully below, the
Olympia & York affiliates have informed JMB/NYC that they have received a
contract for the sale of the 2 Broadway Building at a price which will not
provide any proceeds to JMB/NYC to repay the related Purchase Notes.
Consequently, if the proposed sale is finalized, $19,000,000 of the 2 Broadway
Purchase Notes will be re-allocated and will be payable out of JMB/NYC's share
of distributable sale proceeds from the other two joint ventures.

Prior to 1992, operating profits (excluding depreciation and
amortization) were allocated 30% to JMB/NYC and 70% to the Olympia & York
affiliates, and operating losses (excluding depreciation and amortization)

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

were allocated 96% to JMB/NYC and 4% to the Olympia & York affiliates.
Depreciation and amortization is allocated 46.5% to JMB/NYC and 53.5% to the
Olympia & York affiliates. Subsequent to 1991, pursuant to the agreement
between JMB/NYC and the Olympia & York affiliates, for the period January 1,
1992 to June 30, 1993, as discussed below, gross income was allocable to the
Olympia & York affiliates to the extent of the distributions of excess monthly
cash flow received for the period with the balance of operating profits or
losses allocated 46.5% to JMB/NYC and 53.5% to the Olympia & York affiliates.
Beginning July 1, 1993, operating profits or losses, in general, are allocated
46.5% to JMB/NYC and 53.5% to the Olympia & York affiliates.

The Three Joint Ventures' agreements further provide that, in general,
upon sale or refinancing of the properties, net sale or refinancing proceeds
will be distributable 46.5% to JMB/NYC and 53.5% to the Olympia & York
affiliates subject to, as described above, repayment by JMB/NYC of its
Purchase Notes.

Under the terms of the Three Joint Venture agreements, JMB/NYC was
entitled to a preferred return of annual cash flow, with any additional cash
flow distributable 99% to the Olympia & York affiliates and 1% to JMB/NYC,
through 1991. The Olympia & York affiliates were obligated to make capital
contributions to the Three Joint Ventures to pay any operating deficits (as
defined) and to pay JMB/NYC's preferred return through December 31, 1991.
JMB/NYC did not receive its preferred return for the fourth quarter 1991.
Subsequent to 1991, capital contributions to pay for property operating
deficits and other requirements that may be called for under the Three Joint
Ventures agreements are required to be shared 46.5% by JMB/NYC and 53.5% by
the Olympia & York affiliates. Pursuant to the Three Joint Ventures
agreements between the Olympia & York affiliates and JMB/NYC, the effective
rate of interest with reference to the first mortgage loan for calculating
JMB/NYC's share of operating cash flow or deficits through 1991 was as though
the rate were fixed at 12-3/4% per annum (versus the short-term U.S. Treasury
obligation rate plus 1-3/4% per annum (with a minimum 7%) payable on the first
mortgage loan). JMB/NYC believes that, commencing in 1992, the Three Joint
Ventures agreements require an effective rate of interest with reference to
the first mortgage loan, based upon each Joint Venture's allocable share of
the loan, to be 1-3/4% over the short-term U.S. Treasury obligation rate plus
any excess monthly operating cash flow after capital costs of each of the
Three Joint Ventures, such sum not to be less than a 7% nor exceed a 12-3/4%
per annum interest rate, rather than the 12-3/4% per annum fixed rate that
applied prior to 1992. The Olympia & York affiliates disputed this
calculation of interest expense and contended that the 12-3/4% per annum fixed
rate applied after 1991.

During the quarter ended March 31, 1993, an agreement was reached between
JMB/NYC and the Olympia & York affiliates which rescinded default notices
previously received by JMB/NYC alleging defaults for failing to make capital
contributions and eliminated the alleged operating deficit funding obligation
of JMB/NYC for the period January 1, 1992 through June 30, 1993. Pursuant to
this agreement, during this period, JMB/NYC recorded interest expense at 1-
3/4% over the short-term U.S. Treasury obligation rate (subject to a minimum
rate of 7% per annum), which is the interest rate on the underlying first
mortgage loan. Under the terms of this agreement, during this period, the
amount of capital contributions that the Olympia & York affiliates and JMB/NYC
would have been required to make to the Three Joint Ventures as if the first
mortgage loan bore interest at a rate of 12-3/4% per annum (the Olympia & York
affiliates' interpretation), became a priority distribution level to the
Olympia & York affiliates from the Three Joint Ventures' annual cash flow or
net sale or refinancing proceeds. The agreement also entitles the Olympia &
York affiliates to a 7% per annum return on such unpaid priority distribution
level. It was also agreed that during this period the excess available
operating cash flow after the payment of the priority distribution level

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

discussed above from any of the Three Joint Ventures would be advanced in the
form of loans to pay operating deficits and/or unpaid priority distribution
level amounts of any of the Three Joint Ventures. Such loans bear a market
rate of interest, have a final maturity of ten years from the date when made
and will be repayable only out of first available annual cash flow or net sale
or refinancing proceeds. The agreement also provides that except as
specifically agreed otherwise, the parties each reserves all rights and claims
with respect to each of the Three Joint Ventures and each of the partners
thereof, including, without limitation, the interpretation of or rights under
each of the joint venture partnership agreements for the Three Joint Ventures.

As a result of the above noted agreement with the Olympia & York affiliates,
the cumulative priority distribution level payable to the Olympia & York
affiliates at June 30, 1994 is $48,522,601. The term of the agreement expired
on June 30, 1993. Therefore, effective July 1, 1993, JMB/NYC is recording
interest expense at 1-3/4% over the short-term U.S. Treasury obligation rate
plus any excess operating cash flow after capital costs of the Three Joint
Ventures, such sum not to be less than 7% nor exceed a 12-3/4% per annum
interest rate. The Olympia & York affiliates continue to dispute this
calculation for the period commencing July 1, 1993 and contend that the 12-
3/4% per annum fixed rate applies. Based upon the Olympia & York affiliates'
interpretation, interest expense for the Three Joint Ventures for the six
months ended June 30, 1994 was $58,720,786. Based upon the amount of interest
determined by JMB/NYC for the six months ended June 30, 1994, interest expense
for the Three Joint Ventures was $41,873,661. The effect of recording
interest calculated by JMB/NYC is to reduce the losses of the Three Joint
Ventures by $16,847,125 (of which the Partnership's share is $3,916,956) for
the six months ended June 30, 1994 and to correspondingly reduce what would
otherwise be JMB/NYC's funding obligation with respect to the Three Joint
Ventures.

O & Y and certain of its affiliates have been involved in bankruptcy
proceedings in the United States and Canada and similar proceedings in
England. The Olympia & York affiliates have not been directly involved in
these proceedings. During the quarter ended March 31, 1993, O & Y emerged
from bankruptcy protection in the Canadian proceedings. In addition, a
reorganization of the management of the company's United States operations has
been completed, and affiliates of O & Y are in the process of renegotiating or
restructuring a number of loans affecting various properties in the United
States in which they have an interest. The Partnership is unable to assess
and cannot presently determine to what extent these events may adversely
affect the willingness and ability of the Olympia & York affiliates either to
meet their own obligations to the Joint Ventures and JMB/NYC or to negotiate a
restructuring of the joint venture agreements, or otherwise reach an
understanding with JMB/NYC regarding any future funding obligation of JMB/NYC.

During the fourth quarter of 1992, the Joint Ventures received a notice
from the first mortgage lender alleging a default for failure to meet certain
reporting requirements of the Olympia & York affiliates contained in the first
mortgage loan documents. No monetary default has been alleged. The Olympia &
York affiliates have responded to the lender that the Joint Ventures are not
in default. JMB/NYC has been unable to determine if the Joint Ventures are in
default. There have not been any further notices from the first mortgage
lender. However, on June 30, 1994, the Olympia & York affiliates, on behalf
of the Three Joint Ventures, signed a letter of intent with representatives of
the lender (consisting of a steering committee of holders of notes evidencing
the mortgage loan) to restructure certain terms of the existing mortgage loan.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

obtained under these or any other terms. In conjunction with negotiations
held prior to June 30, 1994, the Olympia & York affiliates reached an
agreement with the first mortgage lender whereby effective January 1, 1993,
the Olympia & York affiliates are limited to taking distributions of $250,000
on a monthly basis from the Three Joint Ventures reserving the remaining
excess cash flow in a separate interest-bearing account to be used exclusively
to meet the obligations of the Three Joint Ventures as approved by the lender.

Interest on the first mortgage loan is currently calculated based upon a
variable rate related to the short-term U.S. Treasury obligation rate, subject
to a minimum rate on the loan of 7% per annum. An increase in the short-term
U.S. Treasury obligation rate could result in increased interest payable on
the first mortgage loan by the Three Joint Ventures.

During 1992, the Olympia & York affiliates and certain other affiliates
of O & Y reached an agreement with the City of New York to defer the payment
of real estate taxes on properties in which O&Y affiliates have an ownership
interest, including the 237 Park Avenue, 1290 Avenue of the Americas and 2
Broadway buildings, whereby payment of the July real estate taxes was made in
six equal monthly installments from July through December and payment of the
December real estate taxes are made in six equal monthly installments from
January through June. This agreement has been extended through December,
1994. As of the date of this report, 237 Park Avenue and 1290 Avenue of the
Americas are current in their payments to the City of New York. However, the
August 1994 real estate tax installment payment related to the 2 Broadway
building has not been paid and there is uncertainty regarding the remittance
of future installment payments related to the building.

JMB/NYC continues to seek, among other things, a restructuring of the
joint venture agreements or otherwise to reach an acceptable understanding
regarding its funding obligations. If JMB/NYC is unable to achieve this,
based upon current and anticipated market conditions, JMB/NYC may decide not
to commit any additional amounts to the Three Joint Ventures. In addition, it
is possible that JMB/NYC may determine to litigate these issues with the
Olympia & York affiliates. A decision not to commit any additional funds or
an adverse litigation result could, under certain circumstances, result in the
loss of the interest in the related ventures. The loss of an interest in a
particular venture could, under certain circumstances, permit an acceleration
of the maturity of the related Purchase Note (each Purchase Note is secured by
JMB/NYC's interest in the related venture). Under certain circumstances, the
failure to repay a Purchase Note could constitute a default under, and permit
an immediate acceleration of, the maturity of the Purchase Notes for the other
ventures. In such event, JMB/NYC may decide not to repay, or may not have
sufficient funds to repay, any of the Purchase Notes and accrued interest
thereon. This could result in JMB/NYC no longer having an interest in any of
the related ventures, which would result in substantial net gain for financial
reporting and Federal income tax purposes to JMB/NYC (and through JMB/NYC and
the Partnership, to the Limited Partners) with no distributable proceeds. In
such event, the Partnership would then proceed to terminate its affairs.

If JMB/NYC is successful in its negotiations to restructure the Three
Joint Ventures agreements and retains an interest in one or more of these
investment properties, there would nevertheless need to be a significant
improvement in current market and property operating conditions resulting in a
significant increase in value of the 237 Park and 1290 Avenue of the Americas
properties before JMB/NYC would receive any share of future net sale or
refinancing proceeds. The 2 Broadway building is in need of a major
renovation. The Joint Ventures that own the 2 Broadway building and land have
no plans for a renovation of the property because of the potential sale of the
building discussed below and because the effective rents that could be
obtained under the current office market conditions may not be sufficient to
justify the costs of the renovation.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The Olympia & York affiliates have informed JMB/NYC that they have
received a contract for the sale of 2 Broadway for a net purchase price of $15
million. The first mortgage lender has preliminarily agreed, in the loan
restructuring proposal discussed above, to the sale of the building according
to the terms of the 2 Broadway sales contract. A sale pursuant to the
contract received by the Olympia & York affiliates would be subject to, among
other things, the approval of the first mortgage lender as well as JMB/NYC.
While there can be no assurance that a sale would occur pursuant to such
contract or any other contract, if this contract were to be accepted by or
consented to by all required parties and the sale completed pursuant thereto,
and if discussions with the Olympia & York affiliates relating to the contract
were finalized to allocate the unpaid first mortgage indebtedness currently
allocated to 2 Broadway to 237 Park and 1290 Avenue of the Americas after
completion of the sale, then the 2 Broadway Joint Ventures would incur a
significant loss for financial reporting and Federal income tax purposes.
Accordingly, a provision for value impairment was recorded at December 31,
1993 for financial reporting purposes for $192,627,560, net of the non-
recourse portion of the Purchase Notes including related accrued interest
related to the 2 Broadway Joint Venture interests that are payable by JMB/NYC
to the Olympia & York affiliates in the amount of $46,646,810. The provision
for value impairment was allocated $136,534,366 and $56,093,194 to the Olympia
& York affiliates and to JMB/NYC, respectively. Such provision was allocated
to the partners to reflect their respective ownership percentages before the
effect of the non-recourse promissory notes including related accrued
interest.

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

The Partnership's liability for such contribution, if any, would be its
share, if any, of the liability of JMB/NYC and would depend upon, among other
things, the amounts of JMB/NYC's and the Olympia & York affiliates' respective
capital accounts at the time of a sale or other disposition of Joint Venture
property, the amount of JMB/NYC's share of the taxable gain attributable to
such sale or other disposition of the Joint Venture property and the timing of
the dissolution and liquidation of the Joint Venture. In such event, the
Partnership could be required to sell or dispose of its other assets in order
to satisfy any obligation attributable to it as a partner of JMB/NYC to make
such contribution. Although the amount of such liability could be material,
the Limited Partners of the Partnership would not be required to make
additional contributions of capital to satisfy such obligation of the
Partnership. The Partnership's deficit investment balance in JMB/NYC as
reflected in the balance sheet (aggregating $151,247,719 at June 30, 1994)
does not necessarily represent the amount, if any, the Partnership would be
required to pay to satisfy its deficit restoration obligation.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The properties are being managed by an affiliate of the Olympia & York
affiliates under a long-term agreement for a management fee equal to 1% of
gross receipts. An affiliate of the Olympia & York affiliates performs
certain maintenance and repair work and construction of certain tenant
improvements at the investment properties. Additionally, the Olympia & York
affiliates have lease agreements and occupy approximately 95,000 square feet
of space at 237 Park Avenue at rental rates which approximate market.

(d) JMB/Piper

In August 1992, the venture signed an agreement with the lender,
effective April 1, 1991, to modify the terms of the mortgage notes which are
secured by the investment property. The principal balance of the mortgage
notes has been consolidated into one note in the amount of $100,000,000.
Under the terms of the modification, commencing on April 1, 1991 and
continuing through and including January 30, 2020, fixed interest will accrue
and is payable on a monthly basis at a $10,250,000 per annum level.
Contingent interest is payable in annual installments on April 1 and is
computed at 50% of gross receipts, as defined, for each fiscal year in excess
of $15,200,000; none was due for 1991, 1992 or 1993. In addition, to the
extent the investment property generates cash flow after payment of the fixed
interest on the mortgage, contingent interest, leasing and capital costs, and
29% of the ground rent (25% after January 15, 1992 as a result of the Larkin,
Hoffman, Daly & Lindgren, Ltd. settlement discussed below), such amount will
be paid to the lender as a reduction of the principal balance of the mortgage
loan. The excess cash flow generated by the property in 1992 totalled
$923,362 and was remitted to the lender during the third quarter of 1993.
During 1993, the excess cash flow generated under this agreement was
$1,390,910 and was remitted to the lender during the second quarter of 1994.
The mortgage note provides for the lender to earn a minimum internal rate of
return which increases over the term of the note. Accordingly, for financial
reporting purposes, interest expense has been accrued at a rate of 13.59% per
annum which is the estimated minimum internal rate of return per annum
assuming the note is held to maturity. On a monthly basis, the venture
deposits the property management fee into an escrow account to be used for
future leasing costs to the extent cash flow is not sufficient to cover such
items. The manager of the property (which is an affiliate of the Corporate
General Partner) has agreed to defer receipt of its management fee until a
later date. As of June 30, 1994, the manager has deferred approximately
$2,094,000 of management fees. In order for the Partnership to share in
future net sale or refinancing proceeds, there must be a significant
improvement in current market and property operating conditions resulting in a
significant increase in value of the property.

During the fourth quarter of 1993, the joint venture finalized a lease
amendment with Popham, Haik, Schnobrich & Kaufman, Ltd. (104,843 square feet).

The amendment provides for the extension of the lease term from February 1,
1997 to January 31, 2003 in exchange for a rent reduction effective February
1, 1994. In addition, the tenant will lease an additional 10,670 square feet
effective August 1, 1995. The rental rate on the expansion space approximates
market, which is significantly lower than the reduced rental rate on the
tenant's current occupied space.

During the second quarter of 1994, the manager reached an agreement with
Piper Jaffray, Inc. (275,758 square feet) to expand its leased space by 3,362
square feet in July 1995 and 19,851 square feet in December 1995. Such space
is currently leased to tenants whose leases expire just prior to the effective
dates for Piper's expansions. The expansion space lease expiration date will
be coterminous with Piper's existing lease expiration date of March 2000 and
the net effective rental rate approximates market.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(e) JMB/900

As a result of certain defaults by one of the unaffiliated joint venture
partners, an affiliate of the General Partners assumed management
responsibility for the property as of August 1987 for a fee computed as a
percentage of certain revenues.

Through December 31, 1991, it was necessary for JMB/900 to contribute
approximately $4,364,000 ($1,457,000 of which was contributed by the
Partnership) to pay past due real estate taxes and to pay certain costs which
were the responsibility of one of the unaffiliated joint venture partners
under the terms of the joint venture agreement, to the extent such funds were
not available from the investment property.

In July 1989, JMB/900 filed a lawsuit in Federal court against the former
manager and one of the unaffiliated venture partners to recover the amounts
contributed and to recover certain other joint venture obligations on which
the unaffiliated partner has defaulted. This lawsuit was dismissed on
jurisdictional grounds. Subsequently, however, the Federal Deposit Insurance
Corp. ("FDIC") filed a complaint, since amended, in a lawsuit against the
joint venture partner, the Partnership and affiliated partner and the joint
venture, which has enabled the Partnership and affiliated partner to refile
its previously asserted claims against the joint venture partner as part of
that lawsuit in Federal court. There is no assurance that JMB/900 will
recover the amounts of its claims as a result of the litigation. Due to the
uncertainty, no amounts in addition to the amounts advanced to date, noted
above, have been recorded in the financial statements. Settlement discussions
with one of the venture partners and the FDIC continue. In addition, it
appears that the unaffiliated venture partners may not have the financial
capabilities to repay amounts advanced on their behalf. Consequently, a final
settlement will likely involve redirecting amounts otherwise payable to the
unaffiliated venture partners in accordance with the venture agreement to
JMB/900. There are no assurances that a settlement will be finalized and that
the Partnership and affiliated partner will be able to recover any amounts
from the unaffiliated venture partners.

JMB/900, on behalf of the joint venture, has entered into a non-binding
letter of intent with the existing lender for the extension of its mortgage
loan in the amount of $90,411,000 which matures in December 1994. The
proposed terms of the extension would extend the loan for seven years with
monthly payments of principal and interest based on an interest rate of 9.375%
per annum and a 25 year principal amortization schedule. The current interest
rate is 13% per annum. In addition, net cash flow after debt service and
capital will be paid into an escrow account controlled by the lender to be
used by the joint venture for releasing costs associated with leases which
expire in 1999 and 2000 (approximately 240,000 square feet of space). The
remaining proceeds in this escrow, if any, will be released to the joint
venture once 90% of such leased space has been renewed or released. The
letter of intent contemplates a closing for this extension by the end of
September 1994 with the terms being effective upon the current maturity date
in December 1994. The letter of intent is non-binding with respect to the
loan extension, and consummation of the proposed transaction is subject to the
satisfaction of various conditions, including approval by the unaffiliated
venture partners. Therefore, there can be no assurance that a loan extension
will be consummated on these or any terms.

(f) South Tower

The mortgage note secured by the property, as well as the promissory note
secured by the Partnership's interest in the joint venture are scheduled to
mature in December 1994. The promissory note secured by the Partnership's
interest in the joint venture is classified at June 30, 1994 and December 31,

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1993 as a current liability in the accompanying consolidated financial
statements. In view of, among other things, current and anticipated market
and leasing conditions affecting the property, including uncertainty regarding
the amount of space, if any, which IBM will renew when its lease expires in
December 1998, there is no assurance that the joint venture or the Partnership
will be able to refinance these notes when they mature. The Partnership may
then decide not to commit any significant amounts to the property. This may
result in the Partnership no longer having an ownership interest in the
property, which would result in a gain for financial reporting and for Federal
income tax purposes with no corresponding distributable proceeds.

(g) 1090 Vermont

Through 1993, the Partnership and joint venture partner contributed a
total of $4,076,000 ($2,038,000 for the Partnership) to the joint venture to
cover releasing costs and costs of a lobby renovation. The Partnership and
joint venture partner had agreed that the contributions made to the joint
venture would be repaid along with a return thereon out of first available
proceeds from property operations, sale or refinancing. During the fourth
quarter of 1993, the joint venture finalized a refinancing of the existing
mortgage loan with a new loan in the amount of $17,750,000. The refinancing
resulted in net proceeds of approximately $2,259,000 for the joint venture.
Of such proceeds, $1,785,560 (of which the Partnership's share was $889,064)
was distributed to the venture partners in December 1993 as a partial return
of the additional capital contributed. The remaining proceeds are being
retained by the joint venture as working capital. The new loan provides for
interest only monthly payments for the entire ten-year term. The interest
rate for the first five years is 8.01% per annum. The fixed interest rate
thereafter until maturity will be 2.8% per annum over the five-year Treasury
rate at the beginning of such five-year period. In addition to providing
refinancing proceeds to the joint venture, the debt service payments due under
the new loan are significantly lower than the payments due under the prior
loan.

(h) Mariners Pointe

Under the terms of the joint venture agreement, the joint venture partner
is obligated to contribute 22.3% of annual cash operating deficits. The
Partnership had made a request for capital from the joint venture partner for
its share of the 1992 deficit. The joint venture partner's obligation to make
the capital contribution is secured by its interest in the joint venture as
well as personal guarantees by certain of its principals. The joint venture
partner has not made the required contribution, however, the Partnership is
currently negotiating with the joint venture partner to obtain its interest in
the joint venture and receive certain amounts in satisfaction of its funding
obligation. There can be no assurance that the Partnership will collect any
or all of the amounts due from the joint venture partner in satisfaction of
its funding obligation.

(3) DISPOSITION OF INVESTMENT PROPERTIES

(a) Turtle Creek

Under the terms of the Turtle Creek venture agreement, through December
1990, the joint venture partner was obligated to make capital contributions to
the venture to fund operating deficits including debt service of the property
and to pay the Partnership a preferential return. The joint venture partner
defaulted on such obligations. Due to the non-payment of debt service, the
lender, on March 7, 1989, concluded proceedings to realize on its security and
took title to the property.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The joint venture partner's obligations to the Partnership were
guaranteed by certain of the joint venture partner's principals. After filing
a lawsuit against the joint venture partner and certain of the joint venture
partner's principals, on April 3, 1992, the Partnership entered into a
settlement agreement whereby the Partnership is scheduled to receive total
payments of $4,075,000. The Partnership received $650,000 of this amount upon
execution of the agreement. The remainder of the settlement amount is
represented by a promissory note issued to the Partnership in the amount of
$3,425,000. The note provides for monthly interest payments over a six-year
period at interest rates which vary from 4.8613% to 5.3684% per annum. In
addition, the note provides for annual principal payments of $400,000 due
every April for five years with a final payment in the amount of $1,425,000
due on the sixth anniversary of the date of issuance of the note. Due to the
uncertainty of collection of the remaining settlement amounts, settlement
principal payments are reflected in other income only as collected. As of the
date of this report, all scheduled principal and interest payments have been
received.

(b) Old Orchard Shopping Center

A summary description of the sale is contained in note 2(b).

A summary description of the dispositions is contained in note 6.

(4) LONG-TERM DEBT

(a) Brittany Downs Apartments - Phase I and II

In June 1993, the Partnership refinanced the Brittany Downs Apartments
Phase I $7,090,000 mortgage loan resulting in a reduction of the effective
interest rate on the loan from 8.0% per annum to 6.2% per annum.

Brittany Downs Apartments Phase II does not produce sufficient cash flow
to cover its required debt service payments and, consequently, the Partnership
has been paying a reduced amount of debt service since November 1990. As a
result, the Partnership was negotiating with the RTC to obtain a loan
modification to reduce the property's required debt service payments. During
the fourth quarter 1992, the RTC sold the Phase II mortgage loans. The new
underlying lender has placed the Partnership in default for failure to pay the
required debt service. Accordingly, the balances of the Phase II first
mortgage note, the second mortgage note, and related accrued interest have
been classified as current liabilities in the accompanying consolidated
financial statements at June 30, 1994 and December 31, 1993. Based upon the
notice of default, the total amount of interest in arrears on the existing
mortgage notes for Brittany Downs Apartment Phase II in the principal amount
of $8,605,884 as of June 30, 1994, equals $1,075,141.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

for the sale of the Partnership's interest in the properties, with the closing
of the transaction expected to be in late September or early October 1994.
The letter of intent executed by the Partnership and the prospective purchaser
is non-binding with respect to the sale of the Partnership's interest in the
properties, and consummation of the proposed transaction is subject to the
satisfaction of various conditions, including the satisfactory completion of
the prospective purchaser of its due diligence review and the negotiation and
execution of a sale agreement. Therefore, there can be no assurance that a
sale will be consummated on any terms.

If the Partnership is not successful in completing this proposed
transaction, the Partnership has decided, based upon an analysis of current
and anticipated market conditions and the probability of large future cash
deficits, not to commit additional funds to the Phase II property. This would
result in the Partnership no longer having an ownership interest in the Phase
II property and could result in gain for financial reporting and Federal
income tax purposes to the Partnership with no distributable proceeds from the
disposition. The Partnership, however, would continue marketing the Phase I
property for sale.

(b) Louisiana Tower

During 1988, Louisiana Tower restructured its existing mortgage note with
the lender. Under the terms of the agreement, Louisiana Tower paid the lender
a total of $13,000,000, representing a principal reduction of $10,775,000 and
an interest rate reduction fee of $2,225,000. In return, the interest rate on
the remaining non-recourse note balance of $22,225,000 was lowered from 12.5%
to 9.0% per annum. The lender is also entitled to additional contingent
interest equal to 30% of the net sale or refinancing proceeds (as defined) in
excess of $35,225,000. In order for the lender to realize this additional
contingent interest and for the Partnership to share in future net sale or
refinancing proceeds, there must be a significant improvement in current
market or property operating conditions resulting in a significant increase in
value of the property. Accordingly, no additional contingent interest has
been accrued by the Partnership.

In 1990, the Partnership signed an agreement with the underlying lender
to provide additional debt restructuring in order to reduce current and
anticipated deficits resulting from the termination of a major tenant's lease
and costs associated with leasing. The terms of the agreement require debt
service payments in an amount equal to the monthly cash flow generated by the
property (before payment of property management fees) plus $100,000 per annum
for a five-year period commencing with the January 1990 payment. The cash
flow of the property is escrowed monthly and remitted to the lender annually
on March 31. For calendar 1993, excess cash flows of $973,118 were deposited
in escrow and included in the March 31, 1994 remittance to the lender of net
annual cash flow (as defined). The difference between the above pay rate and
the contract pay rate of 9% per annum on the principal balance will accrue at
9% per annum compounded monthly until maturity when the principal and accrued
interest is due and payable. The existing modification period expires and the
loan matures in January 1995. The Partnership has decided that it will not
commit any significant amounts of capital to this property due to the fact
that the recovery of such amounts would be unlikely. Consequently, commencing
in June 1994, the Partnership ceased making the required debt service payments
to the underlying lender and commenced discussions with them to provide
further modifications to the loan in order to eliminate a deficit funding
obligation. The underlying lender has recently informed the Partnership that
it is unwilling to provide further modifications to the loan. The lender is
currently pursuing a course of significantly reducing its holdings in
commercial real estate loans. The lender can achieve this through a sale of
the loan or through obtaining title to the underlying real estate and
subsequently selling it. The lender has informed the Partnership that it will

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

pursue the latter method for divesting itself of this real estate investment.
Under either scenario, however, the lender would receive significantly less
than the full amount of its loan due to the depressed value of the property.
The Partnership and underlying lender are now working on an agreement whereby
the Partnership will transfer title to the property to the lender in 1995.
This property represents approximately 5% of the Partnership's original
investments. The Partnership will recognize a gain for Federal income tax and
financial reporting purposes in 1995 in connection with this proposed
transaction with no distributable proceeds.

The underlying mortgage loan matures on October 1, 1994. In this regard,
the Partnership has commenced discussions with the underlying lender for an
extension of the existing mortgage loan. The Partnership is concurrently
marketing the property for sale. There can be no assurance that the
Partnership will be able to refinance or extend the existing mortgage loan, or
sell the property.

(d) Wilshire Bundy Plaza

The Partnership has commenced discussions with the existing lender for a
possible debt modification on its mortgage loan which matures April 1996 in
order to reduce its debt service and cover its releasing costs over the next
several years. If the Partnership is unsuccessful in obtaining such
modification, it may decide not to commit additional amounts to the property,
which could result in a disposition of the property and a recognition of gain
for financial reporting and Federal income tax purposes with no distributable
proceeds.

(5) PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale of 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
accounts deficits (if any) to a level consistent with the gain anticipated to
be realized from the sale of properties. Losses from the sale of investment
properties are to be allocated 1% to the General Partners. The remaining
profits and losses will be allocated to the Limited Partners.

The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon termination of
the Partnership. Distributions of "net cash receipts" of the Partnership are
allocated 90% to the Limited Partners and 10% to the General Partners (of
which 6.25% constitutes a management fee to the Corporate General Partner for
services in managing the Partnership).

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The Partnership Agreement provides that subject to certain conditions,
the General Partners shall receive as a distribution from the sale of a real
property by the Partnership up to 3% of the selling price, and that the
remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, prior to such distributions being made, the Limited Partners are
entitled to receive 99% of net sale or refinancing proceeds and the General
Partners shall receive 1% until the Limited Partners have received (i) cash
distributions of sale or refinancing proceeds in an amount equal to the
Limited Partners' aggregate initial capital investment in the Partnership and
(ii) cumulative cash distributions from the Partnership's operations which,
when combined with the sale or refinancing proceeds previously distributed,
equal a 6% annual return on the Limited Partners' average adjusted capital
investment for each year (their initial capital investment reduced by sale or
refinancing proceeds previously distributed) commencing with the third fiscal
quarter of 1985. Accordingly, $1,742,000 of proceeds (representing 3% of the
selling price of the Marketplace at South Street Seaport which was sold in
1988) has been deferred by the General Partners at June 30, 1994. If upon the
completion of the liquidation of the Partnership and the distribution of all
Partnership funds, the Limited Partners have not received the amounts in (i)
and (ii) above, the General Partners will be required to return all or a
portion of the 1% distribution of sale or refinancing proceeds described above
in an amount equal to such deficiency in payments to the Limited Partners
pursuant to (i) and (ii) above.

(6) MANAGEMENT AGREEMENTS

Scottsdale Financial Centers I & II

On October 1, 1993, the RTC sold the mortgage note underlying Scottsdale
Financial Center II and the Partnership simultaneously transferred title to
the purchaser of the note. On December 17, 1993, the Partnership relinquished
its ownership interest in Scottsdale Financial Center I in a similar
transaction.

A judicial hearing was held in early 1991 concerning, among other things,
an alleged default by the Partnership on the mortgage loans secured by the
Scottsdale Financial Center I and II investment properties. The judge issued
an order rendering the Partnership's rights of offset unenforceable against
the RTC acting as receiver of the lender. The court entered a judgment
pursuant to this order in February 1992. However, per the judgment, the
Partnership was not required to return the guaranteed payments received from
the manager (an affiliate of the lender) since acquisition of the properties,
which totalled approximately $1,900,000 for both properties.

Both the Partnership and the RTC had filed a notice of appeal from the
judgment order of the court. During the appeal process, the RTC was entitled
to obtain title to the properties and the cash reserves on hand. Accordingly,
during the second quarter, 1992, the RTC withdrew the cash reserves on hand at
the properties. During the quarter ended March 31, 1993, the Partnership
reached an agreement with the RTC for the settlement of the disputes through a
dismissal of their respective appeals. In April 1993, in accordance with the
settlement, the Partnership returned $320,000, which represented certain
amounts (plus interest thereon) which were withdrawn from the property
operating accounts subsequent to the date of the alleged default by the
Partnership and set aside in a segregated interest bearing account. However,
the Partnership was not required to return the $1.9 million of guaranteed
payments it had previously received. As a result of the transfers of title
discussed above, the Partnership recognized a gain of $18,382,769 and
$7,920,092 in 1993 for financial reporting and Federal income tax purposes,
respectively, without any corresponding distributable proceeds.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(7) TRANSACTIONS WITH AFFILIATES

Fees, commissions and other expenses required to be paid by the Partner-
ship (or in the case of certain property management fees and out-of-pocket
expenses, by the Partnership's consolidated ventures) to the Corporate General
Partner and its affiliates as of June 30, 1994 and for the six months ended
June 30, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Unpaid at
1994 1993 June 30, 1994
-------- --------- -------------
<S> <C> <C> <C>
Property management and
leasing fees. . . . . . . . . $542,961 448,202 43,661
Insurance commissions
(refunds) . . . . . . . . . . 41,788 77,914 --
Reimbursement (at cost) for
out-of-pocket expenses. . . . 181,332 37,221 291
-------- ------- ------
$766,081 563,337 43,952
======== ======= ======
</TABLE>
The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Corporate General Partner and its affiliates relating to the
administration of the Partnership and the operation of Partnership investment
properties. In 1994 and 1993, such costs aggregated $64,704 and $169,566,
respectively, of which $169,566 was unpaid as of June 30, 1994. All amounts
deferred or currently due to the Corporate General Partner and its affiliates
do not bear interest and are expected to be repaid in future periods.
Reference is made to note 5 above for a discussion of certain distributions
payable to the General Partners that have been deferred and subordinated
distributions payable to the General Partners under certain other
circumstances.

Reference is made to note 2(c) regarding the Partnership's obligation to
fund, on demand, $1,200,000 and $1,200,000 to Carlyle Managers, Inc. and
Carlyle Investors, Inc., respectively, for additional paid-in capital. These
amounts, plus accrued interest, aggregate $2,486,658 and are reflected in
amounts due to affiliates in the accompanying consolidated financial
statements.

The manager of Piper Jaffray Tower (which is an affiliate of the
Corporate General Partner) has agreed to defer receipt of its property
management fees as more fully discussed in note 2(d). Such fees were
approximately $2,094,000 at June 30, 1994.

Effective January 1, 1994, certain officers and directors of the
Corporate General Partner acquired interests in a company which, among other
things provide and continues to provide certain property management services
to certain properties owned by the Partnership. Such acquisition had no
effect on the fees payable by the Partnership under any existing agreements
with such company. The fees earned by such company from the Partnership for
the six months ended June 30, 1994 were approximately $5,800, all of which
have been paid.

(8) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION

Summary income statement information for Orchard Associates (note 2(b)),
JMB/NYC, JMB/Piper, JMB/Piper II, South Tower, JMB/900 and 1090 Vermont for
the six months ended June 30, 1994 and 1993 are as follows:

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED

1994 1993
------------ ----------
Total income from properties (uncon-
solidated). . . . . . . . . . . . . . . . . . $135,866,610 143,173,195
============ ===========
Operating loss of ventures.. . . . . . . . . . $ 22,052,435 32,952,198
============ ===========
Partnership's share of operating loss. . . . . $ 7,841,909 10,160,100
============ ===========

(9) ADJUSTMENTS

In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1994
and for the three and six months ended June 30, 1994 and 1993.

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

All references to "Notes" are Notes to Consolidated Financial Statements
contained in this report.

At June 30, 1994, the Partnership and its consolidated ventures had cash
and cash equivalents of approximately $2,702,000. Such funds and short-term
investments of approximately $17,263,000 are available for distributions to
partners and working capital requirements including the Partnership's
potential funding obligations at the Louis Joliet Mall for mall enhancement
program costs and Wilshire Bundy Plaza related to releasing costs and
underlying mortgage obligations, and the cash operating deficits currently
being incurred at the Mariners Pointe Apartments. The Partnership and its
consolidated ventures have currently budgeted in 1994 approximately $5,676,000
for tenant improvements and other capital expenditures, including
approximately $2,500,000 for a mall enhancement program at Louis Joliet Mall
as discussed below. The Partnership's share of such items and its share of
such similar items for its unconsolidated ventures in 1994 is currently
budgeted to be approximately $7,611,000. Actual amounts expended may vary
depending on a number of factors including actual leasing activity, results of
property operations, liquidity considerations and other market conditions over
the course of the year. The source of capital for such items and for both
short-term and long-term future liquidity and distributions to partners is
dependent upon net cash generated by the Partnership's investment properties
and the sale or refinancing of such investments, as well as the Partnership's
cash and short-term investments. Due to the above situations and the property
specific concerns discussed below, the Partnership suspended distributions
beginning with the fourth quarter 1991 distribution payable in February 1992.

As of June 30, 1994, the current portion of the long-term indebtedness of
the Partnership and its consolidated ventures was approximately $50,115,000,
including the entire indebtedness encumbering Louisiana Tower, Mariner's
Pointe Apartments, Brittany Downs Apartments - Phase II and the Partnership's
interest in the Wells Fargo South Tower office building. Reference is made to
Notes 2(f), 2(h), 4(a) and 4(b).

Piper Jaffray Tower

The Minneapolis office market remains competitive due to the significant
amount of new office building developments, which has caused effective rental
rates achieved at Piper Jaffray Tower to be below expectations. During the
fourth quarter of 1993, the joint venture finalized a lease amendment with
Popham, Haik, Schnobrich & Kaufman, Ltd. (104,843 square feet). The amendment
provides for the extension of the lease term from February 1, 1997 to January
31, 2003 in exchange for a rent reduction effective February 1, 1994. In
addition, the tenant will lease an additional 10,670 square feet effective
August 1, 1995. The rental rate on the expansion space approximates market,
which is significantly lower than the reduced rental rate on the tenant's
current occupied space.

Pursuant to the modification of the mortgage loan made in August, 1992,
to the extent the investment property generates cash flow after leasing and
capital costs, and 25% of the ground rent, such amount will be paid to the
lender as a reduction of the principal balance of the mortgage loan. The
excess cash flow generated by the property in 1992 totalled $923,362 and was
remitted to the lender during the third quarter of 1993. During 1993, the
excess cash flow generated under this agreement was $1,390,910 and was
remitted to the lender in May 1994. The mortgage note provides for the lender
to earn a minimum internal rate of return which increases over the term of the
note. Accordingly, for financial reporting purposes, interest expense has
been accrued at a rate of 13.59% per annum which is the estimated minimum
internal rate of return per annum assuming the note is held to maturity. On a
monthly basis, the venture deposits the property management fee into an escrow
account to be used for future leasing costs to the extent cash flow is not
sufficient to cover such items. The manager of the property (which is an
affiliate of the Corporate General Partner) has agreed to defer receipt of its
management fee until a later date. As of June 30, 1994, the manager has
deferred approximately $2,094,000 of management fees. In order for the
Partnership to share in future net sale or refinancing proceeds, there must be
a significant improvement in current market and property operating conditions
resulting in a significant increase in value of the property. Reference is
made to Note 2(d) for further discussion of this investment property.

Brittany Downs Apartments - Phase I and II

Brittany Downs Apartments Phase II does not produce sufficient cash flow
to cover its required debt service payments and, consequently, the Partnership
has been paying a reduced amount of debt service since November 1990. The
lender has placed the Partnership in default for failure to pay the required
debt service. Accordingly, the balances of the Phase II first mortgage note,
the second mortgage note, and related accrued interest have been classified as
current liabilities in the accompanying consolidated financial statements at
June 30, 1994 and December 31, 1993. Based on the notice of default, the
total amount of interest in arrears on the existing mortgage notes for
Brittany Downs Apartment Phase II in the principal amount of $8,605,884 as of
June 30, 1994, equals $1,075,141.

As previously reported, the Partnership has been marketing the two Phases
together for sale. Subsequent to the end of the second quarter 1994, the
Partnership entered into a non-binding letter of intent for the sale of the
two Phases. In addition, the Partnership has entered into an agreement with
the lender for Phase II whereby the Partnership would retain net proceeds in
excess of $8,250,000, if any, from the sale of the Phase II property. The two
Phases together represent approximately 1% of the Partnership's original
investments. The prospective purchaser is currently conducting its due
diligence review with respect to the property and the proposed transaction and
is expected to complete such review by the end of August 1994. Upon
completion of such review, assuming that the transaction is to proceed, the
Partnership and the prospective purchaser would enter into a binding agreement
for the sale of the Partnership's interest in the properties, with the closing
of the transaction expected to be in late September or early October 1994.
The letter of intent executed by the Partnership and the prospective purchaser
is non-binding with respect to the sale of the Partnership's interest in the
properties, and consummation of the proposed transaction is subject to the
satisfaction of various conditions, including the satisfactory completion of
the prospective purchaser of its due diligence review and the negotiation and
execution of a sale agreement. Therefore, there can be no assurance that a
sale will be consummated on any terms.

JMB/NYC

At the 2 Broadway Building, occupancy during the quarter decreased to
19%, down from 30% in the previous quarter due to Bear Stearns Co. vacating
its space in April 1994 upon the expiration of its lease. Kidder Peabody &
Co. (71,994 square feet or approximately 4.5% of the building's leasable
space) whose lease was to expire December 1993, extended their lease to
December 31, 1995. The remaining tenant roster at the property includes
several other major financial service companies whose leases expire in 1994.
Most of these companies maintain back office support operations in the
building which can be easily consolidated or moved. In addition to the
competition for tenants in the Downtown Manhattan market from other buildings
in the area, there is ever increasing competition from less expensive
alternatives to Manhattan, such as locations in New Jersey and Brooklyn, which
are also experiencing high vacancy levels. Rental rates in the Downtown
market continue to be at depressed levels and this can be expected to continue
while the large amount of vacant space is gradually absorbed. Little, if any,
new construction is planned for Downtown over the next few years. It is
expected that 2 Broadway will continue to be adversely affected by a high
vacancy rate and the low effective rental rates achieved upon releasing of
space under existing leases which expire over the next few years. In
addition, the property is in need of a major renovation in order to compete in
the office leasing market. However, there are currently no plans for a
renovation because of the potential sale of the property discussed below and
because the effective rents that could be obtained under current market
conditions likely are not sufficient to justify the costs of the renovation.
As more fully discussed below, the O&Y affiliates have informed JMB/NYC that
they have received a contract for the sale of the 2 Broadway building.

Occupancy at 1290 Avenue of the Americas increased slightly to 91%, up
from 90% in the previous quarter. It is expected that the property will
continue to be adversely affected by low effective rental rates achieved upon
releasing of space under existing leases which expire over the next few years
and may be adversely affected by an increased vacancy rate over the next few
years. Although approximately 20% of the building's space under tenant leases
will expire by the end of 1995, negotiations are currently being conducted
with a number of prospective tenants in the financial services industry to
lease a significant portion of the current and anticipated vacant space.
There can be no assurances that such negotiations will be successful. John
Blair & Co. (which had leased 253,193 square feet or approximately 13% of the
building's leasable space) filed for Chapter 11 bankruptcy protection in 1993.

Because much of the John Blair space had been subleased, the joint venture had
been collecting approximately 70% of the monthly rent due from John Blair from
the subtenants. Due to the uncertainty regarding the collection of the
balance of the monthly rents from Blair, a provision for doubtful accounts
related to rents and other receivables and accrued rents receivable
aggregating $7,659,366 was recorded at December 31, 1993 related to this
tenant. During the quarter, a settlement was reached whereby the joint
venture received a $7,000,000 lease termination fee which included settlement
of past due amounts. In conjunction with the settlement, effective July 1,
1994, John Blair is released from all future lease obligations and the joint
venture now has direct leases with the original Blair subtenants. Such
subtenants occupy 228,398 square feet or approximately 11% of the building's
leasable space. As a result of the settlement, the provision for doubtful
accounts at June 30, 1994 related to Blair is $0 at June 30, 1994.

Occupancy at 237 Park Avenue during the quarter remained at 98%. It is
expected that the property will be adversely affected by the low effective
rental rates achieved upon releasing of space under existing leases which
expire over the next few years and may be adversely affected by an increased
vacancy rate over the next few years.

JMB/NYC continues to have a dispute with the unaffiliated venture
partners who are affiliates (hereinafter sometimes referred to as the "Olympia
& York affiliates") of Olympia & York Developments, Ltd. (hereinafter
sometimes referred to as "O & Y") over the calculation of the effective
interest rate with reference to the first mortgage loan, which covers all
three properties, for the purpose of determining JMB/NYC's deficit funding
obligation, as described more fully in Note 2(c) of Notes to Financial
Statements. Under JMB/NYC's interpretation of the calculation of the
effective rate of interest, only 2 Broadway operated at a deficit for the six
months ended June 30, 1994. During the first quarter of 1993, an agreement
was reached between JMB/NYC and the Olympia & York affiliates which rescinded
the default notices previously received by JMB/NYC and eliminated the
operating deficit funding obligation of JMB/NYC for the period January 1, 1992
through June 30, 1993. Pursuant to this agreement, during this period,
JMB/NYC recorded interest expense at 1-3/4% over the short-term U.S. Treasury
obligation rate (subject to a minimum rate of 7% per annum), which is the
interest rate on the underlying first mortgage loan. Under the terms of this
agreement, during this period, the amount of capital contributions that the
Olympia & York affiliates and JMB/NYC would have been required to make to the
Joint Ventures, if the first mortgage loan bore interest at a rate of 12-3/4%
per annum (the Olympia & York affiliates' interpretation), became a priority
distribution level to the Olympia & York affiliates from the Joint Ventures'
annual cash flow or net sale or refinancing proceeds. The agreement also
entitles the Olympia & York affiliates to a 7% per annum return on such unpaid
priority distribution level amount. It was also agreed that during this
period the excess available operating cash flow after the payment of the
priority distribution level discussed above from any of the Three Joint
Ventures would be advanced in the form of loans to pay operating deficits
and/or unpaid priority distribution level amounts of any of the other Three
Joint Ventures. Such loans bear a market rate of interest, have a final
maturity of ten years from the date when made and are repayable only out of
first available annual cash flow or net sale or refinancing proceeds. The
agreement also provides that except as specifically agreed otherwise, the
parties each reserves all rights and claims with respect to each of the Three
Joint Ventures and each of the partners thereof, including, without
limitation, the interpretation of or rights under each of the joint venture
partnership agreements for the Three Joint Ventures. The term of the
agreement expired on June 30, 1993. Therefore, effective July 1, 1993,
JMB/NYC is recording interest expense at 1-3/4% over the short-term U.S.
Treasury obligation rate plus any excess operating cash flow after capital
costs of each of the Three Joint Ventures, such sum not to be less than 7% nor
exceed a 12-3/4% per annum interest rate. The Olympia & York affiliates
continue to dispute this calculation for the period commencing July 1, 1993,
and contend that the 12-3/4% per annum fixed rate applies.

JMB/NYC continues to seek, among other things, a restructuring of the
joint venture partnership agreements or otherwise to reach an acceptable
understanding regarding its funding obligations. If JMB/NYC is unable to
achieve this, based upon current and anticipated market conditions mentioned
above, JMB/NYC may decide not to commit any additional amounts to the Three
Joint Ventures. In addition, it is possible that JMB/NYC may determine to
litigate these issues with the Olympia & York affiliates. A decision not to
commit any additional funds or an adverse litigation result could, under
certain circumstances, result in the loss of the interest in the related
ventures. The loss of an interest in a particular venture could, under
certain circumstances, permit an acceleration of the maturity of the related
Purchase Note (each Purchase Note is secured by JMB/NYC's interest in the
related venture). The failure to repay a Purchase Note, could under certain
circumstances, constitute a default that would permit an immediate
acceleration of the maturity of the Purchase Notes for the other ventures. In
such event, JMB/NYC may decide not to repay, or may not have sufficient funds
to repay, any of the Purchase Notes and accrued interest thereon. This could
result in JMB/NYC no longer having an interest in any of the related ventures,
which would result in substantial net gain for financial reporting and Federal
income tax purposes to JMB/NYC (and through JMB/NYC and the Partnership, to
the Limited Partners) with no distributable proceeds. In such event, the
Partnership would then proceed to terminate its affairs. As discussed more
fully below, the Olympia & York affiliates have informed JMB/NYC that they
have received a contract for the sale of the 2 Broadway Building at a price
which will not provide any proceeds to JMB/NYC to repay the related Purchase
Notes. Consequently, if the proposed sale is finalized, $19,000,000 of the 2
Broadway Purchase Notes will be re-allocated and will be payable out of
JMB/NYC's share of distributable sale proceeds from the other two joint
ventures. In addition, under certain circumstances as discussed more fully in
Note 2(c), JMB/NYC may be required to make additional capital contributions to
the Joint Ventures in order to fund a deficit restoration obligation
associated with a deficit balance in its capital account, and the Partnership
could be required to bear a share of such capital contributions obligation.

If JMB/NYC is successful in its negotiations to restructure the Three
Joint Ventures agreements and retains an interest in one or more of these
investment properties, there would nevertheless need to be a significant
improvement in current market and property operating conditions (including a
major renovation of the 2 Broadway building) resulting in a significant
increase in value of the properties before JMB/NYC would receive any share of
future net sale or refinancing proceeds. The Joint Ventures that own the 2
Broadway building and land have no plans for a renovation of the property
because of the potential sale of the property discussed below and because the
effective rents that could be obtained under the current office market
conditions likely are not sufficient to justify the costs of the renovation.

The Olympia & York affiliates have informed JMB/NYC that they have
received a contract for the sale of 2 Broadway for a net purchase price of $15
million. The first mortgage lender has preliminarily agreed in the loan
restructuring proposal discussed below to the sale of the building according
to the terms of the 2 Broadway sales contract. A sale pursuant to the
contract received by the Olympia & York affiliates would be subject to, among
other things, the approval of the first mortgage lender as well as JMB/NYC.
While there can be no assurance that a sale would occur pursuant to such
contract or any other contract, if this contract were to be accepted by or
consented to by all required parties and the sale completed pursuant thereto,
and if discussions with the Olympia & York affiliates relating to the contract
were finalized to allocate the unpaid first mortgage indebtedness currently
allocated to 2 Broadway to 237 Park and 1290 Avenue of the Americas after
completion of the sale, then the 2 Broadway Joint Ventures would incur a
significant loss for financial reporting and Federal income tax purposes.
Accordingly, a provision for value impairment has been recorded for financial
reporting purposes for $192,627,560, net of the non-recourse portion of the
Purchase Notes including related accrued interest related to the 2 Broadway
Joint Venture interests that are payable by JMB/NYC to the Olympia & York
affiliates in the amount of $46,646,810. The provision for value impairment
has been allocated $136,534,366 and $56,093,194 to the Olympia & York
affiliates and JMB/NYC, respectively. Such provision has been allocated to
the partners to reflect their respective ownership percentages before the
effect of the non-recourse promissory notes including related accrued
interest.

O & Y and certain of its affiliates have been involved in bankruptcy
proceedings in the United States and Canada and similar proceedings in
England. The Olympia & York affiliates have not been directly involved in
these proceedings. During the quarter ended March 31, 1993, O & Y emerged
from bankruptcy protection in the Canadian proceedings. In addition, a
reorganization of the management of the company's United States operations has
been completed, and affiliates of O & Y are in the process of renegotiating or
restructuring a number of loans affecting various properties in the United
States in which they have an interest. The Partnership is unable to assess
and cannot presently determine to what extent these events may adversely
affect the willingness and ability of the Olympia & York affiliates either to
meet their own obligations to the joint ventures and JMB/NYC or to negotiate a
restructuring of the joint venture agreements, or otherwise reach an
understanding with JMB/NYC regarding any funding obligation of JMB/NYC.
However, the financial difficulties of O&Y and its affiliates may be adversely
affecting the Three Joint Ventures' efforts to restructure the mortgage loan
and to release vacant space in the buildings.

During the fourth quarter 1992, the Joint Ventures received a notice from
the first mortgage lender alleging a default for failure to meet certain
reporting requirements of the Olympia & York affiliates contained in the first
mortgage loan documents. No monetary default has been alleged. The Olympia &
York affiliates have responded to the lender that the Joint Ventures are not
in default. JMB/NYC has been unable to determine if the Joint Ventures are in
default. There have not been any further notices from the first mortgage
lender. However, on June 30, 1994, the Olympia & York affiliates, on behalf
of the Three Joint Ventures, signed a letter of intent with representatives of
the lender (consisting of a steering committee of holders of notes evidencing
the mortgage loan) to restructure certain terms of the existing mortgage loan.

The proposed restructuring would change the interest rate on the notes from a
floating rate equal to 1.75% over the rate on three month U.S. Treasury bills
to a fixed rate of 9% with a pay rate of 7%. Unpaid interest will accrue at
9% and unless previously paid out of excess property cash flow will be payable
at maturity. There is no assurance that a restructuring of the loan will be
obtained under these or any other terms. In conjunction with negotiations,
held prior to June 30, 1994, the Olympia & York affiliates reached an
agreement with the first mortgage lender whereby effective January 1, 1993,
the Olympia & York affiliates are limited to taking distributions of $250,000
on a monthly basis from the Three Joint Ventures reserving the remaining
excess cash flow in a separate interest-bearing account to be used exclusively
to meet the obligations of the Three Joint Ventures as approved by the lender.

1090 Vermont Avenue Building

During the quarter, occupancy of this office building remained at 99%.
Through 1993, the Partnership and joint venture partners contributed a total
of $4,076,000 ($2,038,000 by the Partnership) to the joint venture to cover
releasing costs and costs of a lobby renovation. The Partnership and joint
venture partner had agreed that the contributions made to the joint venture
would be repaid along with a return thereon out of first available proceeds
from property operations, sale or refinancing. During the fourth quarter of
1993, the joint venture finalized a refinancing of the existing mortgage loan
with a new loan in the amount of $17,750,000. The refinancing resulted in net
proceeds of approximately $2,259,000 for the joint venture. Of such proceeds,
$1,785,560 (of which the Partnership's share was $889,064) was distributed to
the venture partners in December 1993 as a partial return of the additional
capital contributed. The remaining proceeds are being retained by the joint
venture as working capital. The new loan provides for interest only monthly
payments for the entire ten-year term. The interest rate for the first five
years is 8.01% per annum. The fixed interest rate thereafter until maturity
will be 2.8% per annum over the five-year Treasury rate at the beginning of
such five-year period. In addition to providing refinancing proceeds to the
joint venture, the debt service payments due under the new loan are
significantly lower than the payments due under the prior loan. Consequently,
the property is expected to produce cash flow for the joint venture in 1994.

Old Orchard Shopping Center

On September 2, 1993, effective August 30, 1993, Orchard Associates (in
which the Partnership and an affiliated partnership sponsored by the Corporate
General Partner each had a 50% interest) sold its interest in the Old Orchard
shopping center (reference is made to Note 2(b)). The Partnership is
currently retaining its share of the net proceeds from the sale for working
capital purposes.

Scottsdale Financial Centers I and II

As a result of the transfers of title discussed above, the Partnership
recognized a gain of $18,382,769 and $7,920,092 in 1993 for financial
reporting and Federal income tax purposes, respectively, without any
corresponding distributable proceeds.<PAGE>
Wilshire Bundy Plaza

Occupancy at the Wilshire Bundy Plaza remained at 87% during the quarter.

The building experienced only minor cosmetic damage as a result of the January
1994 earthquake in southern California. From 1994 through 1996, approximately
60% of the building's square feet under tenant leases expires. Included in
such expirations are Dun & Bradstreet (60,500 square feet or approximately 21%
of the building's leasable space) and Bozell, Jacobs, Kenyan & Eckhardt
(51,000 square feet or approximately 18% of the building's leasable space) who
have informed the Partnership that they will not be renewing their leases
which expire in March 1995 and May 1996, respectively. In addition, several
tenants have approached the Partnership seeking space and/or rent reductions.
The Partnership is working with its existing tenants and aggressively seeking
replacement tenants for current and future vacant space. The West Los Angeles
office market (the competitive market for the building) is extremely
competitive with a current vacancy rate of approximately 21%. While office
building development in this market is virtually at a standstill, the
Partnership does not expect a significant improvement in the competitive
market conditions for several years.

As a result of these market conditions, it is expected that in 1994 and
for several years beyond, the property will not generate enough cash flow to
cover the required debt service on its mortgage loan due to high releasing
costs expected to be incurred and lower anticipated effective rental rates
expected to be achieved in connection with releasing of the space under
current leases that expires. The building may also experience increased
vacancy during the releasing period. The Partnership has commenced
discussions with the existing lender for a possible debt modification on its
mortgage loan which matures April 1996 in order to reduce its debt service and
cover its releasing costs over the next several years. If the Partnership is
unsuccessful in obtaining such modification, it may decide not to commit
additional amounts to the property, which could result in a disposition of the
property and a recognition of gain for financial reporting and Federal income
tax purposes with no distributable proceeds.

900 Third Avenue Building

During the quarter, occupancy of this building remained at 94%, down from
95% at the end of 1993. The midtown Manhattan market remains depressed and
16% of the leases at the property expire during 1994 through 1996. The
property is expected to operate at a deficit in 1994 due to certain leasing
costs expected to be incurred. Such deficit would be paid by cash reserves
currently held by the joint venture.

Louis Joliet Mall

Occupancy of this mall decreased to 73% during the quarter from 75% at
the end of the first quarter. During the third quarter of 1993, Al Baskin Co.
(19,960 square feet or approximately 7% of the mall space) informed the
Partnership that even though its lease does not contain provisions allowing it
to terminate its lease, it believed it had the right and intended to terminate
its lease effective December 31, 1993 (original lease expiration of December
31, 2003). In response, during the fourth quarter of 1993, the Partnership
filed an anticipatory breach lawsuit against the tenant in order to prevent
the tenant from vacating its space and cease paying rent to the Partnership.
The Partnership and tenant have entered into a temporary agreement under which
the tenant will continue to operate its store and pay rent through December
31, 1994. As of the date of this report, all rent and costs due from the
tenant under the lease have been received. The Partnership believes the
tenant's position is without merit and intends to enforce the original terms
of the lease.

Work has begun on an enhancement program for the center to be completed
in 1994 at a cost of approximately $2,500,000. The enhancement program
includes new flooring, signage and mall entranceways. Costs are expected to
be funded from the property's operating cash flow and the Partnership's
working capital reserve. As a result of the mall enhancement and current
leasing activity, the mall has signed letters of intent from several tenants
which it expects will increase occupancy at the center to approximately 85% by
year-end.

The owner of Carson Pirie Scott filed for protection under Chapter 11 of
the United States Bankruptcy Code in October 1991. However, Carson Pirie
Scott, which owns its store, has continued to operate since this filing and
has affirmed its obligation to continue operations in the future in accordance
with existing agreements related to the center.

Louisiana Tower

Occupancy at Louisiana Tower increased to 86% during the quarter, up from
83% at the end of the first quarter. The property is operating at a small
deficit as a result of the 1990 debt restructuring as more fully discussed in
Note 4(b). The existing modification period expires and the loan matures in
January 1995. The Partnership has decided that it will not commit any
significant amounts of capital to this property due to the fact that the
recovery of such amounts would be unlikely. Consequently, commencing in June
1994, the Partnership ceased making the required debt service payments to the
underlying lender and commenced discussions with them to provide further
modifications to the loan in order to eliminate a deficit funding obligation.
The underlying lender has recently informed the Partnership that it is
unwilling to provide further modifications to the loan. The lender is
currently pursuing a course of significantly reducing its holdings in
commercial real estate loans. The lender can achieve this through a sale of
the loan or through obtaining title to the underlying real estate and
subsequently selling it. The lender has informed the Partnership that it will
pursue the latter method for divesting itself of this real estate investment.
Under either scenario, however, the lender would receive significantly less
than the full amount of its loan due to the depressed value of the property.
The Partnership and underlying lender are now working on an agreement whereby
the Partnership will transfer title to the property to the lender in 1995.
This property represents approximately 5% of the Partnership's original
investments. The Partnership will recognize a gain for Federal income tax and
financial reporting purposes in 1995 in connection with this proposed
transaction with no distributable proceeds.

Mariners Pointe Apartments

Occupancy at the Mariners Pointe Apartments increased to 86% during the
quarter, up from 84% at the end of the first quarter. As a result of certain
capital improvement projects, the property has been operating at a small
deficit. Under the terms of the joint venture agreement, the joint venture
partner was obligated to contribute 22.3% of such deficit. The Partnership
had made a request for capital from the joint venture partner for its share of
the 1992 deficit. The joint venture partner's obligation to make the capital
contribution is secured by its interest in the joint venture as well as
personal guarantees by certain of its principals. The joint venture partner
has not made the required contribution, however the Partnership is currently
negotiating with the joint venture partner to obtain its interest in the joint
venture and receive certain amounts in satisfaction of its funding obligation.

The mortgage loan secured by this property is scheduled to mature October 1,
1994. In this regard, the Partnership has commenced discussions with the
underlying lender for an extension of the existing mortgage loan. The
Partnership is concurrently marketing the property for sale. There can be no
assurance that the Partnership will collect any or all of the amounts due from
the joint venture partner in satisfaction of its funding obligation, be able
to refinance or extend its existing mortgage loan when it matures, or sell the
property.

General

To the extent that additional payments related to certain properties are
required or if properties do not produce adequate amounts of cash to meet
their needs, the Partnership may utilize the working capital which it
maintains and/or pursue outside financing sources. However, based upon
current market conditions, the Partnership may decide not to, or may not be
able to, commit additional funds to certain of its investment properties.
This would result in the Partnership no longer having an ownership interest in
such property, and generally would result in taxable income to the Partnership
with no corresponding distributable proceeds. The Partnership's and the
ventures' mortgage obligations are all non-recourse. Therefore, the
Partnership and its ventures are not personally obligated to pay mortgage
indebtedness.

There are certain risks and uncertainties 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.

Though the economy has recently shown signs of improvement and financing
is generally becoming more available for certain types of high-quality
properties in healthy markets, real estate lenders are typically requiring a
lower loan-to-value ratio for mortgage financing than in the past. This has
made it difficult for owners to refinance real estate assets at their current
debt levels unless the value of the underlying property has appreciated
significantly. As a consequence, and due to the weakness of some of the local
real estate markets in which the Partnership's properties operate, the
Partnership is taking steps to preserve its working capital. The Partnership
continues to carefully analyze all expenditures and defer certain capital
projects when appropriate and has sought or is seeking loan modifications
where appropriate. In addition, the Partnership suspended its distributions
from operations, effective with the distribution for the fourth quarter of
1991, to improve its cash reserve. By conserving working capital, the
Partnership will be in a better position to meet future needs of its
properties since external sources of capital are very limited.

Due to the issues discussed above, it is likely that the Partnership will
hold certain of its investment properties longer than originally anticipated
in order to maximize the return to the Limited Partners. Also, in light of
the current severely depressed real estate markets, it currently appears that
the Partnership's goal of capital appreciation will not be achieved. Although
the Partnership expects to distribute from sale proceeds some portion of the
Limited Partners' original capital, without dramatic improvement in market
conditions, the Limited Partners will receive substantially less than half of
their original investment. However, the Partnership continues its efforts to
maximize the return on the Limited Partners' investment.

RESULTS OF OPERATIONS

At June 30, 1994 and 1993, the Partnership owned twelve and fifteen
investment properties, respectively, all of which were operating. Reference
is made to Note 6 of Notes to Consolidated Financial Statements filed with the
Partnership's 1993 Annual Report for a description of agreements which the
Partnership has entered into with sellers or affiliates of sellers of the
Partnership's properties for the operation and management of such properties.

The decrease in cash and cash equivalents and the related increase in
short-term investments at June 30, 1994 as compared to December 31, 1993 is
primarily due to the investment of cash on hand in U.S. government securities
and receipt of operating distributions in 1994 from South Tower ($1,232,000)
and 1090 Vermont ($250,000). This increase is partially offset by the
Partnership's contributions to $1,482,930 the operating deficits incurred at
Mariners Pointe Apartments and Louisiana Tower during 1994.

The decrease in restricted funds and accrued interest at June 30, 1994 as
compared to December 31, 1993 is due primarily to the $1,482,930 remittance on
March 31 to the lender of net annual cash flow (as defined) generated by the
Louisiana Tower as debt service pursuant to the agreement signed November,
1990 as more fully discussed in Note 4(b).

The decrease in prepaid expenses and the corresponding increase in
accounts payable at June 30, 1994 as compared to December 31, 1993 is
primarily due to the timing of payment of certain property operating expenses
(including insurance premiums) at certain of the Partnership's investment
properties.

The increase in escrow deposits and the corresponding increase in accrued
real estate taxes at June 30, 1994 as compared to December 31, 1993 is due the
timing of real estate tax payments at certain of the Partnership's investment
properties.

The increase in buildings and improvements as of June 30, 1994 as
compared to December 31, 1993 is primarily due to (i) tenant improvement costs
related to 1993 leasing activity at Wilshire Bundy, (ii) tenant improvement
costs at Louisiana Tower and (iii) approximately $90,000 of mall enhancement
program costs at Louis Joliet Mall.

The increase in the current portion of long-term debt and the
corresponding decrease in long-term debt, less current portion at June 30,
1994 as compared to December 31, 1993 is primarily due to the reclassification
of the debt (with a principal balance of $21,971,253 at June 30, 1994) secured
by the Louisiana Tower which matures in January, 1995.

The increase in due to affiliates at June 30, 1994 as compared to
December 31, 1993 is primarily due to interest accruing on the Partnership's
obligation to fund, on demand, $1,200,000 and $1,200,000 to Carlyle Managers,
Inc. and Carlyle Investors, Inc., respectively, for additional paid-in capital
(as more fully discussed in note 2(c)) and certain unpaid out-of-pocket
expenses of the Corporate General Partner.

The decrease in unearned rents at June 30, 1994 as compared to December
31, 1993 is due primarily to the timing of certain rental collections at the
Wilshire Bundy Plaza and the Louisiana Tower investment properties.

The increase in the Partnership's aggregate deficit investment in
unconsolidated ventures at June 30, 1994 as compared to December 31, 1993 is
due primarily to losses from the Partnership's indirect investment in JMB/NYC
resulting from (i) interest accruals on the Purchase Notes and (ii) a
significant decrease in occupancy at 2 Broadway and 1290 Avenue of the
Americas in 1993 and 1994. In addition, although the 1290 Associates venture
received a $7,000,000 lease termination fee during the second quarter from a
major tenant at 1290 Avenue of the Americas, this income is offset by a
significant increase in excess monthly cash flow after capital costs which is
recognized as additional interest expense by JMB/NYC. Reference is made to
Note 2(c).

Rental income decreased for the three and six months ended June 30, 1994
as compared to the three and six months ended June 30, 1993 primarily due to
the disposition of the Scottsdale Financial Centers Phase I and II during the
fourth quarter of 1993 and a decrease in occupancy in 1994 at Louis Joliet
Mall, Louisiana Tower and Mariners Pointe Apartments.

Interest income increased for the three and six months ended June 30,
1994 as compared to June 30, 1993 primarily due to an increase in the average
balance of U.S. government obligations in 1994 resulting from the receipt and
retention of proceeds relating to the sale of the Old Orchard Shopping Center
(note 2(b)) and the refinancing of 1090 Vermont Avenue (note 2(g)) during the
third and fourth quarter of 1993, respectively.

Mortgage and other interest, depreciation, property operating expenses
and professional services decreased for the three and six months ended June
30, 1994 as compared to June 30, 1993 primarily due to the disposition of the
Scottsdale Financial Centers Phase I and II during the fourth quarter of 1993.

Partially offsetting the decrease in property operating expenses for the three
and six months ended June 30, 1994 as compared to the three and six months
ended June 30, 1993 was the effect of an adjustment to the allowance for
doubtful accounts relating to the collection and settlement in 1993 of amounts
due from certain tenants at the Wilshire Bundy Plaza which had previously been
reserved for in 1992.

The decrease in the Partnership's share of the loss from operations of
unconsolidated ventures for the three and six months ended June 30, 1994 as
compared to the three and six months ended June 30, 1993 is primarily due to
JMB/NYC recording a $192,627,560 provision for value impairment at 2 Broadway
at December 31, 1993, which reduced the subsequent depreciation expense
related to that investment property. (Reference is made to note 2(c)).

The increase in venture partner's share of venture's operations for the
three months ended June 30, 1994 as compared to 1993 and the decrease in
venture partner's share of venture's operations for the six months ended June
30, 1994 as compared to 1993 is due to the 1994 suspension of profit and loss
allocations to the venture partner of Mariners Pointe due to default on its
obligations to fund its share of the 1992 deficits at the Mariners Pointe
Apartments and the Partnership's ongoing negotiations to obtain the venture
partner's interest in the joint venture, as more fully discussed in Note 2(h).

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Reference is made to Note 2(e) for a discussion of certain litigation
involving the Partnership.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Reference is made to Notes 2(c) (tenth paragraph) 4(a) and 4(b) and the
Liquidity and Capital Resources section of Management's Discussion and
Analysis of Financial Condition and Results of Operations included with this
Report for a discussion of defaults (or alleged defaults) under, and/or
current attempts to obtain modifications of, mortgage loans secured by the
Brittany Downs Apartments Phase II, the 237 Park Avenue, 1290 Avenue of the
Americas and 2 Broadway Office Buildings and the Louisiana Tower which
discussions are hereby incorporated by reference.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY

The following is a listing of approximate occupancy levels by quarter for the Partnership's investment properties.
<CAPTION>
1993 1994
------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ----- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Scottsdale Financial Center I
Scottsdale, Arizona (a) . . . . . . . . . . 13% 9% 9% N/A N/A N/A
2. Scottsdale Financial Center II
Scottsdale, Arizona (a) . . . . . . . . . . 77% 81% 81% N/A N/A N/A
3. Wilshire Bundy Plaza
Los Angeles, California . . . . . . . . . . 91% 89% 89% 87% 87% 87%
4. Brittany Downs Apartments
Phase I and II
Thornton (Denver), Colorado . . . . . . . . 97% 97% 98% 95% 96% 96%
5. Mariners Pointe Apartments
Stockton, California. . . . . . . . . . . . 88% 93% 93% 90% 84% 86%
6. Old Orchard Shopping Center
Skokie (Chicago), Illinois (b). . . . . . . 62% 53% N/A N/A N/A N/A
7. 237 Park Avenue Building
New York, New York. . . . . . . . . . . . . 99% 99% 99% 98% 98% 98%
8. 1290 Avenue of the Americas Building
New York, New York. . . . . . . . . . . . . 97% 95% 95% 98% 90% 91%
9. 2 Broadway Building
New York, New York. . . . . . . . . . . . . 59% 59% 29% 30% 30% 19%
10. 1090 Vermont Avenue Building
Washington, D.C.. . . . . . . . . . . . . . 99% 99% 99% 99% 99% 99%
11. Louisiana Tower
Shreveport, Louisiana . . . . . . . . . . . 90% 90% 90% 90% 83% 86%
12. Piper Jaffray Tower
Minneapolis, Minnesota. . . . . . . . . . . 97% 98% 98% 98% 99% 99%
13. 900 Third Avenue Building
New York, New York. . . . . . . . . . . . . 91% 94% 94% 95% 94% 94%
14. Wells Fargo Center South Tower
Los Angeles, California . . . . . . . . . . 98% 98% 98% 98% 97% 97%
15. Louis Joliet Mall
Joliet, Illinois. . . . . . . . . . . . . . 89% 86% 85% 82% 75% 72%
<FN>
- - ----------------
An "N/A" indicates that the property was sold or the Partnership's interest in the
property was sold and was not owned by the Partnership at the end of the quarter.
(a) Reference is made to Note 6.
(b) Reference is made to Note 2(b).
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10-A. Acquisition documents relating to the purchase by the
Partnership of the Wilshire Bundy Plaza in Los Angeles, California are hereby
incorporated by reference to the Partnership's report on Form 8-K (File No. 2-
88687) dated February 19, 1986.

10-B. Acquisition documents relating to the purchase by the
Partnership of an interest in the 1290 Avenue of the Americas Building in New
York, New York are hereby incorporated by reference to the Partnership's Post-
Effective Amendment #1 to the Partnership's Registration Statement on Form S-
11 (No. 2-88687) dated June 4, 1984.

10-C. Acquisition documents relating to the purchase by the
Partnership of an interest in the 237 Park Avenue Building in New York, New
York are hereby incorporated by reference to the Partnership's Post-Effective
Amendment #1 to the Partnership's Registration Statement on Form S-11 (No. 2-
88687) dated June 4, 1984.

10-D. Acquisition documents relating to the purchase by the
Partnership of an interest in the 2 Broadway Building in New York, New York
are hereby incorporated by reference to the Partnership's Post-Effective
Amendment #1 to the Partnership's Registration Statement on Form S-11 (No. 2-
88687) dated June 4, 1984.

10-E. Acquisition documents relating to the purchase by the
Partnership of an interest in the Wells Fargo Center - IBM Tower in Los
Angeles, California are hereby incorporated by reference to the Partnership's
Post-Effective Amendment #5 to the Partnership's Registration Statement on
Form S-11 (No. 2-88687) dated June 4, 1984.

10-F. Acquisition documents relating to the purchase by the
Partnership of an interest in the Louisiana Tower in Shreveport, Louisiana are
hereby incorporated by reference to the Partnership's Post-Effective Amendment
#2 to the Partnership's Registration Statement on Form S-11 (No. 2-88687)
dated June 4, 1984.

10-G. Acquisition documents relating to the purchase by the
Partnership of the Louis Joliet Mall in Joliet, Illinois are hereby
incorporated by reference to the Partnership's report on Form 8-K (File No. 2-
88687) dated August 1, 1985.

10-H. Agreement dated March 25, 1993 between JMB/NYC and the
Olympia & York affiliates regarding JMB/NYC's deficit funding obligations from
January 1, 1992 through June 30, 1993 is hereby incorporated by reference to
the Partnership's report for December 31, 1992 on Form 10-K (File No. 2-88687)
dated March 30, 1993.

10-I. Settlement Agreement dated March 12, 1993 between the
Resolution Trust Corporation and Carlyle-XIV is hereby incorporated by
reference to the Partnership's report on Form 10-Q (File No. 2-88687) dated
May 14, 1993.

10-J. Agreement of Limited Partnership of Carlyle-XIV
Associates, L.P. is hereby incorporated by reference to the Partnership's
report on Form 10-Q (File No. 2-88687) dated May 14, 1993.

10-K. Second Amended and Restated Articles of Partnership of
JMB/NYC Office Building Associates, is hereby incorporated by reference to the
Partnership's report for December 31, 1993 on Form 10-K (File No. 2-88687)
dated March 28, 1994.

10-L. Documents relating to the sale by the Partnership of its
interest in the Old Orchard Urban Venture are hereby incorporated by reference
to the Partnership's report on Form 8-K (File No. 2-88687) for August 30,
1993, dated November 12, 1993.

10-M. Amended and Restated Certificate of Incorporation of
Carlyle-XIV Managers, Inc., (known as Carlyle Managers, Inc.) is hereby
incorporated by reference to the Partnership's report for December 31, 1993 on
Form 10-K (File No. 2-88687) dated March 28, 1994.

10-N. Amended and Restated Certificate of Incorporation of
Carlyle-XIII Managers, Inc., (known as Carlyle Investors, Inc.), is hereby
incorporated by reference to the Partnership's report for December 31, 1993 on
Form 10-K (File No. 2-88687) dated March 28, 1994.

10-O. $1,200,000 demand note between Carlyle-XIV Associates,
L.P. and Carlyle Managers, Inc., is hereby incorporated by reference to the
Partnership's report for December 31, 1993 on Form 10-K (File No. 2-88687)
dated March 28, 1994.

10-P. $1,200,000 demand note between Carlyle-XIV Associates,
L.P. and Carlyle Investors, Inc., is hereby incorporated by reference to the
Partnership's report for December 31, 1993 on Form 10-K (File No. 2-88687)
dated March 28, 1994.

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(b) No reports on Form 8-K have been filed for the quarter covered
by this report.
SIGNATURES

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

BY: JMB Realty Corporation
(Corporate General Partner)

By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: August 12, 1994

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person in the capacity and on
the date indicated.

GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: August 12, 1994