CARLYLE REAL ESTATE LTD PARTNERSHIP XIV /IL/, 10-K405, 1996-04-01

CARLYLE REAL ESTATE LTD PARTNERSHIP XIV /IL/
10-K405, 1996-04-01
REAL ESTATE

Previous: LIBERTY BANCORP INC /OK/, 10-K, 1996-04-01

Next: ENSTAR INCOME PROGRAM 1984-1 LP, 10-K405, 1996-04-01

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934

For the fiscal year
ended December 31, 1995 Commission File No. 0-15962

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

Illinois 36-3256340
(State of organization)(I.R.S. Employer Identification No.)

900 N. Michigan Ave., Chicago, Illinois60611
(Address of principal executive office)(Zip Code)

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

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

Name of each exchange on
Title of each class which registered
- ------------------- ------------------------------
None None

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

LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class)

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

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

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

Documents incorporated by reference: None

TABLE OF CONTENTS

Page
----
PART I

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

Item 2. Properties. . . . . . . . . . . . . . . 6

Item 3. Legal Proceedings . . . . . . . . . . . 9

Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . 9

PART II

Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters . . . . 9

Item 6. Selected Financial Data . . . . . . . . 11

Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . 21

Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . 35

Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . 95

PART III

Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . 95

Item 11. Executive Compensation. . . . . . . . . 98

Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . 99

Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . 100

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . 100

SIGNATURES . . . . . . . . . . . . . . . . . . . . 105

PART I

ITEM 1. BUSINESS

Unless otherwise indicated, all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report.

The registrant, Carlyle Real Estate Limited Partnership-XIV (the
"Partnership"), is a limited partnership formed in late 1983 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois to invest in improved income-producing commercial and residential
real property. On June 4, 1984, the Partnership commenced an offering to
the public of $250,000,000 (subject to increase by up to $250,000,000) in
Limited Partnership Interests (and assignee interests therein)
("Interests") pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (No. 2-88687). A total of 401,048.66 Interests were
sold to the public at $1,000 per Interest. The holders of 226,632.06
Interests were admitted to the Partnership in 1984; the holders of
174,416.6 Interests were admitted to the Partnership in 1985. The offering
closed July 15, 1985. No Limited Partner has made any additional capital
contribution after such date. The Limited Partners of the Partnership
share in their portion of the benefits of ownership of the Partnership's
real property investments according to the number of Interests held.

The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or through
joint venture partnership interests. The Partnership's real estate
investments are located throughout the nation and it has no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding
of the Partnership's business taken as a whole. Pursuant to the
Partnership Agreement, the Partnership is required to terminate no later
than December 31, 2034. The Partnership is self-liquidating in nature. At
sale of a particular property, the net proceeds, if any, are generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties. As discussed further in Item 7, the
marketplaces in which the portfolio operates and real estate markets in
general are in a recovery mode. The Partnership currently expects to
conduct an orderly liquidation of most of its remaining investment
portfolio as quickly as practicable. As a result, the Partnership
currently expects that it will sell or dispose of its remaining investment
properties, with the possible exception of its interests in the 237 Park
Avenue and 1290 Avenue of the Americas properties not later than December
31, 1999, barring any unforeseen economic developments.

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

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (k) SIZE PURCHASECAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
- ---------------------- ---------- ------------------------------ ---------------------
<S> <C> <C> <C> <C>
1. Old Orchard Shopping
Center
Skokie (Chicago),
Illinois. . . . 783,000 4/1/84 8/30/93 fee ownership of
sq.ft. land and improvements
g.l.a. (through joint venture
partnerships) (c)(e)
2. Brittany Downs
Apartments
Phase I and Phase II,
Thornton (Denver),
Colorado. . . . 464 units 8/15/84 1/10/95 fee ownership of land and
improvements (h)
3. Scottsdale Financial
Center I
Scottsdale,
Arizona . . . . 106,800 9/28/84 12/17/93 fee ownership of land and
sq.ft. improvements (f)
n.r.a.
4. Scottsdale Financial
Center II
Scottsdale,
Arizona . . . . 151,625 9/28/84 10/1/93 fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (f)
5. 237 Park Avenue
Building
New York,
New York. . . . 1,140,000 8/14/84 7% fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships) (c)
6. 1290 Avenue of the
Americas Building
New York,
New York. . . . 2,000,000 7/27/84 15% fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships)
(c)(l)

7. 2 Broadway Building
New York,
New York. . . . 1,600,000 8/14/84 9/18/95 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships)
(c)(i)
8. 1090 Vermont Avenue
Building
Washington, D.C. 140,000 9/26/84 2% fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnership) (c)
9. Mariners Pointe
Apartments
Stockton,
California. . . 220 units 10/2/84 1% fee ownership of land and
improvements (through joint
venture partnership) (c)
10. Louisiana Tower
Shreveport,
Louisiana . . . 349,000 11/14/84 8/30/95 fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (j)
11. Marketplace at
South Street
Seaport
New York,
New York. . . . 263,000 12/14/84 3/8/88 fee ownership of improve-
sq.ft. ment and ground leasehold
n.r.a. interest in land (through
joint venture partnership)
12. Gateway Tower
White Plains,
New York. . . . 552,000 12/31/84 12/30/92 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnership)
13. Piper Jaffray Tower
Minneapolis,
Minnesota . . . 723,755 12/27/84 5% fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships) (c)

14. 900 Third Avenue
Building
New York,
New York. . . . 517,000 12/28/84 5% fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships) (c)
15. Wells Fargo Center
-IBM Tower
Los Angeles,
California. . . 1,100,000 6/28/85 10% fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnership)
(c)(l)
16. Louis Joliet Mall
Joliet, Illinois 305,000 7/31/85 5% fee ownership of land and
sq.ft. improvements (l)
g.l.a.
17. Turtle Creek Centre
Dallas, Texas . 296,378 8/30/85 3/7/89 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnership) (c)(g)
18. Yerba Buena West
Office Building
San Francisco,
California. . . 267,687 8/30/85 6/24/92 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships)
19. Wilshire Bundy
Plaza
Los Angeles,
California. . . 284,724 11/7/85 9% fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (d)(l)

<FN>
- -----------------------
(a) The computation of this percentage for properties held at
December 31, 1995 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.

(b) Reference is made to Note 4 and to Note 3 to Combined Financial
Statements filed with this annual report for the current outstanding
principal balances and a description of the long-term mortgage indebtedness
secured by the Partnership's real property investments.

(c) Reference is made to Note 3 for a description of the joint venture
partnership or partnerships through which the Partnership made this real
property investment.

(d) Reference is made to Note 8(b) for a description of the leasehold
interest, under a ground lease, in the land on which this real property
investment is situated.

(e) Reference is made to Note 3(b) for a description of the sale of the
Partnership's interest in this investment property.

(f) Reference is made to Note 6 for a description of the disposition of
this investment property.

(g) Reference is made to Note 3(g) for a description of the disposition
of this investment property.

(h) Reference is made to Note 4(b)(i) for a description of the sale of
this investment property.

(i) Reference is made to Note 3(c) for a description of the disposition
of this investment property.

(j) Reference is made to Note 4(b)(ii) for a description of the
disposition of this investment property.

(k) Reference is made to Item 8 - Schedule IIIs to the Consolidated and
Combined Financial Statements filed with this annual report for further
information concerning real estate taxes and depreciation.

(l) Reference is made to Item 6 - Selected Financial Data for additional
operating and lease expiration data concerning this investment property.

</TABLE>

The Partnership's real property investments are subject to competition
from similar types of properties (including in certain areas properties
owned or advised by affiliates of the General Partners or properties owned
by certain of the joint venture partners) in the respective vicinities in
which they are located. Such competition is generally for the retention of
existing tenants. Additionally, the Partnership is in competition for new
tenants in markets where significant vacancies are present. Reference is
made to Item 7 below for a discussion of competitive conditions and future
renovation and capital improvement plans of the Partnership and certain of
its significant investment properties. Approximate occupancy levels for
the properties are set forth in the table in Item 2 below to which
reference is hereby made. The Partnership maintains the suitability and
competitiveness of its properties in its markets primarily on the basis of
effective rents, tenant allowances and service provided to tenants. In the
opinion of the Corporate General Partner of the Partnership, all of the
investment properties held at December 31, 1995 are adequately insured.
Although there is earthquake insurance coverage for a portion of the value
of the Partnership's investment properties, the Corporate General Partner
does not believe that such coverage for the entire replacement cost of the
investment properties is available on economic terms.

Reference is made to Item 6 and Note 8(a) and Note 4 of Notes to
Combined Financial Statements filed with this annual report for a schedule
of minimum lease payments to be received in each of the next five years,
and in the aggregate thereafter, under leases in effect at certain of the
Partnership's investment properties as of December 31, 1995.

The Partnership has no employees other than personnel performing on-
site duties at certain of the Partnership's properties, none of whom are
officers or directors of the Corporate General Partner of the Partnership.

The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.

ITEM 2. PROPERTIES

The Partnership owns directly or through joint venture partnerships
the properties or interests in the properties referred to under Item 1
above to which reference is hereby made for a description of said
properties.

The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1995 and 1994 for the Partnership's investment properties owned
during 1995:

<TABLE>
<CAPTION>
1994 1995
--------------------------------------------------
At At At At At At At At
Principal Business3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---------------------- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

1. Wilshire Bundy
Plaza
Los Angeles,
California. . . . . Financial Ser-
vices/Advertising 87% 87% 80% 80% 83% 87% 86% 86%

2. Brittany Downs
Apartments
Phase I and Phase II
Thornton (Denver),
Colorado. . . . . . Apartments 96% 96% 96% 95% N/A N/A N/A N/A

3. Mariners Pointe
Apartments
Stockton, California Apartments 84% 86% 96% 91% 85% 91% 96% 94%

4. 237 Park Avenue
Building
New York, New York. Advertising/
Insurance/Paper/
Real Estate
Investment 98% 98% 98% 98% 98% 98% 98% 98%

5. 1290 Avenue of the
Americas Building
New York, New York. Financial Services90% 91% 91% 94% 94% 94% 94% 93%

6. 2 Broadway Building
New York, New York. Financial Services30% 19% 19% 18% 18% 18% N/A N/A

7. 1090 Vermont Avenue
Building
Washington, D.C.. . Trade Associations99% 99% 99% 99% 95% 95% 93% 95%

1994 1995
--------------------------------------------------
At At At At At At At At
Principal Business3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---------------------- ---- ---- ----- ---- ---- ----- -----
8. Louisiana Tower
Shreveport, Louisiana Natural Gas/
Banking 83% 86% 88% 88% 88% 88% N/A N/A

9. Piper Jaffray Tower
Minneapolis,
Minnesota . . . . . Legal Services/
Advertising/
Financial Services99% 99% 98% 98% 97% 97% 98% 98%

10. 900 Third Avenue
Building
New York, New York. Legal Services/
Detective Agency/
Insurance 94% 94% 94% 94% 94% 96% 96% 97%

11. Wells Fargo Center
-IBM Tower
Los Angeles,
California. . . . . Business Infor-
mation Systems 97% 97% 97% 96% 96% 96% 96% 95%

12. Louis Joliet Mall
Joliet, Illinois. . Retail 75% 72% 76% 79% 79% 80% 87% 88%

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

Reference is made to Item 6, Item 7, Note 8 and Note 4 of Notes to Combined Financial Statements for further
information regarding property occupancy, competitive conditions and tenant leases at the Partnership's investment
properties.

An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.

</TABLE>

ITEM 3. LEGAL PROCEEDING

On October 17, 1995, an action entitled TEACHERS INSURANCE AND ANNUITY
ASSOCIATION V. CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV was filed in
California Superior Court of Los Angeles County, California. In the
lawsuit, Teachers Insurance and Annuity Association ("Teachers"), as the
holder of the first mortgage loan secured by the Wilshire Bundy Plaza
office building, seeks to foreclose the mortgage and obtain title to the
property. As a result of competitive market conditions combined with
significant lease turnover, the property will not generate sufficient cash
flow to pay re-leasing costs, anticipated capital costs and required debt
service during 1995 and several years after. Consequently, in December
1994, the Partnership ceased making the required debt service payments on
the first mortgage loan and commenced discussions with Teachers to obtain a
modification of the loan to reduce the debt service and cover capital and
re-leasing costs expected to be incurred over the next several years.
Teachers has refused to provide such a loan modification, and the
Partnership has decided not to commit any significant additional amounts of
capital to the property since recovery of such amounts would be unlikely.
By agreement of the parties, the court has appointed a receiver for the
property. The Partnership did not contest the foreclosure action. It is
anticipated that title to the property will transfer to Teachers on March
27, 1996.

Reference is made to Note 3(e) for a discussion of certain other
litigation involving the Partnership.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during
fiscal years 1995 and 1994.

PART II

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

As of December 31, 1995, there were 41,653 record holders of Interests
of the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request,
the Corporate General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any economic
aspects of the transaction, will be subject to negotiation by the investor.

There are certain conditions and restrictions on the transfer of Interests,
including, among other things, the requirement that the substitution of a
transferee of Interests as a Limited Partner of the Partnership be subject
to the written consent of the Corporate General Partner. The rights of a
transferee of Interests who does not become a substituted Limited Partner
will be limited to the rights to receive his share of profits or losses and
cash distributions from the Partnership, and such transferee will not be
entitled to vote such Interests. No transfer will be effective until the
first day of the next succeeding calendar quarter after the requisite
transfer form satisfactory to the Corporate General Partner has been
received by the Corporate General Partner. The transferee consequently
will not be entitled to receive any cash distributions or any allocable
share of profits or losses for tax purposes until such next succeeding
calendar quarter. Profits or losses from operations of the Partnership for
a calendar year in which a transfer occurs will be allocated between the
transferor and the transferee based upon the number of quarterly periods in
which each was recognized as the holder of the Interests, without regard to
the results of the Partnership's operations during particular quarterly
periods and without regard to whether cash distributions were made to the
transferor or transferee. Profits or losses arising from the sale or other
disposition of Partnership properties will be allocated to the recognized

holder of the Interests as of the last day of the quarter in which the
Partnership recognized such profits or losses. Cash distributions to a
holder of Interests arising from the sale or other disposition of
Partnership properties will be distributed to the recognized holder of the
Interests as of the last day of the quarterly period with respect to which
such distribution is made.

Reference is made to Note 5 for a discussion of the provisions of the
Partnership Agreement relating to cash distributions. Reference is made to
Item 6 below for a discussion of cash distributions made to the holders of
Interests.

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1995, 1994, 1993, 1992 AND 1991
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

<CAPTION>
1995 1994 1993 1992 1991
-------------------------- ----------- ------------------------
<S> <C> <C> <C> <C> <C>
Total income . . . . .$ 19,054,756 23,597,310 25,596,437 26,852,635 26,614,275
============ =========== =========== =========== ===========

Operating loss . . . .$ (8,072,831) (8,019,023)(12,471,986) (22,560,142)(12,030,996)
Partnership's share of
loss from operations
of unconsolidated
ventures. . . . . . . (19,392,303) (16,851,858)(60,283,861) (22,495,785)(32,932,440)
Venture partners' share
of ventures' operations -- -- 22,472 70,706 72,816
------------ ----------- ----------- ----------- -----------
Net operating loss . . (27,465,134) (24,870,881)(72,733,375) (44,985,221)(44,890,620)
Gain (loss) on sale of
unconsolidated
venture or on sale
or disposition of
investment properties (14,886,886) 1,702,082 26,281,496 8,783,892 --
Extraordinary items. . 35,711,359 (3,000,000) -- -- --
------------ ----------- ----------- ----------- -----------
Net earnings (loss). .$ (6,640,661) (26,168,799)(46,451,879) (36,201,329)(44,890,620)
============ =========== =========== =========== ===========
Net earnings (loss) per
Interest (b):
Net operating loss.$ (65.74) (59.53) (177.06) (107.68) (107.45)
Gain (loss) on sale of
unconsolidated
ventures or on sale
or disposition
of investment
properties . . . . (36.75) 4.20 64.88 21.68 --
Extraordinary items 87.94 (7.18) -- -- --
------------ ----------- ----------- ----------- -----------
Net loss . . . . . . .$ (14.55) (62.51) (112.18) (86.00) (107.45)
============ =========== =========== =========== ===========

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

Total assets . . . . .$106,113,792 147,075,454 149,516,685 191,806,563 211,584,255
Long-term debt . . . .$ 26,000,000 25,794,970 98,747,743 116,309,718 108,899,903
Cash distributions
per Interest (c) . .$ 20.00 -- -- -- 6.50
============ =========== =========== =========== ===========

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

(a) The above selected financial data should be read in conjunction with the consolidated financial statements
and the related notes appearing elsewhere in this annual report.

(b) The net loss per Interest is based upon the number of Interests outstanding at the end of the period.

(c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for financial
reporting or Federal income tax purposes. Each Partner's taxable income (or loss) from the Partnership in each year
is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the cash generated
or distributed by the Partnership. Accordingly, cash distributions to the Limited Partners since the inception of
the Partnership have represented a return of capital for financial reporting purposes.

</TABLE>

<TABLE>

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

Property
- --------

Wilshire Bundy
Plaza a) The net rentable square feet ("NRF") occupancy rate and average base rent per square
foot as of December 31 for each of the last five years were as follows:

NRF Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>

1991. . . . . 95% $23.62
1992. . . . . 91% 24.24
1993. . . . . 87% 23.80
1994. . . . . 80% 23.59
1995. . . . . 86% 19.97
<FN>
(1) Average base rent per square foot is based on NRF occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base RentScheduled LeaseLease
b) Significant Tenants Square FeetPer AnnumExpiration DateRenewal Option(s)
------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Bozell, Jacobs, Kenyon
& Eckhardt 51,097 $1,226,544 5/1996 N/A
(Advertising Agency)

</TABLE>

<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Wilshire Bundy Plaza:

Annualized Percent of
Number of Approx. Total Base Rent Total 1995
Year Ending Expiring NRF of Expiringof Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- -------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 8 71,181 $1,729,992 35%
1997 9 25,734 598,548 12%
1998 11 30,145 562,764 11%
1999 10 63,108 1,433,208 29%
2000 7 56,041 1,352,916 28%
2001 -- -- -- --
2002 -- -- -- --
2003 -- -- -- --
2004 2 9,306 201,720 4%
2005 -- -- -- --
<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases with
replacement tenants have been executed as of March 25, 1996.
</TABLE>

Property
- --------

1290 Avenue
of the Americas
Office Building a) The net rentable square feet ("NRF") occupancy rate and average base rent per square
foot as of December 31 for each of the last five years were as follows:

NRF Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>

1991. . . . . 97% $36.25
1992. . . . . 97% 36.94
1993. . . . . 98% 35.78
1994. . . . . 94% 36.93
1995. . . . . 93% 37.32
<FN>
(1) Average base rent per square foot is based on NRF occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base RentScheduled LeaseLease
b) Significant Tenants Square FeetPer AnnumExpiration DateRenewal Option(s)
------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

None - No single tenant represents more than 10% of the net rentable square feet of
the property.

</TABLE>

<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the 1290 Avenue of the Americas:

1996 9 221,930 $5,196,228 7%
1997 5 44,258 1,950,084 3%
1998 14 239,010 9,334,656 13%
1999 6 78,422 2,871,480 4%
2000 5 7,540 246,804 --
2001 1 96,700 4,158,096 6%
2002 14 247,390 10,277,412 14%
2003 5 43,607 1,965,444 3%
2004 12 163,190 7,827,036 11%
2005 4 13,990 917,748 1%
<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases with replacement
tenants have been executed as of March 25, 1996.
</TABLE>

<TABLE>

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

Property
- --------

Wells Fargo Centera) The occupancy rate of net rentable square feet ("NRF") and average base rent per square
foot as of December 31 for each of the last five years were as follows:

Avg. Annual
NRF Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ---------------
<S> <C> <C> <C> <C>

1991. . . . . 96% $31.84
1992. . . . . 98% 29.11
1993. . . . . 98% 30.66
1994. . . . . 96% 32.46
1995. . . . . 95% 34.32
<FN>
(1) Average annual base rent per square foot is based on NRF occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square FeetPer Annum Expiration DateRenewal Option(s)
------------------- -------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>

International Business305,934 $21,596,668 12/1998 N/A
Machines Corporation (1)
(1)

Los Angeles Unified
School District (1) 273,559 $ 1,584,171 3/2002 N/A
(1)

(1) In March 1995, the Venture entered into a seven year direct lease with the Los
Angeles Unified School District ("LAUSD") for a portion of the space formerly occupied by International Business
Machines Corporation ("IBM"). In addition, IBM is obligated to reimburse the Venture for any shortfalls between
amounts collected under the LAUSD lease and amounts due under the IBM lease through December 1998. Base rent per
annum for IBM includes reimbursement of shortfalls for 1995.
</TABLE>

<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at Wells Fargo Center:

1996 8 85,551 $2,203,129 6%
1997 4 19,514 721,067 2%
1998 20 357,610 13,960,469 39%
1999 -- -- -- --
2000 2 660 14,100 --
2001 2 28,810 886,698 3%
2002 14 283,231 8,177,848 23%
2003 8 68,700 2,014,080 6%
2004 3 15,016 346,404 1%
2005 2 29,581 668,084 2%
<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases with
replacement tenants have been executed as of March 25, 1996.
</TABLE>

Property
- --------

Louis Joliet
Mall
a) The gross leasable area ("GLA") occupancy rate and average base rent per
square foot as of December 31, for each of the last five years were
as follows:

GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>

1991. . . . . 92% $12.01
1992. . . . . 91% 12.41
1993. . . . . 82% 13.56
1994. . . . . 79% 13.53
1995. . . . . 88% 13.29
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base RentScheduled LeaseLease
b) Significant Tenants Square FeetPer AnnumExpiration DateRenewal Option(s)
------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

None - No single tenant represents more than 10%
of the gross leasable area of the property.

</TABLE>

<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Louis Joliet Mall:

Annualized Percent of
Number of Approx. Total Base Rent Total 1995
Year Ending Expiring GLA of Expiringof Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- -------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 14 30,399 $ 540,084 15%
1997 9 17,120 289,860 8%
1998 4 6,355 110,868 3%
1999 17 13,800 332,592 9%
2000 8 16,469 187,740 5%
2001 6 17,812 169,392 5%
2002 7 6,779 207,960 6%
2003 14 30,180 357,432 10%
2004 8 21,615 487,296 14%
2005 15 46,156 1,026,828 29%
<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases with replacement
tenants have been executed as of March 25, 1996.
</TABLE>

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

LIQUIDITY AND CAPITAL RESOURCES

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

On June 4, 1984, the Partnership commenced an offering of $250,000,000
(subject to increase by up to $250,000,000) pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933. All Interests
were subscribed and issued between June 4, 1984 and July 15, 1985 pursuant
to the public offering from which the Partnership received gross proceeds
of $401,053,660.

After deducting selling expenses and other offering costs, the
Partnership had approximately $351,747,000 with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments and for working capital. A portion of such proceeds was
utilized to acquire the properties described in Item 1 above.

At December 31, 1995, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $16,210,000. Such funds are
available for distributions to partners and working capital requirements.
In February 1995, the Partnership distributed $8,020,647 to the Limited
Partners ($20 per limited partnership interest) and $81,017 to the General
Partners out of proceeds from the sale or refinancing of certain investment
properties. Reference is made to Notes 3(b), 3(h) and 4(b)(i). The
Partnership and its consolidated ventures have currently budgeted in 1996
approximately $2,830,680 for tenant improvements and other capital
expenditures. The Partnership's share of such items and its share of such
similar items for its unconsolidated ventures in 1996 is currently budgeted
to be approximately $8,061,833. Actual amounts expended in 1996 may vary
depending on a number of factors including actual leasing activity, results
of property operations, liquidity considerations and other market
conditions over the course of the year. The source of capital for such
items and for both short-term and long-term future liquidity and
distributions to partners is dependent upon existing working capital, net
cash generated by the Partnership's investment properties and the sale or
refinancing of such investments. However, due to the property specific
discussions below, the Partnership considers only Louis Joliet Mall, 1090
Vermont Avenue and 900 Third Avenue to be potential significant sources of
future cash generated from operations, sales or refinancings. In such
regard, reference is made to the Partnership's property specific
discussions below and also to the Partnership's disclosure of certain
property lease expirations in Item 6. Due to the above situations and the
property specific concerns discussed below, the Partnership had suspended
operating distributions beginning with the fourth quarter 1991 distribution
payable in February 1992.

As of December 31, 1995, the current portion of the long-term
indebtedness of the Partnership and its consolidated ventures was
approximately $60,042,105, which is composed of the entire indebtedness
encumbering Wilshire Bundy Plaza, Mariners Pointe Apartments and the
Partnership's interest in the Wells Fargo South Tower office building.
Reference is made to Notes 4(a) and 4(b).

Piper Jaffray Tower

Occupancy at the property remained at 98% during 1995. 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.

Pursuant to the modification of the mortgage loan made in August 1992,
to the extent the investment property generates cash flow after payment of
fixed interest on the mortgage, contingent interest, if any, 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 payments remitted to the lender for 1993 and 1994 totalled
$1,390,910 and $353,251, respectively. During 1995, the excess cash flow
generated under this agreement was $464,178 which is expected to be
remitted to the lender during the second quarter of 1996. 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. To date, no escrow funds have been required to be used for
leasing costs. The manager of the property (which was an affiliate of the
Corporate General Partner through November 1994 has agreed to defer receipt
of its management fee until a later date. As of December 31, 1995, the
manager has deferred approximately $2,538,000 of management fees
($1,839,000 of which represents deferred fees due to affiliates through
November 1994 (Note 9)). 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
3(d) for further discussion of this investment property.

Wells Fargo Center

The Wells Fargo Center ("South Tower") operates in the downtown Los
Angeles office market, which has become extremely competitive over the last
several years with the addition of several new buildings that has resulted
in a high vacancy rate of approximately 25% in the marketplace.

The Partnership expects that the competitive market conditions and the
continued recession in Southern California will have an adverse affect on
the building through lower effective rental rates achieved on releasing of
existing space which expires or is given back over the next several years.
In addition, new leases are expected to require expenditures for lease
commissions and tenant improvements prior to occupancy. This anticipated
decline in rental rates, the anticipated increase in re-leasing time and
the costs upon releasing will result in a decrease in cash flow from
operations over the near term. In 1992, two major law firm tenants
occupying approximately 11% of the building's space approached the joint
venture indicating that they were experiencing financial difficulties and
desired to give back a portion of their leased space in lieu of ceasing
business altogether. The joint venture reached agreements which resulted
in a reduction of the space leased by each of these tenants. Also, a major
tenant, IBM, which originally leased approximately 58% of the tenant space
in the Wells Fargo Building, is sub-leasing a portion of its space which is
scheduled to expire in December 1998. In addition, the joint venture has
entered into a seven year direct lease with the Los Angeles United School
District ("LAUSD") for approximately one-half of IBM's space with occupancy
beginning March 1, 1995. Under the terms of an agreement reached with IBM,
the joint venture will be reimbursed by IBM for all shortfalls between
amounts due under the IBM lease and the LAUSD lease. In early 1995, two
major law firm tenants occupying approximately 5% of the building's space
notified the joint venture of their intentions to disband each of these
respective firms. The joint venture negotiated a lease termination
agreement with one of the law firms for $1,600,000, all of which has been
received as of December 31, 1995. The other law firm, which has vacated
its space and is no longer paying rent, has filed for bankruptcy. The
collectability of amounts owed by such tenant under its lease obligation is
uncertain.

The mortgage note secured by the property (with a balance of
$198,388,423 as of December 31, 1995), as well as the promissory note
secured by the Partnership's interest in the joint venture (with a balance
of $12,250,000 and accrued interest of $1,575,000 and $245,000 as of
December 31, 1995 and 1994, respectively) matured December 1, 1994. The
Partnership and the joint venture have been in discussions with the
respective lenders regarding an extension of the mortgage note and the
promissory note. The joint venture reached an agreement with the lender of
the mortgage note whereby the lender refrained from exercising its rights
and remedies under the loan documents through September 1, 1995 while the
joint venture continued to negotiate an extension or refinancing of the
note with the lender. The lender is currently considering an extension of
such agreement. The venture continues to make interest payments to the
lender under the original terms of the mortgage note and is required to
escrow all available cash flow. The Partnership has ceased making debt
service payments on the promissory note and an extension or refinancing
with such lender is likely to be dependent on the results of negotiations
with the lender of the mortgage note. There is no assurance that the joint
venture or the Partnership will be able to extend or refinance these notes.

In the absence of an extension or refinancing of the notes, the Partnership
may decide not to commit any significant additional amounts to the
property. This would likely result in the Partnership no longer having an
ownership interest in the property, and in such event would result in a
gain for financial reporting and for Federal income tax purposes with no
corresponding distributable proceeds. The promissory note secured by the
Partnership's interest in the joint venture has been classified at December
31, 1995 and 1994 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 (approximately 306,000 square feet) expires in December
1998, the South Tower Venture, as a matter of prudent accounting practice,
recorded a provision for value impairment of $67,479,871 (of which
$10,017,591 has been allocated to the Partnership and was reflected in the
Partnership's share of operations of unconsolidated ventures). Such
provision, made as of August 31, 1993, was recorded to reduce the net
carrying value of the Wells Fargo Center to the then outstanding balance of
the related non-recourse debt. The property did not sustain any
significant damage as a result of the January 1994 earthquake in southern
California.

Brittany Downs Apartments - Phase I and II

On January 10, 1995, the Partnership sold the Brittany Downs
Apartments Phase I and II to an unaffiliated third party. The sale price
was $18,380,000 (before selling costs and prorations), of which $2,795,768
was received in cash at closing and $14,340,000 represented the purchaser's
assumption of the debt (net of a payoff discount granted by the lender for
Brittany Downs Apartments Phase II). The sale resulted in a gain of
$6,574,760 for financial reporting purposes and $8,984,569 for Federal
income tax reporting purposes in 1995. In addition, as a result of the
payoff discount granted by the underlying lender for Brittany Downs
Apartments Phase II, the Partnership recognized an additional gain on
forgiveness of indebtedness of $1,650,639 for financial reporting purposes
in 1995.

JMB/NYC

Occupancy at 1290 Avenue of the Americas decreased slightly to 93%
during 1995. During the third quarter of 1995, the Joint Venture that
owns the building executed a lease with a major insurance company for
approximately 506,000 square feet of space in the building with a fifteen
year term with occupancy to commence in 1996. During the fourth quarter of
1994, the Joint Venture that owns the building negotiated an amendment with
a tenant, Deutsche Bank Financial Products Corporation, under which the
tenant will surrender space on the 12th and 13th floors (137,568 square
feet or approximately 7% of the building's leasable space) on or before
June 30, 1996. The original lease (as amended) was to terminate on
December 31, 2003. The amendment also added space on the 8th and 9th
floors (44,360 square feet or approximately 2% of the building's leasable
space) which will expire on or before December 31, 1997. In consideration
for this amendment, the tenant paid an early termination fee of $29,000,000
to the Joint Venture on December 1, 1994.

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

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

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

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

JMB/NYC has had a dispute with the Olympia & York affiliates over the
calculation of the effective interest rate with reference to the first
mortgage loan, which covered all three properties, for the purpose of
determining JMB/NYC's deficit funding obligation, as described more fully
in Note 3(c). During the quarter ended March 31, 1993, an agreement was
reached between JMB/NYC and the Olympia & York affiliates (the "1993
Agreement") which rescinded the default notices previously received by
JMB/NYC and eliminated the operating deficit funding obligation of JMB/NYC
for the period January 1, 1992 through June 30, 1993. Pursuant to the 1993
Agreement, during this period, JMB/NYC recorded interest expense at 1-3/4%
over the short-term U.S. Treasury obligation rate (subject to a minimum
rate of 7% per annum), which is the interest rate on the underlying first
mortgage loan. Under the terms of the 1993 Agreement, during this period,
the amount of capital contributions that the Olympia & York affiliates and
JMB/NYC would have been required to make to the Three Joint Ventures, if
the first mortgage loan bore interest at a rate of 12-3/4% per annum (the
Olympia & York affiliates' interpretation), became a priority distribution
level to the Olympia & York affiliates from the Three Joint Ventures'
annual cash flow or net sale or refinancing proceeds. The 1993 Agreement
also entitled the Olympia & York affiliates to a 7% per annum return on

such unpaid priority distribution level. The 1993 Agreement also provided
that, except as specifically agreed otherwise, the parties each reserved
all rights and claims with respect to each of the Three Joint Ventures and
each of the partners thereof, including, without limitation, the
interpretation of or rights under each of the joint venture partnership
agreements for the Three Joint Ventures. The term of the 1993 Agreement
expired on June 30, 1993. Therefore, effective July 1, 1993, JMB/NYC is
recording interest expense at 1-3/4% over the short-term U.S. Treasury
obligation rate plus any excess operating cash flow after capital costs of
each of the Three Joint Ventures, such sum not to be less than 7% nor
exceed a 12-3/4% per annum interest rate. The Olympia & York affiliates
continued to dispute this calculation for the period commencing July 1,
1993 and contend that a 12-3/4% per annum fixed rate applies. Certain
provisions of the Agreement with the Olympia & York affiliates, when
finalized, would resolve the funding obligation dispute.

The 237 Park Avenue and the 1290 Avenue of the Americas office
buildings currently serve as collateral for the first mortgage loan. A
restructuring of the loan now appears likely to depend upon the
restructuring of the ownership interests of various affiliates of O&Y in a
number of office buildings and the reorganization of the 237 Park Avenue
and 1290 ventures, as discussed above. Prior to 1996, the lender asserted
various defaults under the loan. Commencing in January 1996, the Joint
Ventures ceased making monthly debt service payments on the first mortgage
loan. In previous negotiations, the Olympia & York affiliates reached an
agreement with the first mortgage lender whereby effective January 1, 1993,
the Olympia & York affiliates are limited to taking distributions of
$250,000 on a monthly basis from the Three Joint Ventures and reserving the
remaining excess cash flow in a separate interest-bearing account to be
used exclusively to meet the obligations of the Three Joint Ventures as
approved by the lender. Interest on the first mortgage loan is currently
calculated based upon a variable rate related to the short-term U.S.
Treasury obligation rate, subject to a minimum rate on the loan of 7% per
annum. In the absence of the contemplated restructuring, an increase in
the short-term U.S. Treasury obligation rate could result in increased
interest payable on the first mortgage loan by the Three Joint Ventures.

Should a restructuring of the Joint Ventures providing for the
elimination of JMB/NYC's funding obligations in accordance with the
Agreement not be finalized, JMB/NYC may decide not to commit any additional
amounts to the Three Joint Ventures. In addition, under these
circumstances, it is possible that JMB/NYC may determine to litigate these
issues with the Olympia & York affiliates. A decision not to commit any
additional funds or an adverse litigation result could, under certain
circumstances, result in the loss of the interest in the related Joint
Ventures. The loss of an interest in a particular Joint Venture could,
under certain circumstances, permit an acceleration of the maturity of the
related purchase note (each purchase note is secured by JMB/NYC's interest
in the related Joint venture). Under certain circumstances, the failure to
repay a purchase note could constitute a default under, and permit an
immediate acceleration of, the maturity of the purchase notes for the other
Joint Ventures. In such event, JMB/NYC may decide not to repay, or may not
have sufficient funds to repay, any of the purchase notes and accrued
interest thereon. This could result in JMB/NYC no longer having an
interest in any of the related Joint Ventures, which would result in
substantial net gain for financial reporting and Federal income tax
purposes to JMB/NYC (and through JMB/NYC and the Partnership, to the
Limited Partners) with no distributable proceeds. In such event, JMB/NYC
would then proceed to terminate its affairs.

1090 Vermont Avenue Building

At the end of 1995, occupancy at this office building was 95%, down
from 99% at the end of 1994. Through 1993, the Partnership and joint
venture partners had contributed a total of $4,076,000 ($2,038,000 by the
Partnership) to the joint venture to cover releasing and capital costs.
The Partnership and joint venture partner had agreed that such
contributions would be repaid along with a return thereon out of first
available proceeds from property operations, sale or refinancing. In 1993,
the joint venture finalized a refinancing of the existing mortgage loan.
During December, 1993 $1,785,560 (of which the Partnership's share was
$889,064) was distributed to the venture partners from net refinancing
proceeds as a partial return of the additional capital contributed.
Distributions of operating cash flow totaling approximately $1.5 million
(the Partnership's share was $750,000) since the effective date of the
refinancing have also represented a partial return to the partners of the
additional capital contributed.

Old Orchard Shopping Center

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

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

OOUV may still 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.

Wilshire Bundy Plaza

Occupancy at the Wilshire Bundy Plaza increased to 86% at year-end
1995 from 80% at the end of the previous year. During 1996, approximately
25% of the building's square feet under tenant leases expires. Included in
such expirations is Bozell, Jacobs, Kenyan & Eckhardt (51,097 square feet
or approximately 17% of the building's leasable space) who informed the
Partnership that it would not be renewing its lease that expires in May
1996. In addition, several tenants have approached the Partnership seeking
space and/or rent reductions. The Partnership has been working with its
existing tenants and aggressively seeking replacement tenants for current
and future vacant space. The Brentwood (Los Angeles) office market (the
competitive market for the building) remains competitive with a current
vacancy rate of approximately 14%. 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 which would
result in a property value in excess of the underlying loan for several
years.

The Wilshire Bundy Plaza incurred minimal damage as a result of the
earthquake in southern California on January 17, 1994. On February 22,
1995, the City Council of the City of Los Angeles passed an ordinance
relating to the repair of welded steel moment frame buildings in an area of
the city that includes Wilshire Bundy Plaza. A complete determination of
the requirements to comply with the ordinance was unable to be made at the
time of the issuance of the Partnership's 1994 consolidated financial
statements. It was estimated at that time that the cost of compliance with
the ordinance could be approximately $3 million (none of which has been
budgeted). Accordingly, the 1994 consolidated financial statements
reflected an extraordinary item of $3 million.

During June 1995, the Partnership received notice from the City which
required submission of a report indicating the number of welded connections
damaged and proposed repair procedures. Based upon the findings and cost
estimates of independent structural engineers, it is currently estimated
that the cost of making the necessary repairs should be approximately
$100,000. Accordingly, the extraordinary item recorded in 1994 of $3
million has been reversed in the Partnership's 1995 consolidated financial
statements.

In 1996, and for several years beyond, the property will not generate
enough cash flow to pay for the costs associated with releasing the space
under leases which expire and the required debt service payments.
Consequently, the Partnership had commenced discussions with the existing
lender for a possible debt modification on its mortgage loan which matures
April 1, 1996 in order to reduce its debt service and cover its releasing
costs over the next several years. In this regard, the Partnership
suspended debt service payments commencing with the December 1, 1994
payment. During July 1995, the Partnership received a formal notice of
default on its mortgage loan from the lender. Accordingly, the principal
balance of the property's underlying mortgage loan ($41,292,105) and
related accrued interest has been classified as a current liability in the
accompanying consolidated financial statements at December 31, 1995 and
December 31, 1994. The lender began foreclosure proceedings in October
1995. A receiver was appointed for the property and the previously
affiliated third party property manager continued to manage the property on
behalf of the receiver. Title to the property is anticipated to be
transferred to the lender on March 27, 1996 pursuant to the foreclosure
proceedings. This property represents approximately 9% of the
Partnership's original cash investment in real properties. The Partnership
will recognize a gain for Federal income tax and a net gain for financial
reporting purposes in 1996 in connection with this transfer with no
distributable proceeds.

900 Third Avenue Building

Occupancy of this building increased to 97% at the end of 1995. The
midtown Manhattan market remains competitive. Approximately 44,000 square
feet (approximately 9% of the building's leasable square footage) of leased
space expires in 1996. The manager has signed a long term lease with Zweig
Advisors, Inc. to occupy 25,900 square feet (approximately 5% of the
building's leasable square footage) of this space upon the existing lease
expiration on March 1, 1996. The property's operating cash flow will be
adversely affected by lower rental rates achieved and leasing costs
incurred upon releasing this space and may be adversely affected by
increased vacancy during the releasing period. In 1994, JMB/900 Third
Avenue Associates, on behalf of the property joint venture, successfully
completed an extension to December 1, 2001 of its mortgage loan, which was
scheduled to mature on December 1, 1994. In addition, net cash flow after
debt service and capital (as defined) will be paid into an escrow account
controlled by the lender to be used by the property joint venture for the
payment of property taxes and for releasing costs associated with leases
which expire in 1999 and 2000 (approximately 240,000 square feet of space).

To date, no escrow funds have been required to be used for leasing costs.
The remaining proceeds in this escrow (including interest earned thereon),
if any, will be released to the property joint venture once 90% of such

leased space has been renewed or released. The agreement provides,
however, that the joint venture can repay itself, out of the first
available net cash flow, certain costs incurred and deposits made by the
joint venture in connection with the loan extension (approximately
$3,229,000). As of the date of this report, approximately $1,529,000 has
been repaid to the joint venture (of which the Partnership's share is
approximately $510,000).

Louis Joliet Mall

Occupancy at this mall increased to 88% at year end 1995 (excluding
the effect of the move-out of General Cinema, Inc., as discussed below), up
from 79% at the end of 1994, primarily due to new tenants taking occupancy
during the year. During the fourth quarter of 1994, General Cinema, Inc.
(14,587 square feet or approximately 5% of the mall space) ceased its
operations within the mall. The Partnership and the tenant are currently
seeking a new operator to run the theaters at the mall. The tenant
continue to pay rent in accordance with its lease (which expires December
31, 1998) and as of the date of this report, all amounts due from the
tenant under the lease have been received.

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 (as opposed to the original lease expiration of
December 31, 2003). In response, during the third 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. Subsequently, the Partnership and tenant entered into
a temporary agreement under which the tenant continued to operate its store
and pay rent. All amounts due from the tenant under the lease had been
received through December 31, 1995. The Partnership believes the tenant's
position is without merit and had intended to enforce the original terms of
the lease. On November 9, 1995, Al Baskin filed for protection under
Chapter 11 of the U.S. Bankruptcy Code. On December 29, 1995 Al Baskin
vacated its premises and ceased paying rent. The Partnership subsequently
filed a bankruptcy claim for the maximum amount allowable (approximately
fourteen months of future rent or approximately $415,000). There are no
assurances that any amounts will be recovered from the tenant in connection
with this action.

The litigation regarding the lease expiration date continues.
However, if the tenant accepts the Partnership's bankruptcy claim as
discussed above, the Partnership will terminate this action .

The second mortgage loan matured on September 1, 1995. During
September 1995, the Partnership refinanced the first mortgage and second
mortgage loans with a new $26,000,000 mortgage with the first mortgage
lender. The term of the mortgage loan is for seven years bearing interest
at a rate of 8.03% per annum. Monthly payments of interest only are
required for the first eighteen months and thereafter monthly payments of
principal and interest based upon a 25 year amortization schedule. The
first mortgage loan bore interest of 8.75% per annum and was to mature in
April 1998. The second mortgage loan bore interest of 10% per annum. As a
result of the early refinancing of the first mortgage loan, the Partnership
paid a prepayment penalty of approximately $204,000. The Partnership
received approximately $382,000 in net proceeds after payment of the
existing loans, closing costs and prepayment penalty.

Louisiana Tower

During 1994, due to continuing operating deficits, the Partnership
decided that it would 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 lender and sought further

modifications to the loan. The lender was unwilling to provide further
modifications to the loan and began foreclosure proceedings in October
1994. A receiver was appointed for the property and a third party manager
was appointed to manage the property on the receiver's behalf. The loan
reached scheduled maturity in January 1995. Title to the property was
transferred to the lender on August 30, 1995 due to the Partnership's
default on payments of principal and interest. This property represented
approximately 5% of the Partnership's original cash investment in real
properties. The Partnership recognized a gain of $8,117,412 for financial
reporting purposes and $2,530,731 for Federal income tax purposes in
connection with this transfer with no distributable proceeds in 1995.
Reference is made to Note 4(b)(ii).

Mariners Pointe Apartments

Occupancy at the Mariners Pointe Apartments increased slightly to 94%
at the end of 1995, up from 91% at the end of the prior year. The property
operated at a small deficit in 1994. During the third quarter of 1994, the
Partnership obtained a two-year extension of the existing $6,500,000
mortgage loan which matured on October 1, 1994. The new maturity date is
October 1, 1996. Accordingly, the principal balance of the property's
underlying mortgage loan ($6,500,000) has been classified as a current
liability in the accompanying consolidated financial statements at December
31, 1995. Under terms of the loan extension, the loan bears interest at
2.75% above the floating weekly tax exempt rate. The weekly tax exempt
interest rate at December 31, 1995 was 4.19% per annum resulting in an
interest rate of 6.94% per annum on that date. Prior to the extension, the
loan bore interest of 10.875% per annum.

During the fourth quarter, the joint venture commenced marketing the
property for sale. In March 1996, the joint venture signed an agreement
for sale of the property for a purchase price of approximately $7,900,000.
Such agreement is subject to certain contingencies which must be satisfied
prior to the proposed closing date of May 15, 1996. Therefore, there can
be no assurance that a sale will be finalized. If the sale is consummated
under the proposed terms, the Partnership will recognize a gain for Federal
income tax and a net gain for financial reporting purposes in 1996. This
property represents 1% of the Partnership's original cash investment in
real properties.

In 1992 and 1993, the property operated at a small deficit as the
result of certain capital improvements. Under the terms of the joint
venture agreement, the joint venture partner was obligated to contribute
22.3% of such 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. The Partnership has decided not to pursue this
matter further since the cost to pursue would likely exceed the recovery
(if any) of amounts owed. In addition, a sale of the property in the
foreseeable future will not result in any distribution to the joint venture
partner due to the Partnership's preferential sharing levels upon sale.
Consequently, the Partnership will not pursue the joint venture partner's
interest in 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 its ventures' mortgage obligations are separate non-
recourse loans secured individually by the investment properties and are
not obligations of the entire investment portfolio, and the Partnership and
its ventures are not personally liable for the payment of the mortgage
indebtedness.

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.

As a result of the real estate market conditions discussed above, the
Partnership continues to conserve its working capital. All expenditures
are carefully analyzed and certain capital projects are deferred when
appropriate. The Partnership has also sought or is seeking additional loan
modifications or extensions of loan modifications where appropriate. By
conserving working capital, the Partnership will be in a better position to
meet the future needs of its properties since the availability of
satisfactory outside sources of capital may be limited given the
portfolio's current debt levels.

The Partnership has held certain of its investment properties longer
than originally anticipated in an effort to maximize the return of their
investment to the Limited Partners. After reviewing the remaining
properties and the competitive marketplaces in which they operate, the
General Partners of the Partnership expect to be able to conduct an orderly
liquidation of most of its remaining investment portfolio as quickly as
practicable. As a result, the Partnership currently expects that it will
sell or dispose of its remaining investment properties, with the possible
exception of its interests in the 237 Park Avenue and the 1290 Avenue of
the America properties, no later than the end of 1999 barring unforeseen
economic developments. However, in light of current severely depressed
real estate markets, it currently appears that the Partnership's goal of
capital appreciation will not be achieved. Although, the Partnership
expects to distribute from sale proceeds some portion of the Limited
Partners' original capital, without a dramatic improvement in market
conditions, the Limited Partners will receive substantially less than half
of their original investment.

RESULTS OF OPERATIONS

At December 31, 1995, 1994 and 1993, the Partnership owned nine,
twelve and twelve investment properties, respectively, all of which were
operating.

The aggregate decrease in the balance of cash and cash equivalents and
short-term investments at December 31, 1995 as compared to December 31,
1994 is primarily due to the distribution of sales proceeds to partners of
$8,101,664 in February 1995, partially offset by the receipt of $2,795,768
relating to the sale of Brittany Downs Apartments Phase I and Phase II in
January 1995 (Note 4(b)(i)) and the receipt of $1,041,820, in July 1995
relating to the sale of Old Orchard (Note 3(b)). The decrease in short-
term investments at December 31, 1995 as compared to December 31, 1994 is
primarily due to all of the Partnership's investments in U.S. Government
obligations being classified as cash equivalents at December 31, 1995.
Reference is made to Note 1.

The increase in restricted funds at December 31, 1995 as compared to
December 31, 1994 is due primarily to Wilshire Bundy being placed in
receivership as of October 1995 partially offset by the disposition of
Louisiana Tower during August 1995. (See Note 4(b)(ii) and (iv)).

The decrease in interest, rents and other receivables, prepaid
expenses, escrow deposits, land and leasehold improvements, buildings and
improvements, accumulated depreciation, deferred expenses, and accounts
payable as of December 31, 1995 as compared to December 31, 1994 is due
primarily to the sale of the Brittany Downs Apartments Phase I and Phase II
in January 1995 (Note 4(b)(i)) and the disposition of Louisiana Tower in
August 1995 (Note 4(b)(ii)).

The decrease in current portion of long-term debt and accrued interest
and the increase in long-term debt, less current portion as of December 31,
1995 as compared to December 31, 1994 is primarily due to the sale of the
Brittany Downs Apartments Phase I and Phase II during January 1995, the
disposition of Louisiana Tower in August 1995, and the reclassification of
the mortgage to long-term at Louis Joliet Mall due to the refinancing in
September 1995. The decrease in accrued interest as of December 31, 1995
as compared to December 31, 1994 is partially offset by the compounding of
interest on the loan secured by Wilshire Bundy Plaza (Note 4(b)(iv)) and
the debt secured by the Partnership's interest in the South Tower Venture
(Note 3(f)) for which the Partnership has suspended debt service payments.

The decrease in accounts payable as of December 31, 1995 as compared
to December 31, 1994 is primarily due to the 1995 reversal of the accrual
of $3,000,000 (reflected as an extraordinary item in the accompanying
consolidated financial statements) for structural repair costs in 1994 at
the Wilshire Bundy Plaza based on current estimates of required repairs
resulting from the earthquake in Southern California in January 1994 (as
more fully discussed in Note 2).

The increase in due to affiliates as of December 31, 1995 as compared
to December 31, 1994 is due primarily to interest accruing on the
Partnership's obligation to fund, on demand, $2,400,000 to Carlyle
Managers, Inc. and Carlyle Investors, Inc. ($1,200,000 for each), for
additional paid in capital (as more fully discussed in Note 3(c)).

The decrease in accrued real estate taxes as of December 31, 1995 as
compared to December 31, 1994 is primarily due to the sale of the Brittany
Downs Apartments Phase I and Phase II in January 1995.

The decrease in unearned rents as of December 31, 1995 as compared to
December 31, 1994 is primarily due to the timing of the collection of
rental income at Wilshire Bundy Plaza and Louis Joliet Mall.

The decrease in other liabilities as of December 31, 1995 as compared
to December 31, 1994 is primarily due to the disposition of Louisiana Tower
in August 1995.

The decrease in rental income for the twelve months ended December 31,
1995 as compared to the twelve months ended December 31, 1994 is primarily
due to the sale of Brittany Downs Apartments I and II in January 1995 and
the disposition of Louisiana Tower in August 1995. The decrease in rental
income for the twelve months ended December 31, 1994 as compared to the
twelve months ended December 31, 1993 is primarily due to the disposition
of the Scottsdale Financial Centers I and II during 1993 partially offset
by higher effective rental rates achieved in 1994 at the Brittany Downs
Apartments Phases I and II.

Interest income increased for the twelve months ended December 31,
1995 as compared to the twelve months ended December 31, 1994 primarily due
to the increase in 1995 in the average interest rate earned on the
Partnership's investment in U.S. Government obligations partially offset by
lower average cash balances in 1995. Interest income increased for the
twelve months ended December 31, 1994 as compared to the twelve months
ended December 31, 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 3(b)) and the refinancing of 1090 Vermont Avenue (Note 3(h))

during the third and fourth quarter of 1993, respectively, and the receipt
in 1994 of operating distributions from South Tower and 1090 Vermont Avenue
and the Partnership's share of additional sale proceeds relating to Old
Orchard.

The decrease in mortgage interest, depreciation and property operating
expenses for the twelve months ended December 31, 1995 as compared to the
twelve months ended December 31, 1994 is due primarily to the sale of
Brittany Downs Apartments Phase I and II in January 1995 and the
disposition of Louisiana Tower in August 1995. The decrease in mortgage
interest, depreciation and property operating expenses for the twelve
months ended December 31, 1994 as compared to the twelve months ended
December 31, 1993 is primarily due to the disposition of the Scottsdale
Financial Centers I and II during 1993.

Amortization of deferred expenses increased for the twelve months
ended December 31, 1995 as compared to the twelve months ended December 31,
1994 primarily due to the amortization of costs associated with the
refinancing of Louis Joliet Mall in September 1995 (Note 4(b)(v)) and the
loan extension obtained at Mariners Pointe Apartments during the third
quarter of 1994 (Note 4(b)(iii)). Amortization of deferred expenses
increased for the twelve months ended December 31, 1994 as compared to the
twelve months ended December 31, 1993 primarily due to an increase in
leasing activity at certain of the Partnership's investment properties and
the amortization of the related lease commissions.

The increases in general and administrative expenses for the twelve
months ended December 31, 1995 as compared to the twelve months ended
December 31, 1994 are attributable primarily to an increase in reimbursable
costs to affiliates of the General Partners in 1995 and the recognition of
certain additional prior year reimbursable costs to such affiliates.
Reference is made to Note 9.

The increase in the Partnership's share of loss from operations of
unconsolidated ventures for the twelve months ended December 31, 1995 as
compared to the twelve months ended December 31, 1994 is primarily due to
reduced rental income at Piper Jaffray Tower due to the expansion of Piper
Jaffray, Inc. as discussed above, and reduced rental income at Wells Fargo-
IBM Tower due to the early move-out of two major law firm tenants during
1995 as discussed above. The decrease in the Partnership's share of loss
from unconsolidated ventures for the twelve months ended December 31, 1994
as compared to the twelve months ended December 31, 1993 is due primarily
to, (i) a $67,479,871 provision for value impairment recorded in 1993 for
Wells Fargo-IBM Tower due to the uncertainty of the venture's ability to
recover its net carrying value, (ii) a $192,627,560 provision for value
impairment recorded in 1993 for 2 Broadway Building due to the potential
sale of the property at a sales price significantly below its net carrying
value (iii) an $11,946,284 provision for doubtful accounts recorded by
JMB/NYC in 1993 due to the uncertainty of collectibility of amounts due
from the Olympia & York affiliates to the Three Joint Ventures, and (iv) an
$11,551,049 provision for doubtful accounts recorded by JMB/NYC in 1993 due
to the uncertainty of collectibility of amounts due from tenants at the
Three Joint Ventures' investment properties. The decrease in the
Partnership's share of loss from unconsolidated venture for the year ended
December 31, 1994 as compared to the year ended December 31, 1993 is
partially offset by the Partnership's share of a decrease in rental income
in 1994 at the 2 Broadway Building due to Bear Stearns vacating its space
(approximately 11% of the building's leasable space in April 1994 upon the
expiration of its lease.

The loss from sale or disposition of unconsolidated ventures and the
Partnership's share of gain from the extinguishment of indebtedness of
unconsolidated ventures for the twelve months ended December 31, 1995 as
compared to the twelve months ended December 31, 1994 is primarily due to
the disposition of the 2 Broadway Building and the related gain on the
extinguishment of indebtedness (Note 3(c)).

The decrease in the venture partner's share of venture's operations
for the twelve months ended December 31, 1994 and 1995 as compared to the
twelve months ended December 31, 1993 is due to the suspension of profit
and loss allocations to the venture partner of Mariners Pointe during the
third quarter of 1993 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.

The increase in the gain from the sale or disposition of investment
properties, gain on forgiveness of indebtedness and the prepayment penalty
for the twelve months ended December 31, 1995 as compared to the twelve
months ended December 31, 1994 is due to the sale of the Brittany Downs
Apartments Phase I and Phase II in January 1995 and the related gain
recognized on forgiveness of debt (Note 4(b)(i)), the refinancing of Louis
Joliet Mall in September 1995 and related prepayment penalty (Note 4(b)(v))
and the disposition of Louisiana Tower in August 1995 (Note 4(b)(ii)).

INFLATION

Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.

Inflation is not expected to significantly impact future operations
due to the expected sale or disposition of most of the investment
properties of the Partnership by the end of 1999. However, to the extent
that inflation in future periods may have an adverse impact on property
operating expenses, the effect would generally be offset by amounts
recovered from tenants as many of the long-term leases at the Partnership's
commercial properties have escalation clauses covering increases in the
cost of operating the properties as well as real estate taxes. Therefore,
the effect on operating earnings generally will depend upon the extent to
which the properties are occupied. In addition, substantially all of the
leases at the Partnership's shopping center investments contain provisions
which entitle the property owner to participate in gross receipts of
tenants above fixed minimum amounts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

INDEX

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

SCHEDULE
--------

Consolidated Real Estate and Accumulated DepreciationIII

SCHEDULES NOT FILED:

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

INDEX

Independent Auditors' Report
Combined Balance Sheets, December 31, 1995 and 1994
Combined Statements of Operations (Deficits), years ended December 31,
1995, 1994 and 1993
Combined Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1995, 1994 and 1993
Combined Statements of Cash Flows, years ended December 31, 1995,
1994 and 1993
Notes to Combined Financial Statements

SCHEDULE
--------

Combined Real Estate and Accumulated Depreciation III

SCHEDULES NOT FILED:

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

INDEPENDENT AUDITORS' REPORT

The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV:

We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XIV, a limited partnership, (the Partnership),
and its consolidated ventures as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we
also have audited the financial statement schedule as listed in the
accompanying index. These consolidated financial statements and the
financial statement schedule are the responsibility of the General Partners
of the Partnership. Our responsibility is to express an opinion on these
consolidated financial statements and the financial statement schedule
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
the Partnership and its consolidated venture at December 31, 1995 and 1994,
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

As discussed in Note 3(c) to the consolidated financial statements,
beginning July 1, 1993, the Partnership and its affiliated partners in
JMB/NYC Office Building Associates, L.P. (JMB/NYC) were in dispute with the
unaffiliated venture partners in the real estate ventures over the
calculation of the effective interest rate with reference to the first
mortgage loan, which covers the real estate owned through JMB/NYC's joint
ventures. The Partnership's share of disputed interest aggregated
$11,270,000, $12,218,000 and $4,771,000 for the years ended December 31,
1995, 1994 and 1993, respectively, and has not been included in the
Partnership's share of loss from operations of unconsolidated ventures in
the accompanying consolidated financial statements. In October 1994,
JMB/NYC entered into an agreement (the Agreement) with the unaffiliated
venture partners in the real estate ventures which, when effective, would
resolve this dispute by providing for interest at the same rate as the
first mortgage loan and would eliminate any funding obligations by JMB/NYC.

(Continued)

However, as discussed in Note 3(c), there are no assurances that the
Agreement will be finalized and become effective. The ultimate outcome of
this uncertainty cannot presently be determined. The consolidated
financial statements do not include any adjustments that might result from
this uncertainty.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 25, 1996

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

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1995 AND 1994

ASSETS
------
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . $ 16,210,170 18,419,385
Short-term investments (note 1). . . . . . . . . . . . . . -- 2,129,166
Restricted funds (note 4(b)(iv) and note 4(b)(ii)
for 1995 and 1994, respectively) . . . . . . . . . . . . 2,544,419 203,852
Interest, rents and other receivables (net of allowance
for doubtful accounts of $383,341 for 1995 and
$791,916 for 1994) . . . . . . . . . . . . . . . . . . . 310,325 621,516
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 101,000 141,055
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . 328,318 376,378
------------ ------------
Total current assets . . . . . . . . . . . . . . . 19,494,232 21,891,352
------------ ------------

Investment properties (notes 2, 3, 4 and 8) - Schedule III:
Land and leasehold interest. . . . . . . . . . . . . . . 6,982,049 10,788,810
Buildings and improvements . . . . . . . . . . . . . . . 105,859,744 150,959,418
------------ ------------
112,841,793 161,748,228
Less accumulated depreciation. . . . . . . . . . . . . . 36,814,248 49,431,004
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . 76,027,545 112,317,224
------------ ------------
Investment in unconsolidated ventures, at equity
(notes 1, 3 and 10). . . . . . . . . . . . . . . . . . . . 7,534,345 8,864,503
Deferred expenses (note 1) . . . . . . . . . . . . . . . . . 1,920,835 2,776,163
Accrued rents receivable (note 1). . . . . . . . . . . . . . 1,136,835 1,226,212
------------ ------------

$106,113,792 147,075,454
============ ============

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

CONSOLIDATED BALANCE SHEETS - CONTINUED

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

1995 1994
------------ ------------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . $ 60,042,105 94,880,985
Accounts payable . . . . . . . . . . . . . . . . . . . . . 1,187,171 4,048,221
Due to affiliates. . . . . . . . . . . . . . . . . . . . . 2,743,979 2,575,385
Accrued interest . . . . . . . . . . . . . . . . . . . . . 7,291,442 11,640,409
Accrued real estate taxes. . . . . . . . . . . . . . . . . 600,015 810,997
Unearned rents . . . . . . . . . . . . . . . . . . . . . . 304,724 625,079
------------ ------------
Total current liabilities. . . . . . . . . . . . . 72,169,436 114,581,076
Tenant security deposits . . . . . . . . . . . . . . . . . . 417,084 423,743
Investment in unconsolidated ventures, at equity
(notes 1, 3 and 10). . . . . . . . . . . . . . . . . . . . 184,813,778 167,376,693
Other liabilities. . . . . . . . . . . . . . . . . . . . . . -- 1,443,153
Long-term debt, less current portion (note 4). . . . . . . . 26,000,000 25,794,970
------------ ------------
Commitments and contingencies (notes 3, 4 and 8)
Total liabilities. . . . . . . . . . . . . . . . . 283,400,298 309,619,635
Partners' capital accounts (deficits) (notes 1 and 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . (21,087,495) (20,281,012)
Cumulative cash distributions. . . . . . . . . . . . . . (1,316,336) (1,235,319)
------------ ------------
(22,402,831) (21,515,331)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . . 351,746,836 351,746,836
Cumulative net losses. . . . . . . . . . . . . . . . . . (462,454,483) (456,620,305)
Cumulative cash distributions. . . . . . . . . . . . . . (44,176,028) (36,155,381)
------------ ------------
(154,883,675) (141,028,850)
------------ ------------
Total partners' capital accounts (deficits). . . . (177,286,506) (162,544,181)
------------ ------------
$106,113,792 147,075,454
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . $ 17,403,886 22,212,040 24,836,574
Interest income. . . . . . . . . . . . . . 1,138,093 985,270 353,270
Other income (note 3(g)) . . . . . . . . . 512,777 400,000 406,593
------------ ------------ ------------
19,054,756 23,597,310 25,596,437
------------ ------------ ------------
Expenses:
Mortgage and other interest. . . . . . . . 11,041,298 13,670,591 18,701,027
Depreciation . . . . . . . . . . . . . . . 4,155,575 4,795,412 5,701,647
Property operating expenses. . . . . . . . 9,861,497 11,299,218 12,113,541
Professional services. . . . . . . . . . . 731,793 779,846 676,490
Amortization of deferred expenses. . . . . 650,512 472,735 426,906
General and administrative . . . . . . . . 686,912 598,531 448,812
------------ ------------ ------------
27,127,587 31,616,333 38,068,423
------------ ------------ ------------
Operating loss . . . . . . . . . . . . . (8,072,831) (8,019,023) (12,471,986)
Partnership's share of loss from
operations of unconsolidated ventures
(notes 1 and 10) . . . . . . . . . . . . . (19,392,303) (16,851,858) (60,283,861)
Venture partners' share of ventures'
operations (note 3). . . . . . . . . . . . -- -- 22,472
------------ ------------ ------------
Net operating loss . . . . . . . . . . . (27,465,134) (24,870,881) (72,733,375)
Gain (loss) from sale or disposition of
unconsolidated ventures (notes 3(b) and
3(c)). . . . . . . . . . . . . . . . . . . (29,579,058) 1,702,082 7,898,727
Gain from sale or disposition of
investment properties (notes 4(b) and 6) . 14,692,172 -- 18,382,769
------------ ------------ ------------
Net loss before extraordinary item . . . (42,352,020) (23,168,799) (46,451,879)

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

1995 1994 1993
------------ ------------ ------------
Extraordinary items:
Gain on forgiveness of indebtedness
(note 4(b)(i)) . . . . . . . . . . . . . 1,650,638 -- --
Partnership's share of gain on
extinguishment of indebtedness of
unconsolidated venture (note 3(c)) . . . 31,264,814 -- --
Prepayment penalty on refinanced long-term
debt (note 4(b)(v)). . . . . . . . . . . (204,093) -- --
Provision for earthquake repairs (note 2). 3,000,000 (3,000,000) --
------------ ------------ ------------
Net loss . . . . . . . . . . . . . . . . $ (6,640,661) (26,168,799) (46,451,879)
============ ============ ============
Net earnings (loss) per limited
partnership interest (note 1):
Net operating loss . . . . . . . . . $ (65.74) (59.53) (177.06)
Gain (loss) from sale or disposition of
unconsolidated ventures. . . . . . (73.02) 4.20 19.50
Gain from sale or disposition of
investment properties. . . . . . . 36.27 -- 45.38
Extraordinary items. . . . . . . . . 87.94 (7.18) --
------------ ------------ ------------
Net loss . . . . . . . . . . . . . . $ (14.55) (62.51) (112.18)
============ ============ ============

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

<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET OF
CONTRI- NET CASH OFFERING NET CASH
BUTIONS LOSS DISTRIBUTIONS TOTAL COSTS LOSS DISTRIBUTIONS TOTAL
------- ----------------------- ----------- --------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficits)
Decem-
ber 31,
1992. . . .$1,000(17,723,177)(1,235,319) (18,957,496)351,746,836 (386,557,462)(36,155,381)(70,966,007)

Net loss . . -- (1,460,021) -- (1,460,021) -- (44,991,858) -- (44,991,858)
----------------- ---------- ----------- ----------------------- -----------------------
Balance
(deficits)
Decem-
ber 31,
1993. . . .1,000(19,183,198) (1,235,319)(20,417,517)351,746,836(431,549,320)(36,155,381)(115,957,865)

Net loss . . -- (1,097,814) -- (1,097,814) -- (25,070,985) -- (25,070,985)
----------------- ---------- ----------- ----------------------- -----------------------
Balance
(deficits)
Decem-
ber 31,
1994. . . .1,000(20,281,012) (1,235,319)(21,515,331)351,746,836(456,620,305)(36,155,381)(141,028,850)

Cash dis-
tributions. -- -- (81,017) (81,017) -- -- (8,020,647)(8,020,647)
Net loss . . -- (806,483) -- (806,483) -- (5,834,178) -- (5,834,178)
----------------- ---------- ----------- ----------------------- -----------------------
Balance
(deficits)
Decem-
ber 31,
1995. . . .$1,000(21,087,495)(1,316,336)(22,402,831)351,746,836(462,454,483)(44,176,028)(154,883,675)
================= ========== =========== ======================= =======================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . $ (6,640,661) (26,168,799) (46,451,879)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . 4,155,575 4,795,412 5,701,647
Amortization of deferred expenses. . . . 650,512 472,735 426,906
Amortization of discount on long-term debt 257,588 540,492 502,792
Partnership's share of loss from operations
of unconsolidated ventures . . . . . . 19,392,303 16,851,858 60,283,861
Venture partner's share of venture operations -- -- (22,472)
Gain (loss) on sale or dispositions of
interests in unconsolidated ventures
(notes 3(b) and 3(c)) . . . . . . . . . 29,579,058 (1,702,082) (7,898,727)
Gain on sale or disposition of investment
property (notes 4(b) and 6). . . . . . (14,692,172) -- (18,382,769)
Extraordinary items (note 2) . . . . . . (35,711,359) 3,000,000 --
Changes in:
Restricted funds . . . . . . . . . . . . . (2,340,567) 1,699,657 640,800
Interest, rents and other receivables. . . 239,454 25,989 2,436,524
Prepaid expenses . . . . . . . . . . . . . 9,665 17,052 20,083
Escrow deposits. . . . . . . . . . . . . . (315,817) 164,416 180,009
Accrued rents receivable . . . . . . . . . 89,377 277,659 471,522
Accounts payable . . . . . . . . . . . . . 460,368 212,459 95,585
Due to affiliates. . . . . . . . . . . . . 168,594 127,831 47,554
Accrued interest . . . . . . . . . . . . . 6,213,384 (728,768) 1,356,214
Deferred interest. . . . . . . . . . . . . 1,200,233 2,648,987 1,512,583
Accrued real estate taxes. . . . . . . . . (42,682) 6,237 (9,271)
Unearned rents . . . . . . . . . . . . . . (302,569) (175,116) (476,759)
Tenant security deposits . . . . . . . . . 41,497 131,734 (10,187)
Other liabilities. . . . . . . . . . . . . (488,549) 30,316 (13,691)
------------ ----------- -----------
Net cash provided by
operating activities . . . . . . . 1,923,232 2,228,069 410,325
------------ ----------- -----------

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases)
of short-term investments . . . . . . . . . 2,129,166 14,061,209 (15,847,146)
Additions to investment properties . . . . . (1,487,605) (3,402,832) (525,771)
Partnership's distributions from
unconsolidated ventures. . . . . . . . . . 1,576,046 5,925,748 18,332,690
Cash proceeds from sale of investment
properties . . . . . . . . . . . . . . . . 2,795,768 -- --
Partnership's contributions to
unconsolidated ventures. . . . . . . . . . (515,350) (1,760,411) (1,737,231)
Payment of deferred expenses . . . . . . . . (330,216) (734,434) (12,236)
------------ ----------- -----------
Net cash provided by
investing activities . . . . . . . 4,167,809 14,089,280 210,306
------------ ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . (376,203) (728,949) (652,443)
Proceeds received on refinancing of
long-term debt . . . . . . . . . . . . . . 381,704 -- --
Prepayment penalty on long-term debt . . . . (204,093) -- --
Distributions to general partners. . . . . . (81,017) -- --
Distributions to limited partners. . . . . . (8,020,647) -- --
------------ ----------- -----------
Net cash used in financing
activities . . . . . . . . . . . . (8,300,256) (728,949) (652,443)
------------ ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . (2,209,215) 15,588,400 (31,812)

Cash and cash equivalents,
beginning of year. . . . . . . . . 18,419,385 2,830,985 2,862,797
------------ ----------- -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . $ 16,210,170 18,419,385 2,830,985
============ =========== ===========

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
----------- ----------- -----------
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . $ 3,574,186 11,209,880 15,329,438
============ =========== ===========
Sale of investment properties:
Total sale proceeds, net of selling expenses$ 17,925,768 -- --
Principal balances due on mortgages payable (15,130,000) -- --
------------ ----------- -----------
Cash proceeds from sale of investment
property, net of selling expenses. . . . $ 2,795,768 -- --
============ =========== ===========
Cash financing activities:
Gross proceeds from refinancing of
long-term debt . . . . . . . . . . . . $ 26,000,000 -- --
Principal and interest paid at closing . (24,985,162) -- --
Prepayment penalty . . . . . . . . . . . (204,093) -- --
Payment of deferred mortgage expense . . (429,041) -- --
------------ ----------- -----------
Proceeds received on refinancing
of long-term debt. . . . . . . . $ 381,704 -- --
============ =========== ===========

Non-cash investing and financing activities:
Extraordinary item due to forgive-
ness of indebtedness secured by
Brittany Downs Apartments - Phase II$ 1,650,638 -- --
============ =========== ===========
Gain recognized on disposition of investment
properties (notes 4(b) and 6). . . . . $ 14,692,172 -- 18,382,769
Contributions payable to unconsolidated
venture (note 3(c)). . . . . . . . . . -- -- 2,400,000
============ =========== ===========

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

(1) OPERATIONS AND BASIS OF ACCOUNTING

The Partnership holds (either directly or through joint ventures) an
equity investment portfolio of United States real estate. Business
activities consist of rentals to a wide variety of commercial and retail
companies, and the ultimate sale or disposition of such real estate. The
Partnership currently expects to conduct an orderly liquidation of most of
its remaining investment portfolio and wind up its affairs as quickly as
practicable. As a result, the Partnership currently expects that it will
sell or dispose of its remaining investment properties, with the possible
exception of its interests in the 237 Park Avenue and 1290 Avenue of the
Americas properties, not later than December 31, 1999 barring any unforseen
economic developments.

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 the 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 3(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").

The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to present the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of the ventures as described
above. Such GAAP and consolidation adjustments are not recorded on the
records of the Partnership. The net effect of these items for the years
ended December 31, 1995 and 1994 is summarized as follows:

1995 1994
-------------------------------------------------------------
TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>

Total assets . . . . . . . . . $106,113,792 97,367,891 147,075,454 139,188,017

Partners' capital accounts
(deficits):
General partners . . . . . (22,402,831) (22,727,866) (21,515,331) (22,036,030)
Limited partners . . . . . (154,883,675) (176,962,173) (141,028,850) (143,776,876)

Net loss:
General partners . . . . . (806,483) (610,819) (1,097,814) (487,604)
Limited partners . . . . . (5,834,178) (25,164,650) (25,070,985) (12,025,837)

Net loss per limited
partnership interest . . . . (14.55) (62.75) (62.51) (29.99)
=========== =========== =========== =============

</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 to the Limited Partners for
financial reporting and Federal income tax purposes. Reference is made to
note 5 for a discussion of the allocations of profits and losses.

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

Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from 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 ($16,040,895 and $18,160,234 at December 31, 1995 and 1994,
respectively) as cash equivalents with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.

Deferred expenses consist primarily of mortgage fees which are
amortized on a straight-line basis over the terms of the related mortgage
notes and deferred leasing commissions and concessions which are amortized
over the lives of the related leases.

Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
rental income for the full period of occupancy on a straight-line basis.
Such amounts are reflected in accrued rents receivable in the accompanying
balance sheets.

Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments," requires all
entities to disclose the SFAS 107 value of all financial assets and
liabilities for which it is practicable to estimate. Value is defined in
the Statement as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes the carrying amount of its
current assets and liabilities (excluding current portion of long-term
debt) approximates SFAS 107 value due to the relatively short maturity of
these instruments. There is no quoted market value available for any of
the Partnership's other financial instruments. As the debt secured by the
Wilshire Bundy Plaza and the Partnership's interest in the Wells Fargo
Center South Tower office building have been reclassified by the
Partnership as current liabilities at December 31, 1995 as a result of
defaults (see note 4) and because resolution of such defaults are
uncertain, and because the debt secured by the Mariner's Pointe apartments
is scheduled to mature in October 1996, the Partnership considers the
disclosure of the SFAS 107 value of such debt to be impracticable. The
remaining debt and related accrued interest secured by the Louis Joliet
Mall, with a carrying balance of $26,000,000, has been calculated to have
an SFAS 107 value of $26,461,599 by discounting the scheduled loan payments
to maturity. Due to restrictions on transferability and prepayment and the
inability to obtain comparable financing due to current levels of debt,
previously modified debt terms or other property specific competitive
conditions, the Partnership would be unable to refinance these properties
to obtain such calculated debt amounts reported (see note 4). The
Partnership has no other significant financial instruments.

No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to tax authorities amounts
representing withholding from distributions paid to partners.

(2) INVESTMENT PROPERTIES

(a) General

The Partnership has acquired, either directly or through joint
ventures, two apartment complexes, fourteen office buildings and three
shopping centers. Ten properties have been sold or disposed of by the
Partnership as of December 31, 1995. Reference is made to note 4(b) for a
discussion of the Partnership's sale of Brittany Downs Apartments, Phase I
and II on January 10, 1995 and the foreclosure of Louisiana Tower on August
30, 1995. All of the properties owned at December 31, 1995 were operating.

The cost of the investment properties represents the total cost to the
Partnership or its ventures plus miscellaneous acquisition costs and net of
value impairment adjustments.

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

The investment properties or the Partnership's interest in
unconsolidated ventures are pledged as security for the long-term debt, for
which there is generally no recourse to the Partnership. The long-term
debt represents senior mortgage loans.

Maintenance and repair expenses are charged to operations as incurred.

Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives.

The Wilshire Bundy Plaza incurred minimal damage as a result of the
earthquake in southern California on January 17, 1994. On February 22,
1995, the City Council of the City of Los Angeles passed an ordinance
relating to the repair of welded steel moment frame buildings in an area of
the city that includes Wilshire Bundy Plaza. A complete determination of
the requirements to comply with the ordinance was unable to be made at the
time of the issuance of the Partnership's 1994 consolidated financial
statements. It was estimated at that time that the cost of compliance with
the ordinance could be approximately $3 million (none of which had been
budgeted). Accordingly, the 1994 consolidated financial statements
reflected an extraordinary item of $3 million.

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

situations, such estimated fair value could be less than the existing non-
recourse debt which is secured by the property. There would be no
assurance that any estimated fair value of these assets would ultimately be
obtained by the Partnership in any future sale or disposition transaction.

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

The Partnership will adopt SFAS 121 as required in the first quarter
of 1996. Provisions for value impairment, including the Partnership's
share of such unconsolidated venture provisions, are currently estimated to
total approximately $16,000,000 in the first period of implementation of
SFAS 121. In addition, upon the disposition of an impaired property, the
Partnership would generally recognize more net gain for financial reporting
purposes under SFAS 121 than it would have under the Partnership's current
impairment policy, without regard to the amount, if any, of cash proceeds
received by the Partnership in connection with the disposition. Although
implementation of this new accounting statement could significantly impact
the Partnership's reported earnings, there would be no impact on cash
flows. Further, any such impairment loss would not be recognized for
Federal income tax purposes.

(3) VENTURE AGREEMENTS

(a) General

The Partnership at December 31, 1995 is a party to seven operating
joint venture agreements. Pursuant to such agreements, the Partnership
made initial capital contributions of approximately $192,617,000 (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. Reference is made to
note 3(c) regarding the sale of the 2 Broadway office building in September
1995. The venture properties have been financed under various long-term
debt arrangements as described below and in note 4.

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, as described below.

At sale, OOUV and an unaffiliated third party contributed the Old
Orchard shopping center and $60,366,572 in cash (before closing costs and
prorations), respectively, to a newly formed limited partnership.
Immediately at closing, the new partnership distributed to OOUV $60,366,572
in cash (before closing costs and prorations) in redemption of
approximately 89.5833% of OOUV's interest in the new partnership. OOUV,
the limited partner, has retained a 10.4167% interest in the new limited
partnership after such redemption. OOUV was also entitled to receive up to
an additional $4,300,000 based upon certain events (as defined), all of
which was earned and was subsequently received in 1994. Upon receipt, OOUV
distributed the $4,300,000 to the respective partners based upon their pre-
contribution percentage interests. OOUV still may earn up to an additional
$3,400,000 based upon certain future earnings of the property (as defined),
none of which has been earned or received as of the date of this report.

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

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

OOUV and Orchard have also entered into a contribution agreement
whereby they have agreed to share future gains and losses which may arise
with respect to potential revenues and liabilities from events which
predated the contribution of the property to the new venture (including,
without limitation the distribution to OOUV of $4,300,000 and the potential
future distribution of $3,400,000 as described above) in accordance with
their pre-contribution percentage interests. In September 1994, Orchard
received its share of the contingent $4,300,000, as discussed above.
Orchard distributed to each of the respective partners their share
($1,702,082) of such amount. The Partnership recognized a gain of
$1,702,082 for financial reporting purposes and Federal income tax purposes
in 1994. Upon receipt of all or a portion of the remaining contingent
amounts, Orchard and the Partnership would expect to recognize additional
gain for Federal income tax and financial reporting purposes in the year of
such receipts. However, there can be no assurance that any portion of the
remaining contingent amount will be received.

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

JMB/NYC is a limited partnership among Carlyle-XIV Associates, L.P.,
Property Partners, L.P. and Carlyle-XIII Associates, L.P. as limited
partners and Carlyle Managers, Inc. as the sole general partner. The
Partnership is a 40% shareholder of Carlyle Managers, Inc. and related to
this investment, 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 consolidated financial statements).
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 is a 40%
shareholder. 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 consolidated 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%.

The terms of the JMB/NYC venture agreement generally provide that
JMB/NYC's share of the Three Joint Ventures' annual cash flow, sale or
refinancing proceeds, operating and capital costs (to the extent not
covered by cash flow from a property) and profit and loss will be
distributed to, contributed by or allocated to the Partnership in
proportion to its (indirect) share of capital contributions to JMB/NYC. As
discussed below, an agreement (the "Agreement") with the Olympia & York
affiliates, when effective, would provide first for allocation of cash flow
to the Olympia & York affiliates to the level of certain Preference
Amounts, as defined. The Agreement would also, among other things, provide
for no further allocation from the Joint Ventures of depreciation,
amortization or operating losses and the allocation of operating income
from the Joint Ventures only to the extent of cash flow distributions to
JMB/NYC.

In October 1994, JMB/NYC entered into the Agreement with the Olympia &
York affiliates to resolve certain disputes which are more fully discussed
below. Certain provisions of the Agreement became immediately effective
and, therefore, binding upon the partners, while others become effective
either upon certain conditions being met or upon execution and delivery of
final documentation. In general, the parties agreed to: (i) amend the
Three Joint Ventures' agreements to eliminate any funding obligation by
JMB/NYC for any purpose in return for JMB/NYC relinquishing its rights to
approve almost all property management, leasing, sale (certain rights to
control a sale were to be retained by JMB/NYC through March 31, 2001) or
refinancing decisions and the establishment of a new preferential
distribution level payable to the Olympia & York affiliates from all future
sources of cash, (ii) sell the 2 Broadway Building, and (iii) restructure
the first mortgage loan. In anticipation of this sale and in accordance
with the Agreement, the unpaid first mortgage indebtedness previously
allocated to 2 Broadway was allocated to 237 Park Avenue and 1290 Avenue of
the Americas during 1994. As part of the Agreement, in order to facilitate
the restructuring, JMB/NYC and the Olympia & York affiliates agreed to file

for each of the Three Joint Ventures a pre-arranged bankruptcy plan for
reorganization under Chapter 11 of the Bankruptcy Code. In June 1995, the
2 Broadway Joint Ventures filed their pre-arranged bankruptcy plans for
reorganization, and in August 1995, the bankruptcy court entered an order
confirming their plans of reorganization. In September 1995, the sale of
the 2 Broadway Building was completed. Bankruptcy filings for the other
Joint Ventures are expected to occur in 1996. JMB/NYC is seeking to
incorporate much of the substance of the transactions proposed in the
Agreement in the proposed reorganization plans for the other Joint
Ventures, although various specifics of the proposed transactions are
expected to be changed and there is no assurance that such proposed
transactions would be substantially incorporated. In particular, the
restructuring of their ownership interests in the 237 Park and the 1290
Avenue of the Americas properties by the Olympia & York affiliates and
possible reorganization of the 237 Park Avenue and 1290 ventures discussed
below is expected to result in certain changes to the transactions proposed
in the Agreement, although the extent of such changes has not been
determined. Consequently, there are no assurances that the substance of
the transactions contemplated in the Agreement will be finalized. In any
event, there would need to be a significant improvement in current market
and property operating conditions resulting in a significant increase in
the value of the 237 Park Avenue and 1290 Avenue of the Americas properties
before JMB/NYC would receive any significant share of future net proceeds
from operations, sale or refinancing. The contemplated restructuring of
the Joint Ventures' agreements would include the elimination of any funding
obligation by JMB/NYC for any purposes. Consequently, in such event,
JMB/NYC would recognize, for financial reporting purposes, a gain to the
extent of the then current deficit investment balance (which amount was
$257,188,201 as of December 31, 1995). In the event that one or more of
the transactions proposed in the Agreement are not consummated, JMB/NYC and
the Partnership may, among other things, recognize substantial gain for
Federal income tax purposes with no corresponding distributable proceeds.

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

JMB/NYC purchased a 46.5% interest in each of the Three Joint Ventures
for approximately $173,600,000, subject to a long-term first mortgage loan
which has been allocated between the individual Joint Ventures. A portion
of the purchase price is represented by four 12-3/4% promissory notes (the
"Purchase Notes") which have an aggregate outstanding principal balance of
$33,272,592 and $35,158,225 at December 31, 1995 and 1994, respectively.
Such Purchase Notes, which contain cross-default provisions, and are non-
recourse to JMB/NYC, are secured by JMB/NYC's interests in the Three Joint
Ventures, and such Purchase Note relating to the purchase of the interest
in the ventures formerly owning the 2 Broadway Building is additionally
secured by JMB/NYC's interest in $19,000,000 of distributable sale proceeds
from the other two Joint Ventures. A default under the Purchase Notes
would include, among other things, a failure by JMB/NYC to repay a Purchase
Note upon acceleration of the maturity, and could cause an immediate
acceleration of the Purchase Notes for the other Joint Ventures. The
Purchase Notes provide for monthly interest only payments on the principal
and accrued interest based upon the level of distributions payable to
JMB/NYC discussed below. If the distributions paid or payable to JMB/NYC
are insufficient to cover monthly interest on the Purchase Notes, then the
shortfall interest (as defined) accrues and compounds monthly. Interest
accruals total $47,164,545 at December 31, 1995 as no payments were made on
any of the Purchase Notes during 1995 and 1994. All of the principal and
accrued interest on the Purchase Notes is due in 1999 or, if earlier, on
the sale or refinancing of the related property. The Agreement with the
Olympia & York affiliates, when effective, would provide for an extension
of the due dates on the Purchase Notes. It further provides for the
cancellation of indebtedness under the 2 Broadway Purchase Notes in excess
of $19 million. As discussed more fully below, in September 1995, the 2
Broadway Joint Ventures concluded the sale of the 2 Broadway Building at a
price which did not provide any proceeds to JMB/NYC to repay the related
Purchase Notes. Consequently, principal and accrued interest on the 2
Broadway Purchase Notes in the amount of $62,529,627 was discharged and
$19,000,000 of the 2 Broadway Purchase Notes has been reallocated and is
payable out of JMB/NYC's share of distributable cash flow or sale proceeds,
if any, from the other two Joint Ventures.

Subsequent to 1991, pursuant to the agreement (the "1993 Agreement")
reached in March 1993 between JMB/NYC and the Olympia & York affiliates,
for the period January 1, 1992 to June 30, 1993, as discussed below, gross
income was allocable to the Olympia & York affiliates to the extent of the
distributions of excess monthly cash flow received for the period with the
balance of operating profits or losses allocated 46.5% to JMB/NYC and 53.5%
to the Olympia & York affiliates. Beginning July 1, 1993, operating
profits or losses, in general, are allocated 46.5% to JMB/NYC and 53.5% to
the Olympia & York affiliates. The Agreement with the Olympia & York
affiliates, when effective, would provide for no further allocation to
JMB/NYC of depreciation, amortization or operating losses and the
allocation of operating income only to the extent of cash flow
distributions, if any, during the remaining term of the Joint Ventures.
There was no allocation of depreciation, amortization or operating income
or losses to JMB/NYC for Federal income tax purposes in 1994 or 1995.
However, JMB/NYC did recognize a loss of $55,357,404 on the sale (as
described below) of the 2 Broadway Building for Federal income tax purposes
in 1995.

Under the terms of the Three Joint Ventures' agreements, the Olympia &
York affiliates were obligated to make capital contributions to the Three
Joint Ventures to pay any operating deficits (as defined) and to pay a
preferred return through December 31, 1991 to JMB/NYC. JMB/NYC did not
receive its preferred return for the fourth quarter 1991 and the Olympia &
York affiliates applied JMB/NYC's preferred return to 1992 disputed
interest calculations (see below). Subsequent to 1991, capital
contributions to pay for property operating deficits and other requirements
that may be called for under the Three Joint Ventures' agreements are
required to be shared 46.5% by JMB/NYC and 53.5% by the Olympia & York
affiliates. The Olympia & York affiliates have alleged that pursuant to
the Three Joint Ventures' agreements between the Olympia & York affiliates
and JMB/NYC, the effective rate of interest with reference to the first
mortgage loan for the purpose of calculating JMB/NYC's share of operating

cash flow or deficits after 1991 is as though the rate were fixed at 12-
3/4% per annum (versus the variable short-term U.S. Treasury obligation
rate plus 1-3/4% per annum (with a minimum 7%) payable on the first
mortgage loan). JMB/NYC believes that, commencing in 1992, the Three Joint
Ventures' agreements require an effective rate of interest with reference
to the first mortgage loan, based upon each Joint Venture's allocable share
of the loan, to be 1-3/4% over the variable short-term U.S. Treasury
obligation rate plus any excess monthly operating cash flow after capital
costs of each of the Three Joint Ventures, such sum not to be less than a
7% nor exceed a 12-3/4% per annum interest rate, rather than the 12-3/4%
per annum fixed rate that applied prior to 1992. The Olympia & York
affiliates have disputed this calculation of interest expense and contended
that the 12-3/4% per annum fixed rate applied after 1991.

The 1993 Agreement rescinded the default notices previously received
by JMB/NYC and eliminated the alleged operating deficit funding obligation
of JMB/NYC for the period January 1, 1992 through June 30, 1993. Pursuant
to the 1993 Agreement, during this period, JMB/NYC recorded interest
expense at the interest rate on the underlying first mortgage loan. Under
the terms of the 1993 Agreement, during this period, the amount of capital
contributions that the Olympia & York affiliates and JMB/NYC would have
been required to make to the Three Joint Ventures, if the first mortgage
loan bore interest at a rate of 12-3/4% per annum (the Olympia & York
affiliates' interpretation), became a priority distribution level to the
Olympia & York affiliates from the Three Joint Ventures' annual cash flow
or net sale or refinancing proceeds. The 1993 Agreement also entitled the
Olympia & York affiliates to a 7% per annum return on such unpaid priority
distribution level. The 1993 Agreement also provided that, except as
specifically agreed otherwise, the parties each reserved all rights and
claims with respect to each of the Three Joint Ventures and each of the
partners thereof, including, without limitation, the interpretation of or
rights under each of the joint venture partnership agreements for the Three
Joint Ventures. As a result of the above noted agreement with the Olympia
& York affiliates, the cumulative priority distribution level payable to
the Olympia & York affiliates at December 31, 1995 was approximately
$55,000,000. The term of the 1993 Agreement expired on June 30, 1993.
Therefore, effective July 1, 1993, JMB/NYC is recording interest expense at
1-3/4% over the variable short-term U.S. Treasury obligation rate plus any
excess operating cash flow after capital costs of the Three Joint Ventures,
such sum not to be less than a 7% nor exceed a 12-3/4% per annum interest
rate. The Olympia & York affiliates continued to dispute this calculation
and for the period commencing July 1, 1993 contend that a 12-3/4% per annum
fixed rate applies. Based upon this interpretation, interest expense for
the Three Joint Ventures for the twelve months ended December 31, 1995 was
$115,730,680. Based upon the amount of interest determined by JMB/NYC for
the twelve months ended December 31, 1995, interest expense for the Three
Joint Ventures was $67,258,773. The cumulative effect of recording the
interest expense calculated by JMB/NYC is to reduce the losses of the Three
Joint Ventures by $121,543,336 (of which the Partnership's share is
$28,258,826) for the period of July 1, 1993 through December 31, 1995 and
to correspondingly reduce what would otherwise be JMB/NYC's funding
obligation with respect to the Three Joint Ventures.

Certain provisions of the Agreement with the Olympia & York
affiliates, when effective, would resolve the funding obligation dispute.
In general, the priority distribution level created in the 1993 Agreement
and JMB/NYC's alleged funding obligation subsequent to June 30, 1993 would
be eliminated in return for the creation of a new preferential distribution
level to the Olympia & York affiliates payable from all sources of
available cash ("Preference Amount"). Such Preference Amount would be
$81,500,000 for 1290 Avenue of the Americas and $38,500,000 for 237 Park
Avenue and both amounts would bear interest at 9% per annum, compounded
monthly, retroactively effective from May 1, 1994. Net proceeds available,
if any, after repayment of the Preference Amounts plus interest, would then
be distributable in accordance with the original terms of the Three Joint
Ventures' Agreements which provide for, in general, that net proceeds from
all sources will be distributable 46.5% to JMB/NYC and 53.5% to the Olympia
& York affiliates, subject to, as described above, repayment by JMB/NYC of
its remaining Purchase Notes.

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

The Partnership's potential liability for such contribution, if any,
would be its share, if any, of the liability of JMB/NYC and would depend
upon, among other things, the amounts of JMB/NYC's and the Olympia & York
affiliates' respective capital accounts at the time of a sale or other
disposition of Joint Venture property, the amount of JMB/NYC's share of the
taxable gain attributable to such sale or other disposition of the Joint
Venture property and the timing of the dissolution and liquidation of the
Joint Venture. Although the amount of such liability could be material,
the Limited Partners of the Partnership would not be required to make any
additional contributions of capital to satisfy such obligation, if any, of
the Partnership. The Partnership's deficit investment balance in JMB/NYC as
reflected in the balance sheet (aggregating $170,069,197 at December 31,
1995) does not necessarily represent the amount, if any, the Partnership
would be required to pay to satisfy a deficit capital account restoration
obligation. Under the Agreement with the Olympia & York affiliates,
subject to the satisfaction of certain conditions, any deficit capital
account funding obligation of JMB/NYC to the Joint Ventures would be
eliminated.

In September 1995, the 2 Broadway Joint Ventures concluded the sale of
2 Broadway with a third party for a net purchase price, after commissions
and certain other payments but before prorations, of approximately
$18,300,000. As a result of this sale, the Partnership recognized, for
financial reporting purposes, its share of the loss on the sale of
investment property of $29,579,058 (which includes the Partnership's share
($20,226,108) of the write-off of JMB/NYC's remaining investment in the 2
Broadway Joint Ventures), offset by a gain of $31,264,814 which represents
the Partnership's share of JMB/NYC's related gain on the forgiveness of
indebtedness (as more fully discussed above). Such sale did not result in
the dissolution and termination of the 2 Broadway Building Joint Ventures
for the purposes of the deficit capital account balance computation as
described above. Due to the anticipated sale of the 2 Broadway building at
a sales price significantly below its original carrying value, net of
depreciation, a provision for value impairment was recorded at December 31,
1993 for financial reporting purposes for $192,627,560 which was allocated
$136,534,366 and $56,093,194 to the Olympia & York affiliates and to
JMB/NYC, respectively. Such provision was allocated to the partners to
reflect their respective ownership percentages before the effect of the
non-recourse Purchase Notes including accrued interest.

The 237 Park Avenue and 1290 Avenue of the Americas office buildings
serve as collateral for the first mortgage loan. Prior to 1996, the lender
asserted various defaults under the loan. Commencing in January 1996, the
Joint Ventures ceased making monthly debt service payments on the first
mortgage loan. A restructuring of the loan now appears likely to depend on
the restructuring of the ownership interest of various affiliates of O&Y in
a number of office buildings and the reorganization of the 237 Park Avenue
and 1290 ventures, as discussed above. The Olympia & York affiliates
reached an agreement with the first mortgage lender whereby effective
January 1, 1993, the Olympia & York affiliates are limited to taking
distributions of $250,000 on a monthly basis from the Three Joint Ventures

and reserving the remaining excess cash flow in a separate interest-bearing
account to be used exclusively to meet the obligations of the Three Joint
Ventures as approved by the lender. Interest on the first mortgage loan is
currently calculated based upon a variable rate related to the short-term
U.S. Treasury obligation rate, subject to a minimum rate on the loan of 7%
per annum.

Should a restructuring of the Joint Ventures providing for the
elimination of JMB/NYC's funding obligations in accordance with the
Agreement not be finalized, JMB/NYC may decide not to commit any additional
amounts to the Three Joint Ventures. In addition, under these
circumstances, it is possible that JMB/NYC may determine to litigate these
issues with the Olympia & York affiliates. A decision not to commit any
additional funds or an adverse litigation result could, under certain
circumstances, result in the loss of JMB/NYC's interest in the related
Joint Ventures. The loss of an interest in a particular Joint Venture
could, under certain circumstances, permit an acceleration of the maturity
of the related Purchase Note (each Purchase Note is secured by JMB/NYC's
interest in the related Joint Venture). Under certain circumstances, the
failure to repay a Purchase Note could constitute a default under, and
permit an immediate acceleration of, the maturity of the Purchase Notes for
the other Joint Ventures. In such event, JMB/NYC may decide not to repay,
or may not have sufficient funds to repay, any of the Purchase Notes and
accrued interest thereon. This could result in JMB/NYC no longer having an
interest in any of the related Joint Ventures, which would result in
substantial net gain for financial reporting and Federal income tax
purposes to JMB/NYC (and through JMB/NYC and the Partnership, to the
Limited Partners) with no distributable proceeds. In such event, JMB/NYC
would then proceed to terminate its affairs.

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

(d) JMB/Piper

In 1984, the Partnership acquired, through JMB/Piper, with C-XV, an
interest in a 42-story office building known as the Piper Jaffray Tower in
Minneapolis, Minnesota with the developer and certain limited partners. In
April 1986, JMB/Piper II, a joint venture partnership between the
Partnership and C-XV, acquired the developer's interest in the OB Joint
Venture. As of December 31, 1995, JMB/Piper holds its interest in the
property through three existing joint ventures (OB Joint Venture, OB Joint
Venture II and 222 South Ninth Street Limited Partnership, together
"Piper"). The terms of the JMB/Piper and JMB/Piper II venture agreements
generally provide that JMB/Piper's and JMB Piper II's respective shares of
Piper's annual cash flow, sale or refinancing proceeds and profits and
losses will be distributed or allocated to the Partnership in proportion to
its 50% share of capital contributions.

JMB/Piper invested approximately $19,915,000 for its 71% interest in
Piper. JMB/Piper is obligated to loan amounts to Piper to fund operating
deficits (as defined). The loans bear interest at a rate of not more than
14.36% per annum, provide for payments of interest only from net cash flow,
if any, and are repayable from net sale or refinancing proceeds. Such
loans and accrued interest were approximately $84,489,000 and $72,272,000
at December 31, 1995 and 1994, respectively.

Under the terms of a modification agreement with the lender, in
addition to fixed interest on the mortgage notes secured by the Piper
Jaffray Tower, contingent interest is payable in annual installments on
April 1 computed at 50% of gross receipts, as defined, for each fiscal year
in excess of $15,200,000. No such contingent interest was due for 1993,
1994 or 1995. In addition, to the extent the investment property generates

cash flow after payment of the fixed interest on the mortgage, contingent
interest, if any, 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 payments remitted to
the lender for 1993 and 1994 totalled $1,390,910 and $353,251,
respectively. During 1995, excess cash flow generated under this agreement
was $464,178 which is expected to be remitted to the lender during the
second quarter of 1996. On a monthly basis, the venture deposits the
property management fee into an escrow account to be used (including
interest earned thereon) for future leasing costs to the extent cash flow
is not sufficient to cover such items. To date, no escrow funds have been
required to be used for leasing costs. The manager of the property (which
was an affiliate of the Corporate General Partner through November 1994)
has agreed to defer receipt of its management fee until a later date. As
of December 31, 1995, the manager has deferred approximately $2,538,000
($1,839,000 of which represents deferred fees due to affiliates through
November 1994 (note 9)) of management fees. If upon sale or refinancing as
discussed below, there are funds remaining in this escrow after payment of
amounts owed to the lender, such funds will be paid to the manager to the
extent of its deferred and unpaid management fees. Any remaining unpaid
management fees would be payable out of the venture's share of sale or
refinancing proceeds. Additionally, pursuant to the terms of the loan
modification, effective January 1992, OB Joint Venture, as majority owner
of the underlying land, began deferring receipt of its share of land rent.
These deferrals will be payable from potential net sale or refinancing
proceeds, if any.

Furthermore, pursuant to the loan modification, the venture can prepay
the mortgage note beginning February 1, 1996, subject to a prepayment fee.
The prepayment fee is calculated pursuant to a formula to provide the
lender a minimum return of 13.59% per annum (if the loan is held to
maturity) plus a participation in excess sale and refinancing proceeds, if
any. For financial reporting purposes, interest expense has been accrued
at a rate of 13.59% per annum. In order for the venture 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.

The Piper venture agreements provide that any net cash flow, as
defined, will be used to pay principal and interest on the operating
deficit loans (as described above) with any excess generally distributable
71% to JMB/Piper and 29% to the venture partners, subject to certain
adjustments (as defined). In general, operating profits or losses are
allocated in relation to the economic interests of the joint venture
partners. Accordingly, operating profits (excluding depreciation and
amortization) were allocated 71% to the JMB/Piper and 29% to the venture
partners during 1995, 1994 and 1993, and 100% to the JMB/Piper during 1992.

The Piper venture agreements further provide that, in general, upon
any sale or refinancing of the property, the principal and any accrued
interest outstanding on any operating deficit loans will be repaid. Any
remaining proceeds will be distributable 71% to JMB/Piper and 29% to the
joint venture partners, subject to certain adjustments, as defined.

During the fourth quarter 1991, Larkin, Hoffman, Daly & Lindgren, Ltd.
(23,344 square feet) approached the joint venture indicating it was
experiencing financial difficulties and desired to give back a portion or
all of its leased space. Larkin's lease was scheduled to expire in January
2005 and provided for annual rental payments which were significantly
higher than current market rental rates. Larkin was also a limited partner
with partial interests in the building and the land under the building. On
January 15, 1992, the joint venture agreed to terminate Larkin's lease in
return for its partial interest in the land under the building and a
$1,011,798 note payable to the joint venture. The note payable provides
for monthly payments of principal and interest at 8% per annum with full
repayment over ten years. Larkin may prepay all or a portion of the note
payable at any time. As of the date of this report, all amounts due under
the note payable have been received.

During the second quarter of 1994, a major tenant and joint venture
partner, Piper Jaffray, Inc. (275,758 square feet), agreed to expand its
leased space by 3,362 square feet in July 1995 and 19,851 square feet in
December 1995 into space previously leased to tenants whose leases expired
just prior to the effective dates for Piper Jaffray, Inc.'s expansions.
The expansion space lease expiration date is coterminous with Piper
Jaffray, Inc.'s existing lease expiration date of March 2000 and the net
effective rental rate approximates market.

(e) JMB/900

In 1984, the Partnership acquired, through JMB/900, an interest in an
existing joint venture ("Progress Partners") which owns a 36-story office
building known as the 900 Third Avenue Building in New York, New York. The
partners of Progress Partners were the developer of the property and an
original affiliate of the developer (the "Venture Partners") and JMB/900.
In 1986, one of the unaffiliated partners transferred a portion of its
interest to another partnership in which it and a major tenant of the
building (Central National Bank) were partners. In 1987 the bank failed
and the Federal Deposit Insurance Corporation ("FDIC") assumed its position
as a partner in this unaffiliated partnership.

The terms of the JMB/900 venture agreement generally provide that
JMB/900's share of Progress Partners' cash flow, sale or refinancing
proceeds and profits and losses will be distributed or allocated to the
Partnership in proportion to its 33-1/3% share of capital contributions.

JMB/900 has made capital contributions to Progress Partners and
certain payments to an affiliate of the developer, in the aggregate amount
of $18,270,000, subject to the obligation to make additional capital
contributions as described below.

JMB/900 has also made a loan to the developer in the amount of
$20,000,000 which is secured by the Venture Partners' interest in Progress
Partners. The loan bears interest at the rate of 16.4% per annum and is
payable in monthly installments of interest only until maturity on the
earlier of the sale or refinancing of the property or August 2004. For
financial reporting purposes, the loan is classified as an additional
investment in Progress Partners and any related interest received would be
accounted for as distributions (none in 1993, 1994 and 1995). To the
extent that JMB/900 has not received annual distributions equal to the
interest payable on such loan, the deficiency becomes a cumulative
preferred return payable out of future net cash flow or net sale or
refinancing proceeds.

The Progress Partners venture agreement provides that the venture is
required to pay the Venture Partners a stated return of $3,285,000 per
annum payable quarterly. Generally, JMB/900 is required to contribute
funds to the venture, to the extent net cash flow is not sufficient, to
enable the venture to make this payment. As a result of the lawsuit
discussed below, such amounts have not been contributed by JMB/900 to pay
the Venture Partners and consequently interest has not been received by
JMB/900 on the $20,000,000 loan discussed above. Under the terms of the
Progress Partners' venture agreement, the Venture Partners are generally
entitled to receive a non-cumulative preferred return of net cash flow (net
after the $3,285,000 per annum stated return payable to the Venture
Partners discussed above) of approximately $3,414,000 per annum, with any
remaining net cash flow distributable 49% to JMB/900 and 51% to the Venture
Partners.

The Progress Partners venture agreement further provides that net sale
or refinancing proceeds are distributable to JMB/900 and the Venture
Partners, on a pro rata basis, in an amount equal to the sum of any
deficiencies in the receipt of their respective cumulative preferred
returns of net cash flow plus certain contributions to the venture made by
JMB/900 to pay for the Venture Partners stated return. Next, proceeds will
be distributable to the Venture Partners in an amount equal to $20,000,000.

JMB/900 is entitled to receive the next $21,000,000 and the Venture
Partners will receive the next $42,700,000. Any remaining net proceeds are
to be distributed 49% to JMB/900 and 51% to the Venture Partners. As
discussed above, the $20,000,000 loan to the Venture Partners matures upon
sale or refinancing (under certain conditions) of the property.
Consequently, the $20,000,000 distribution level to the Venture Partners
would be used to pay off the $20,000,000 loan from JMB/900. Furthermore,
to the extent that JMB/900 has not received annual distributions equal to
the interest payable on the $20,000,000 loan discussed above, JMB/900's
preferred return deficiency is increased by the amounts not received.

Operating profits, in general, are allocated 49% to JMB/900 and 51% to
the Venture Partners. Operating losses, in general, are allocated 90% to
JMB/900 and 10% to the venture partners.

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 900 Third Avenue building as of August 1987 for a
fee computed as a percentage of certain revenues. In December 1994, the
affiliated property manager entered into a sub-management contract with an
unaffiliated third party. Pursuant to the sub-management agreement, the
unaffiliated property manager is managing the property.

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 property real estate taxes and to pay certain
costs, including litigation settlement costs, which were the responsibility
of one of the 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 Venture Partners to recover the amounts
contributed and to recover for certain other joint venture obligations on
which the Venture Partner has defaulted. This lawsuit was dismissed on
jurisdictional grounds. Subsequently, however, the FDIC filed a complaint,
since amended, in a lawsuit against the Venture Partner, the Partnership,
C-XV and JMB/900, which has enabled JMB/900 to refile its previously
asserted claims against the 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 Venture Partners may not have the financial capabilities to repay
amounts advanced on their behalf. Consequently, a final settlement may
involve redirecting to JMB/900 amounts otherwise payable to the Venture
Partners in accordance with the venture agreement. Under certain
circumstances, JMB/900 may consider purchasing one or all of the Venture
Partners' positions in Progress Partners in order to resolve this and
potential future disputes. There are no assurances that a settlement will
be finalized or that JMB/900 will be able to recover any amounts from the
Venture Partners.

In 1994, JMB/900, on behalf of Progress Partners, successfully
completed an extension to December 1, 2001 of its mortgage loan, which
matured on December 1, 1994. Pursuant to the loan extension, net cash flow
(as defined) after debt service and capital and after repayment of
approximately $3,229,000 to JMB/900 representing costs associated with and
deposits made by the joint venture in connection with the loan extension
will be paid into an escrow account controlled by the lender to be used,
including interest earned thereon, 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 plus interest
earned thereon, if any, will be released to the joint venture once 90% of
such leased space has been renewed or released. To date, no escrow funds
have been deposited into the account for leasing costs. As of the date of
this report, approximately $1,529,000 of the amounts advanced by the joint
venture have been repaid to the joint venture (of which the Partnership's
share is approximately $510,000).

(f) South Tower

In June 1985, the Partnership acquired an interest in a joint venture
partnership ("South Tower") which owns a 44-story office building in Los
Angeles, California. The joint venture partners of the Partnership include
Carlyle Real Estate Limited Partnership-XV ("Affiliated Partner"), one of
the sellers of the interests in South Tower, and another unaffiliated
venture partner.

The Partnership and the Affiliated Partner purchased their interests
for $61,592,000. In addition, the Partnership and the Affiliated Partner
made capital contributions to South Tower totaling $48,400,000 for general
working capital requirements and certain other obligations of South Tower.
The Partnership's share of the purchase price, capital contributions (net
of additional financing) and interest thereon totaled $26,589,500.

The terms of the South Tower agreement generally provide that the
Partnership and Affiliated Partner's aggregate share of the South Tower's
annual cash flow, net sale or refinancing proceeds, and profits and losses
are to be distributed or allocated to the Partnership and the Affiliated
Partner in proportion to their aggregate capital contributions.

Annual cash flow will be distributed 80% to the Partnership and
Affiliated Partner and 20% to another partner until the Partnership and the
Affiliated Partner have received, in the aggregate, a cumulative preferred
return of $8,050,000 per annum. The remaining cash flow is to be
distributable 49.99% to the Partnership and the Affiliated Partner, and the
balance to the other joint venture partners. Additional contributions to
South Tower were contributed 49.99% by the Partnership and the Affiliated
Partner until all partners had contributed $10,000,000 in aggregate.

Operating profits and losses, in general, are to be allocated 49.99%
to the Partnership and the Affiliated Partner and the balance to the other
joint venture partners. Substantially all depreciation and certain
expenses paid from the Partnership's and Affiliated Partner's capital
contributions are to be allocated to the Partnership and Affiliated
Partner. In addition, operating profits, up to the amount of any annual
cash flow distribution, are allocated to all partners in proportion to such
distributions of annual cash flow.

In general, upon sale or refinancing of the property, net sale or
refinancing proceeds will be distributed 80% to the Partnership and the
Affiliated Partner and 20% to another partner until the Partnership and the
Affiliated Partner have received the amount of any deficiency in their
preferred cash flow distributions described above plus an amount equal to
their "Disposition Preference" (which, in general, begins at $120,000,000
and increases annually by $8,000,000 to a maximum of $200,000,000). Any
remaining net sale or refinancing proceeds will be distributed 49.99% to
the Partnership and the Affiliated Partner and the remainder to the other
partners.

The office building is being managed by an affiliate of one of the
venture partners under a long-term agreement pursuant to which the
affiliate is entitled to receive a monthly management fee of 2-1/2% of
gross project income, a tenant improvement fee of 10% of the cost of tenant
improvements, and commissions on new leases.

In March 1995, the venture entered into a seven year direct lease with
the Los Angeles Unified School District ("LAUSD") for approximately one-
half of a major tenant's (IBM's) space. Under the terms of an agreement
reached with IBM, IBM is obligated to reimburse the joint venture for all
shortfalls between amounts due under the LAUSD as compared to amounts which
would have been received under the IBM leases. In early 1995, two major
law firm tenants occupying approximately 5% of the building's space
notified the joint venture of their intentions to disband each of these
respective firms. The joint venture negotiated a lease termination
agreement with one of the law firms for $1,600,000, all of which has been
received as of September 30, 1995. The other law firm, which has vacated
its space and is no longer paying rent, has filed for bankruptcy. The
collectability of amounts owed by such tenant under its lease obligation is
uncertain.

The mortgage note secured by the property as well as the promissory
note secured by the Partnership's interest in the joint venture matured
December 1, 1994. The Partnership and the joint venture have been in
discussions with the respective lenders regarding an extension of the
mortgage note and the promissory note. The joint venture had reached an
agreement with the lender of the mortgage note whereby the lender refrained
from exercising its rights and remedies under the loan documents through
September 1, 1995 while the venture continued to negotiate an extension or
refinancing of the note with the lender. The lender is currently
considering an extension of such agreement. The venture continues to make
interest payments to the lender under the original terms of the mortgage
note and is required to escrow all available cash flow. The Partnership
has ceased making debt service payments on the promissory note and is
negotiating an extension or refinancing with such lender. Such extension
or refinancing is likely to be dependent on the results of negotiations
with the lender of the mortgage note. There is no assurance that the joint
venture or the Partnership will be able to extend or refinance these notes.

In the absence of an extension or refinancing of the notes, and due to the
uncertainty whether IBM will renew any of its remaining space, the
Partnership may decide not to commit any significant additional amounts to
the property. This would likely 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. The promissory note secured by the
Partnership's interest in the joint venture has been classified at December
31, 1995 and December 31, 1994 as a current liability in the accompanying
consolidated financial statements.

(g) 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 of the property and
to pay the Partnership a preferential return. The joint venture partner
defaulted on such obligations and in this regard, the joint venture partner
had not made the required debt service payments since December 1988 nor had
it paid the Partnership's preferential return since the third quarter of
1988. 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.

The joint venture partner's obligations to the Partnership were
guaranteed by certain of the joint venture partner's principals. The
Partnership filed a lawsuit against the joint venture partner and certain
of the joint venture partner's principals seeking to recover amounts lost
resulting from their defaults. On April 3, 1992, the Partnership signed a
settlement agreement with the joint venture partner and its principals.
Under the terms of the settlement, 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 payments are reflected in other income only as
collected. As of December 31, 1995, all scheduled payments have been
received.

(h) 1090 Vermont

Through 1993, the Partnership and joint venture partners had
contributed a total of $4,076,000 ($2,038,000 by the Partnership) to the
joint venture to cover releasing and capital costs. The Partnership and
joint venture partner had agreed that such contributions would be repaid
along with a return thereon out of first available proceeds from property
operations, sale or refinancing. In 1993, the joint venture finalized a
refinancing of the existing mortgage loan. During December, 1993
$1,785,560 (of which the Partnership's share was $889,064) was distributed
from net refinancing proceeds as a partial return of the additional capital
contributed. 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.

Distributions of operating cash flow totalling approximately $1.5
million (the Partnership's share was approximately $750,000) since the
effective date of the refinancing have also represented a partial return to
the partners of the additional capital contributed. As of December 31,
1995, the total remaining unpaid additional capital contributed, including
the unpaid return thereon, is $2,032,908 of which the Partnership's share
is $1,016,454.

(i) 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. The Partnership has decided not to pursue this matter
further since the cost to pursue would likely exceed the recovery (if any)
of amounts owed. In addition, a sale in the foreseeable future will not
result in any distribution to the joint venture partner due to the
Partnership's preferential sharing levels upon sale of the property.
Consequently, the Partnership will not pursue the joint venture partner's
interest in the property.

In 1995, the joint venture commenced marketing the property for sale.
In March 1996, the joint venture signed an agreement for sale of the
property for a purchase price of approximately $7,900,000. Such agreement
is subject to certain contingencies which must be satisfied prior to the
proposed closing date of May 15, 1996. Therefore, there can be no
assurance that a sale will be finalized. If the sale is consummated under
the proposed terms, the Partnership will recognize a gain for Federal
income tax and a net gain for financial reporting purposes in 1996.

The mortgage note for the property was originally scheduled to mature
in October 1994. See note 4(b)(iii) regarding the extension of such loan
to October 1996.

<TABLE>
(4) LONG-TERM DEBT

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

<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
11.5% mortgage note (in default); secured by the
Wilshire Bundy Plaza in Los Angeles, California;
principal and interest payments of $416,000 are
due monthly through March 1996; unpaid balance
of $40,920,000 is due April 1996 (note 4(b)(iv)) . . . . . $ 41,292,105 41,292,105

9.0% mortgage note; secured by the Louisiana Tower
Office Building located in Shreveport, Louisiana;
retired at disposition in August 1995; payments of
$100,000 per annum plus monthly cash flow was
(as defined) due with the difference being deferred
until cash flow was available or the maturity of
note; unpaid principal balance of $22,225,000
was due January 1995. Balance at December 1994
is net of $102,299 unamortized discount based
on an imputed interest rate of 11.0% (note 4(b)(ii)) . . . -- 22,122,701

12% promissory note (in default); secured by the
Partnership's interest in the Wells Fargo Center South
Tower office building in Los Angeles, California;
monthly interest only payments of $122,500 through
November 1994; principal balance of $12,250,000 was
due in December 1994 (note 3(f)) . . . . . . . . . . . . . 12,250,000 12,250,000

8.75% first mortgage note; secured by the Louis Joliet Mall
in Joliet, Illinois, monthly principal and interest payments
of $134,000 until April 1998 when the remaining balance of
$10,969,000 was due; refinanced in September 1995 by the
loan described below . . . . . . . . . . . . . . . . . . . -- 12,792,560

10% second mortgage note; secured by the Louis Joliet Mall in
Joliet, Illinois; payable interest only at 8.5% per annum plus
1.5% payable from operating cash flow (as defined) above a
specified amount (none paid in 1994, 1993 and 1992) until
September 1995 when the remaining principal amount was due;
refinanced in September 1995 by the loan described below.. -- 10,000,000

8.03% first mortgage note; secured by the Louis Joliet Mall in
Joliet, Illinois; monthly interest only payments of $173,983
until April 1997; beginning April 1, 1997, monthly principal and
interest payments of $201,189 until October 1, 2002 when the
remaining balance of $23,751,765 is due (note 4(b)(v)) . . 26,000,000 --

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

Variable rate mortgage note secured by the Mariner's Pointe
Apartments, (note 4(b)(iii)) . . . . . . . . . . . . . . . 6,500,000 6,500,000

6.2% and 9.375% mortgage notes, secured by the Brittany
Downs Apartments Phases I and II, respectively, satisfied
in January 1995 (note 4(b)(i)) . . . . . . . . . . . . . . -- 15,718,589
------------ ------------

Total debt . . . . . . . . . . . . . . . . . . . . 86,042,105 120,675,955

Less current portion of long-term debt
(note 4(b)). . . . . . . . . . . . . . . . . . . 60,042,105 94,880,985
------------ ------------

Total long-term debt . . . . . . . . . . . . . . . $ 26,000,000 25,794,970
============ ============

</TABLE>

Five year maturities of long-term debt are as follows:

1996 . . . . . . . . $60,042,105
1997 . . . . . . . . 251,510
1998 . . . . . . . . 359,714
1999 . . . . . . . . 389,687
2000 . . . . . . . . 422,156
===========

(b) Long-term Debt Restructurings

(i) 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 did not produce sufficient cash
flow to cover its required debt service payments and, consequently, the
Partnership had been paying a reduced amount of debt service since November
1990. Although the Partnership was negotiating to obtain a loan
modification to reduce the property's required debt service payments, the
Partnership was placed in default during the fourth quarter of 1992.
Accordingly, the balances of the Phase II first mortgage note, the second
mortgage note, and related accrued interest were classified as current
liabilities in the accompanying consolidated financial statements at
December 31, 1994.

On January 10, 1995, the Partnership sold the Brittany Downs
Apartments Phase I and II to an unaffiliated third party. The sale price
was $18,380,000 (before selling costs and prorations), of which $2,795,768
was received in cash at closing and $14,340,000 represented the purchaser's
assumption of the underlying debt (net of a payoff discount granted by the
underlying lender for Brittany Downs Apartments Phase II). The sale
resulted in a gain of $6,574,760 for financial reporting purposes and
$8,984,569 for Federal income tax reporting purposes in 1995. In addition,
as a result of the payoff discount granted by the underlying lender for
Brittany Downs Apartments Phase II, the Partnership recognized an
additional gain on forgiveness of indebtedness of $1,650,638 for financial
reporting purposes in 1995.

(ii) Louisiana Tower

During 1988, Louisiana Tower restructured its existing mortgage note
with the lender. In 1990, the Partnership further restructured the loan 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 required 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
was escrowed monthly and remitted to the lender annually on March 31. The
difference between the above pay rate and the contract pay rate of 9% per
annum on the principal balance accrued at 9% per annum compounded monthly
until maturity when the principal and accrued interest was to be due and
payable. The existing modification period expired and the loan matured in
January 1995. The Partnership decided that it would 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 lender and sought further modifications to the loan. The lender was
unwilling to provide further modifications to the loan and began
foreclosure proceedings in October 1994. A receiver was appointed for the

property and a third party manager was appointed to manage the property on
the receiver's behalf. Title to the property was transferred to the lender
on August 30, 1995. The Partnership recognized a gain of $8,117,412 for
financial reporting purposes and $2,530,731 for Federal income tax purposes
in connection with this transfer with no distributable proceeds in 1995.

(iii) Mariners Pointe

During the third quarter of 1994, the Partnership obtained a two-year
extension of the existing $6,500,000 mortgage loan. The new maturity date
is October 1, 1996. Accordingly, the principal balance of the property's
underlying mortgage loan ($6,500,000) has been classified as a current
liability in the accompanying consolidated financial statements at December
31, 1995. Under terms of the loan extension, the loan bears interest at
2.75% above the floating weekly tax exempt rate. The weekly tax exempt
interest rate at December 31, 1995 was 4.19% per annum for an interest rate
of 6.94% per annum as of that date. Prior to the extension, the loan bore
interest of 10.875% per annum.

(iv) Wilshire Bundy Plaza

The Partnership had 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. In this regard, the Partnership suspended debt service
payments commencing with the December 1, 1994 payment. During July 1995,
the Partnership received a formal notice of default on its mortgage loan
from the lender. Accordingly, the principal balance of the mortgage loan
($41,292,105) and related accrued interest have been classified as a
current liability in the accompanying consolidated financial statements at
December 31, 1995 and December 31, 1994. The lender began foreclosure
proceedings in October 1995. A receiver was appointed for the property and
the previously affiliated third party property manager continued to manage
the property on behalf of the receiver. It is anticipated that the lender
will obtain title to the property on March 27, 1996. The Partnership will
recognize a gain for Federal income tax and a net gain for financial
reporting purposes in 1996 in connection with this transfer with no
distributable proceeds.

(v) Louis Joliet Mall

The second mortgage loan matured on September 1, 1995. During
September 1995, the Partnership finalized a refinancing of the property's
first (with a principal balance of approximately $12,400,000) and second
(with a principal balance of $10,000,000 and accrued and deferred interest
of approximately $2,500,000) mortgage loans with a new seven year first
mortgage loan in the amount of $26,000,000. Such refinancing resulted in
approximately $382,000 in net proceeds after payment of the existing loans,
closing costs and prepayment penalty, which the Partnership has decided to
retain for working capital purposes. The new loan matures on October 1,
2002 and may be prepaid after the second loan year with a yield maintenance
prepayment penalty. As a result of the early refinancing of the first
mortgage loan (scheduled maturity April, 1998) the Partnership paid a
prepayment penalty of approximately $204,000.

(vi) Wells Fargo Center

The mortgage note secured by the Wells Fargo Center (South Tower
Office Building) (with a balance of $198,388,423 as of December 31, 1995)
as well as the promissory note secured by the Partnership's interest in the
joint venture (with a balance of $12,250,000 and accrued interest of
$1,575,000 and $245,000 as of December 31, 1995 and December 31, 1994,
respectively) matured December 1, 1994. The Partnership and the joint
venture have been in discussions with the respective lenders regarding an
extension of the mortgage note and the promissory note. The joint venture
reached an agreement with the lender of the mortgage note whereby the
lender refrained from exercising its rights and remedies under the loan
documents through September 1, 1995 while the venture continued to
negotiate an extension or refinancing of the note with the lender. The
venture continues to make interest payments to the lender under the
original terms of the mortgage note and is required to escrow all available
cash flow. The Partnership has ceased making debt service payments on the
promissory note and is negotiating an extension or refinancing with such
lender. Such extension or refinancing is likely to be dependent on results
from negotiations with the lender of the mortgage note. There is no
assurance that the joint venture or the Partnership will be able to extend
or refinance these notes. In the absence of an extension or refinancing of
the notes, the Partnership may decide not to commit any significant
additional amounts to the property. This would likely result in the
Partnership no longer having an ownership interest in the property, and in
such event would result in a gain for financial reporting and for Federal
income tax purposes with no corresponding distributable proceeds. The
promissory note secured by the Partnership's interest in the joint venture
has been classified at December 31, 1995 and December 31, 1994 as a current
liability in the accompanying consolidated financial statements.

(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 account deficits (if any) to a level consistent with the
gain anticipated to be realized from the sale of properties. Losses from
the sale of 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).

The Partnership Agreement provides that subject to certain conditions,
the General Partners shall receive as a distribution of the proceeds (net
after expenses and liabilities and retained working capital) from the sale
or refinancing of a real property up to 3% of the selling price for any
property sold, and that the remaining net proceeds 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 net 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 net sale or refinancing proceeds previously distributed,
equal a 6% annual non-compounded return on the Limited Partners average
capital investment for each year (their initial capital investment reduced

by net sale or refinancing proceeds previously distributed) commencing with
the third fiscal quarter of 1985. If upon the completion of the
liquidation of the Partnership and the distribution of all Partnership
funds, the Limited Partners have not received the amounts in (i) and (ii)
above, the General Partners will be required to return all or a portion of
the 1% distribution of net sale or refinancing proceeds described above up
to an amount equal to such deficiency in payments to the Limited Partners
pursuant to (i) and (ii) above. Accordingly, $1,742,000 of proceeds have
been deferred for the General Partners at December 31, 1995. The General
Partners have received $121,527 of sale proceeds as of December 31, 1995
representing its 1% share of total sale distributions made.

(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 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 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.

(7) SALE OR DISPOSITION OF INVESTMENT PROPERTIES

(a) Scottsdale Financial Centers - Phase I and II

A description of the disposition is contained in note 6 filed with
this annual report.

(b) Old Orchard Shopping Center

A description of the sale is contained in note 3(b) filed with this
annual report.

A description of the sale is contained in note 4(b) filed with this
annual report.

(d) 2 Broadway Joint Ventures

A description of the sale is contained in note 3(c) filed with this
annual report.

(e) Louisiana Tower

A description of the disposition is contained in note 4(b) filed with
this annual report.

(f) Turtle Creek Centre

A description of the disposition is contained in note 3(g) filed with
this annual report.

(8) LEASES

(a) As Property Lessor

At December 31, 1995, the Partnership and its consolidated ventures'
principal assets are one office building, one apartment complex and one
shopping mall. The Partnership has determined that all leases relating to
these properties are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of each of the
properties, excluding cost of land, is depreciated over the estimated
useful lives. Leases with commercial tenants range in term from one to 34
years and provide for fixed minimum rent and partial to full reimbursement
of operating costs. In addition, leases with shopping center tenants
provide for additional rent based upon percentages of tenant sales volumes.

With respect to the Partnership's shopping center investment, a substantial
portion of the ability of retail tenants to honor their leases is dependent
upon the retail economic sector. Apartment complex leases in effect at
December 31, 1995 are generally for a term of one year or less and provide
for annual rents of $1,229,342.

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

Office buildings:
Cost . . . . . . . . . . $ 56,814,565
Accumulated depreciation (20,426,439)
------------
36,388,126
------------
Shopping mall:
Cost . . . . . . . . . . 48,040,642
Accumulated depreciation (13,569,299)
------------
34,471,343
------------
Apartment complexes:
Cost . . . . . . . . . . 7,986,586
Accumulated depreciation (2,818,510)
------------
5,168,076
------------
Total. . . . . . . $ 76,027,545
============

Minimum lease payments including amounts representing executory costs
(e.g., taxes, maintenance, insurance), and any related profit in excess of
specific reimbursements, to be received in the future under the above
operating commercial lease agreements, are as follows:

1996 . . . . . . . . $ 8,125,335
1997 . . . . . . . . 6,882,148
1998 . . . . . . . . 5,941,733
1999 . . . . . . . . 4,858,875
2000 . . . . . . . . 3,256,567
Thereafter . . . . . 8,584,871
-----------
$37,649,529
===========

(b) As Property Lessee

The following lease agreement has been determined to be an operating
lease:

The land underlying Wilshire Bundy Plaza is subject to a ground lease
having a term ending in September 2047. In September 1987, and every five
years thereafter, the annual ground rent has and will be increased (from a
base amount of $338,000 per annum payable in equal monthly installments)
based on a formula equal to the lesser of a compounded amount or an amount
based on a price index. The required ground rent payments for the period
October 1987 through September 1992 and October 1992 through September 1998
equal $421,409 and $526,762, respectively, per annum payable in equal
monthly installments. The Partnership has an option to purchase the land
between October 2005 and October 2007 at fair market value. However, title
to this property is anticipated to be transferred to the lender on March
27, 1996 pursuant to foreclosure proceedings. Therefore, there is no
assurance that there will be any future ground rent payments related to
this lease. See Note 4(b)(iv).

Future minimum rental commitments under the leases are as follows:

1996. . . . . . . . . . $ 526,762
1997. . . . . . . . . . 526,762
1998. . . . . . . . . . 526,762
1999. . . . . . . . . . 526,762
2000. . . . . . . . . . 526,762
Thereafter. . . . . . . 24,626,124
-----------
$27,259,934
===========

<TABLE>

(9) TRANSACTIONS WITH AFFILIATES

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

<CAPTION>
UNPAID AT
DECEMBER 31,
1995 1994 1993 1995
-------- --------- --------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees . . . . . . . . . . $433,723 2,088,404 2,162,440 1,839,000
Insurance commissions. . . . . . . 64,121 64,214 79,545 --
Reimbursement (at cost) for
accounting services. . . . . . . 178,371 211,104 156,851 --
Reimbursement (at cost) for
portfolio management services. . 73,169 42,795 -- --
Reimbursement (at cost) for
legal services. . . . . . . . . . 10,599 24,654 12,714 --
Reimbursement (at cost) for
administrative charges
and other out-of pocket
expenses . . . . . . . . . . . . 203,318 271,902 310,413 84,757
-------- ---------- --------- ---------

$963,301 2,703,073 2,721,963 1,923,757
======== ========== ========= =========
<FN>

The above table reflects that during 1995, the Partnership recognized and paid certain 1994 administrative
charges of approximately $83,418 that had not previously been reimbursed.

</TABLE>

In February 1995, the Partnership distributed $81,017 to the General
Partners out of proceeds from the sale or refinancing of certain investment
properties.

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

Reference is made to note 3(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
(reflected in amounts due to affiliates in the accompanying consolidated
financial statements). As of December 31, 1995, these obligations bore
interest at 5.83% per annum and interest accrued on these obligations was
$343,979.

The manager of Piper Jaffray Tower (which was an affiliate of the
Corporate General Partner through November 1994) had agreed to defer
receipt of its property management fees as more fully discussed in note
3(d). Such fees deferred by the affiliate were approximately $1,839,000 at
December 31, 1995.

Effective January 1, 1994, certain officers and directors of the
Corporate General Partner acquired interests in a company which, among
other things, has provided and continues to provide certain property
management services to Wilshire Bundy Plaza. 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 twelve months ended December 31, 1995 were approximately $11,600,
all of which have been paid.

All amounts currently payable to the General Partners and their
affiliates do not bear interest and are expected to be paid in future
periods. Reference is made to note 5 above for a discussion of certain
subordinated distributions payable to the General Partners under certain
circumstances.

(10) INVESTMENT IN UNCONSOLIDATED VENTURES

Summary combined financial information for Orchard Associates,
JMB/NYC, JMB/Piper, JMB/Piper II, JMB/900, 1090 Vermont, South Tower and
their unconsolidated ventures (note 3) as of and for the years ended
December 31, 1995 and 1994 is presented below.

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

Current assets . . . . . . .$ 41,169,690 61,559,349
Current liabilities (including
$902,603,491 and $913,398,422
respectively, of debt in
default at December 31, 1995
and December 31, 1994)
(note 3). . . . . . . . . . (1,152,046,100)(1,153,329,220)
-------------- --------------
Working capital (deficit)(1,110,876,410)(1,091,769,871)
-------------- --------------
Investment properties, net . 975,646,720 1,055,303,077
Other assets . . . . . . . . 110,638,545 105,872,114
Other liabilities. . . . . . (86,791,207) (150,860,322)
Long-term debt . . . . . . . (225,621,000) (221,001,770)
-------------- --------------
Partners' capital. . . . $ (337,003,352) (302,456,774)
============== ==============
Represented by:
Invested capital . . . . . $1,035,645,376 1,078,356,674
Cumulative distributions . (259,482,618) (265,345,596)
Cumulative losses. . . . . (1,113,166,110)(1,115,467,853)
-------------- --------------
$ (337,003,352) (302,456,774)
============== ==============
Total income . . . . . . . . $ 253,409,999 242,197,996
============== ==============
Expenses applicable to
operating loss . . . . . . $ 285,772,212 287,980,902
============== ==============
Net loss . . . . . . . . . . $ 32,362,213 (45,782,906)
============== ==============

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

Total income and net loss for 1994 includes gain of $3,404,164 related
to the sale of the Old Orchard Shopping Center. (Reference is made to note
3(b)).

Total income and net loss for 1993 was $287,330,325 and $307,239,196,
respectively, which includes gain of $36,387,799 related to the sale of the
Old Orchard Shopping Center, a $192,627,560 provision for value impairment
at the 2 Broadway Building and a $67,479,871 provision for value impairment
at the Wells Fargo Center.

<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995

COSTS
INITIAL COST TO SUBSEQUENT GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
----------------------------- ----------------------------------------------------------
LAND AND BUILDINGS LAND AND LAND AND BUILDINGS
LEASEHOLD AND BUILDINGS AND LEASEHOLD AND
ENCUMBRANCE(C) INTEREST IMPROVEMENTSIMPROVEMENTS(F) INTEREST IMPROVEMENTS TOTAL (G)
-------------- ----------- --------------------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
APARTMENT
BUILDINGS:
Stockton,
California
(E). . . . $ 6,500,000 786,961 7,082,651 116,974 786,961 7,199,625 7,986,586
OFFICE
BUILDINGS:
Los Angeles,
California
(D). . . . 41,292,105 2,449,356 60,122,288 (5,757,079) 2,094,674 54,719,891 56,814,565
SHOPPING MALL:
Joliet,
Illinois . 26,000,000 4,100,414 35,752,871 8,187,357 4,100,414 43,940,228 48,040,642
----------- ---------- ----------- ----------- ---------- ----------- -----------

Total. . $73,792,105 7,336,731 102,957,810 2,547,252 6,982,049 105,859,744 112,841,793
=========== ========== =========== =========== ========== =========== ===========

</TABLE>

<TABLE> SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(H) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ------------------------- -----------
<S> <C> <C> <C> <C> <C>
APARTMENT BUILDINGS:
Stockton, California
(E) . . . . . . . . . . $ 2,818,510 1984 10/2/84 5-30 years 75,239
OFFICE BUILDINGS:
Los Angeles,
California (D) . . . . 20,426,439 1984 11/7/85 5-30 years 263,934
SHOPPING MALL:
Joliet, Illinois. . . . 13,569,299 1978 7/31/85 5-30 years 549,540
----------- -------
Total . . . . . . . $36,814,248 888,713
=========== =======
<FN>
Notes:
(A) The initial cost represents the original purchase price of the properties, including amounts incurred subsequent
to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1995 for Federal income tax purposes was $120,882,742.
(C) Amounts disclosed exclude current accrued interest.
(D) Property operated under ground lease; see Note 8.
(E) Property owned and operated by joint venture; see Note 3.
(F) Includes provision for value impairment at Wilshire Bundy of $9,495,459 recorded June 30, 1992. See Note 2
for further discussion.

</TABLE>

(G) Reconciliation of real estate owned:

<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . $161,748,228 158,345,396 194,946,080
Additions during period . . . . . . . . . 1,487,605 3,402,832 525,771
Disposals during period . . . . . . . . . (50,394,040) -- (37,126,455)
Provision for value impairment. . . . . . -- -- --
Revaluation of land leasehold . . . . . . -- -- --
------------ ------------ ------------
Balance at end of period. . . . . . . . . $112,841,793 161,748,228 158,345,396
============ ============ ============

(H) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . $ 49,431,004 44,635,592 49,123,417
Depreciation expense. . . . . . . . . . . 4,155,575 4,795,412 5,701,647
Disposals . . . . . . . . . . . . . . . . (16,772,331) -- (10,189,472)
------------ ------------ ------------
Balance at end of period. . . . . . . . . $ 36,814,248 49,431,004 44,635,592
============ ============ ============

</TABLE>

INDEPENDENT AUDITORS' REPORT

The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV:

We have audited the combined financial statements of JMB/NYC Office
Building Associates, L.P. (JMB/NYC) and unconsolidated ventures as listed
in the accompanying index. In connection with our audits of the combined
financial statements, we also have audited the financial statement schedule
as listed in the accompanying index. These combined financial statements
and financial statement schedule are the responsibility of the General
Partners of Carlyle Real Estate Limited Partnership - XIV (the
Partnership). Our responsibility is to report on these combined financial
statements and financial statement schedule based on the results of our
audits.

As discussed in Note 3(c) of the Partnership's notes to the
consolidated financial statements, incorporated by reference in Note 2 of
the combined financial statements, beginning July 1, 1993, JMB/NYC was in
dispute with the unaffiliated venture partners in the real estate ventures
over the calculation of the effective interest rate with reference to the
first mortgage loan, which covers the real estate owned through JMB/NYC's
joint ventures. The disputed interest aggregated $48,472,000, $52,550,000
and $20,521,000 for the years ended December 31, 1995, 1994 and 1993,
respectively, and has not been included in mortgage and other interest in
the accompanying combined financial statements. In October 1994, JMB/NYC
entered into an agreement (the Agreement) with the unaffiliated venture
partners in the real estate ventures which, when effective, would resolve
this dispute by providing for interest at the same rate as the first
mortgage loan and would eliminate any funding obligations by JMB/NYC.
However, as discussed in Note 2 of the combined financial statements, there
are no assurances that the Agreement will be finalized and become
effective. The ultimate outcome of this uncertainty cannot presently be
determined.

The accompanying combined financial statements and financial statement
schedule have been prepared assuming that JMB/NYC and unconsolidated
ventures will continue as going concerns. As discussed in Note 3(c) of the
Partnership's notes to consolidated financial statements incorporated by
reference in Note 2 of the combined financial statements, the holder of the
first mortgage loan alleged certain defaults under the loan agreements.
Also, commencing January 1996, the real estate ventures ceased making
monthly debt service payments on the first mortgage loan. Further, JMB/NYC
and the unaffiliated venture partners in the real estate ventures have
agreed to file, for each of the real estate joint ventures, a prearranged

(continued)

bankruptcy plan for reorganization under Chapter 11 of the Bankruptcy Code.

Such filings with respect to the 2 Broadway ventures occurred in June of
1995 with the remaining filings expected to occur in 1996. These
circumstances raise substantial doubt about JMB/NYC and unconsolidated
ventures' ability to continue as going concerns. The General Partners'
plans in regard to these matters are also described in Note 3(c) of the
Partnership's notes to the consolidated financial statements. The combined
financial statements and financial statement schedule do not include any
adjustments that might result from the outcome of this uncertainty.

Because of the significance of the uncertainties discussed in the
preceding two paragraphs, we are unable to express, and we do not express,
an opinion on the accompanying combined financial statements and financial
statement schedule.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 25, 1996

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

COMBINED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994

ASSETS
------

<CAPTION>
1995 1994
------------ --------------
<S> <C> <C>
Current assets:
Cash (including amounts held by property manager) (note 1) $ 647,722 1,529,078
Restricted funds (note 1) . . . . . . . . . . . . . . . . 9,356,055 23,929,599
Rents and other receivables (net of allowance for doubtful
accounts of $9,455,898 and $8,167,305 at December 31, 1995
and 1994, respectively). . . . . . . . . . . . . . . . . 2,378,248 3,234,487
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 977,891 13,918,412
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . 492,957 1,425,723
Tenant notes receivable. . . . . . . . . . . . . . . . . . 46,107 154,249
Due from the O&Y affiliates (net of allowance for uncollecti-
bility of $15,417,785 and $13,608,787 at December 31,
1995 and 1994, respectively) (note 1). . . . . . . . . . -- --
------------ --------------
Total current assets . . . . . . . . . . . . . . . 13,898,980 44,191,548
------------ --------------

Investment properties (notes 1, 2, 3 and 4) - Schedule III:
Land and leasehold interest. . . . . . . . . . . . . . . 163,939,715 168,798,314
Buildings and improvements . . . . . . . . . . . . . . . 799,898,096 956,574,507
------------ --------------
963,837,811 1,125,372,821
Less accumulated depreciation. . . . . . . . . . . . . . 314,230,841 406,690,418
------------ --------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . 649,606,970 718,682,403
------------ --------------

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

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

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

COMBINED BALANCE SHEETS - CONTINUED

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

1995 1994
------------ --------------
Current liabilities:
Current portion of long-term debt (note 3) . . . . . . . . $ 902,603,491 913,398,422
Accounts payable and accrued expenses. . . . . . . . . . . 5,980,842 4,666,201
Accrued interest . . . . . . . . . . . . . . . . . . . . . 5,341,844 5,557,267
Tenant allowance payable . . . . . . . . . . . . . . . . . -- 2,809,707
Unearned rent (note 4) . . . . . . . . . . . . . . . . . . 16,597,279 13,724,100
Interest payable to the O&Y affiliates . . . . . . . . . . -- 1,570,237
------------- --------------
Total current liabilities. . . . . . . . . . . . . 930,523,456 941,725,934

Unearned rent (note 4) . . . . . . . . . . . . . . . . . . . 4,109,000 19,704,669
Notes payable (note 5) . . . . . . . . . . . . . . . . . . . 33,272,592 34,158,225
Deferred interest payable (note 5) . . . . . . . . . . . . . 47,164,545 93,853,559
Tenant security deposits . . . . . . . . . . . . . . . . . . 492,957 1,454,994
------------- --------------
Commitments and contingencies (notes 1 and 2)

Total liabilities. . . . . . . . . . . . . . . . . 1,015,562,550 1,090,897,381
Partners' capital accounts (deficits) (note 2):
Carlyle-XIV:
Capital contributions. . . . . . . . . . . . . . . . . . 91,166,774 91,166,774
Cumulative net losses. . . . . . . . . . . . . . . . . . (222,263,352) (230,586,769)
Cumulative cash distributions. . . . . . . . . . . . . . (18,747,499) (18,747,499)
------------- --------------
(149,844,077) (158,167,494)
------------- --------------
Venture partners:
Capital contributions. . . . . . . . . . . . . . . . . . 561,463,303 561,413,303
Cumulative net losses. . . . . . . . . . . . . . . . . . (620,801,264) (595,804,858)
Cumulative cash distributions. . . . . . . . . . . . . . (72,511,000) (72,511,000)
------------- --------------
(131,848,961) (106,902,555)
------------- --------------
Total partners' capital accounts . . . . . . . . . (281,693,038) (265,070,049)
------------- --------------
$ 733,869,512 825,827,332
============= ==============
<FN>
See accompanying notes to combined financial statements.
</TABLE>

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

COMBINED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

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

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

Loss on sale of investment property (note 2) (38,214,703) -- --
------------- ------------ ------------
Loss before extraordinary item . . (79,202,616) (36,089,024) (243,975,596)

Extraordinary gain on forgiveness of
indebtedness (note 2). . . . . . . . . . . 62,529,627 -- --
------------- ------------ ------------
Net loss . . . . . . . . . . . . . $(16,672,989) (36,089,024) (243,975,596)
============= ============ ============

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

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

COMBINED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
VENTURE
CARLYLE-XIV PARTNERS
------------- -----------
<S> <C> <C>

Balance at December 31, 1992 . . . . . . . . . . . . . . . . $(101,310,180) 120,970,502

Cash contributions . . . . . . . . . . . . . . . . . . . . . 10,000 1,111,010
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . (44,333,978) (199,641,618)
Cash distributions . . . . . . . . . . . . . . . . . . . . . -- (6,257,237)
------------- ------------

Balance at December 31, 1993 . . . . . . . . . . . . . . . . (145,634,158) (83,817,343)

Cash contributions . . . . . . . . . . . . . . . . . . . . . -- 470,476
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . (12,533,335) (23,555,689)
------------- ------------

Balance at December 31, 1994 . . . . . . . . . . . . . . . . (158,167,493) (106,902,556)

Cash contributions . . . . . . . . . . . . . . . . . . . . . -- 50,000

Operating loss . . . . . . . . . . . . . . . . . . . . . . . (13,588,448) (27,399,465)

Loss on sale of investment property. . . . . . . . . . . . . (9,352,950) (28,861,753)

Extraordinary gain on forgiveness of indebtedness. . . . . . 31,264,814 31,264,813
------------- ------------

Balance at December 31, 1995 . . . . . . . . . . . . . . . . $(149,844,077) (131,848,961)
============= ============

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

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

COMBINED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . $(16,672,989) (36,089,024) (243,975,596)
Items not requiring (providing) cash:
Depreciation . . . . . . . . . . . . . 29,564,205 30,374,278 39,102,045
Amortization of deferred expenses. . . 2,321,990 2,257,477 2,173,860
Write-off of tenant allowances payable -- (1,337,328) --
Provision for doubtful accounts. . . . 4,562,708 5,272,274 23,497,333
Provision for value impairment . . . . -- -- 192,627,560
Loss on sale of investment property. . 38,214,703 -- --
Extraordinary gain on forgiveness of
indebtedness . . . . . . . . . . . . (62,529,627) -- --
Changes in:
Rents and other receivables. . . . . . . 856,239 (3,858,448) (4,583,255)
Prepaid expenses . . . . . . . . . . . . 12,893,726 (13,461,314) (203,064)
Escrow deposits. . . . . . . . . . . . . 932,766 82,320 (24,494)
Tenant notes receivable. . . . . . . . . 108,142 85,196 238,882
Accounts payable and accrued expenses. . 1,428,266 1,173,792 (1,296,990)
Accrued interest . . . . . . . . . . . . (215,423) 172,860 (50,248)
Tenant security deposits . . . . . . . . (962,037) (162,518) 133,963
Interest payable to the O&Y affiliates . (1,570,237) (3,000,000) 4,570,237
Deferred interest payable. . . . . . . . 14,954,980 15,248,036 13,431,777
Unearned rent. . . . . . . . . . . . . . (12,718,177) 31,449,394 97,864
Accrued rents receivable . . . . . . . . (1,615,968) (885,365) (24,448)
----------- ------------ -----------
Net cash provided by
operating activities . . . . 9,553,267 27,321,630 25,715,426
----------- ------------ -----------

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

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

COMBINED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
------------ ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . (10,794,931) (9,642,776) (8,613,592)
Capital contributions. . . . . . . . . . . 50,000 470,476 1,121,010
Advances to the O&Y affiliates . . . . . . (1,808,998) (1,662,503) (1,176,224)
Distributions to partners. . . . . . . . . -- -- (6,257,237)
------------ ------------ -----------

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

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

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

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest $ 69,785,231 68,450,694 68,078,479
============ ============ ===========
Non-cash investing and financing activities:
Retirement of investment property. . . $ -- 1,896,898
============ ============ ===========

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

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

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

(1) ORGANIZATION AND BASIS OF ACCOUNTING

The accompanying combined financial statements have been prepared for
the purpose of complying with Rule 3.09 of Regulation S-X of the Securities
and Exchange Commission. Certain unconsolidated joint ventures previously
included in the combined financial statements have been excluded. JMB/NYC
Office Building Associates, L.P. ("JMB/NYC") is an unconsolidated joint
venture in which Carlyle-XIV Associates, L.P. owns a direct interest. Also
included are the accounts of those joint venture partnerships (underlying
ventures) in which Carlyle-XIV owns an indirect interest through one of
these unconsolidated joint ventures. The entities (the "Combined
Ventures") included in the combined financial statements are as follows:

1. JMB/NYC Office Building Associates, L.P. ("JMB/NYC") (a)

-237 Park Avenue Associates, L.L.C. (b)} (together
-1290 Associates, L.L.C.(b) } "Three Joint
-2 Broadway Associates and } Ventures")
2 Broadway Land Company (b)(c) }

(a) Carlyle-XIV owns an indirect interest in this unconsolidated
joint venture through Carlyle-XIV Associates, L.P.

(b) Represents a joint venture in which Carlyle-XIV owns an
indirect ownership interest through JMB/NYC.

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

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

For purposes of preparing the combined financial statements, the
effect of all significant transactions between an unconsolidated joint
venture and an underlying joint venture has been eliminated.

The records of JMB/NYC and the Three Joint Ventures (the "Combined
Ventures") are maintained on the accrual basis of accounting as adjusted
for Federal income tax reporting purposes. The accompanying combined
financial statements have been prepared from such records after making
appropriate adjustments to present the Three Joint Ventures' accounts in
accordance with generally accepted accounting principles. Such adjustments
are not recorded on the records of the Three Joint Ventures.

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

Statement of Financial Accounting Standards No. 95 requires the
Combined Ventures to present a statement which classifies receipts and
payments according to whether they stem from operating, investing or
financing activities. The required information has been segregated and
accumulated according to the classification specified in the pronouncement.

Deferred expenses are comprised of leasing and renting costs which are
amortized using the straight-line method over the terms of the related
leases.

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

Although certain leases of the Three Joint Ventures' investment
properties provide for tenant occupancy during periods for which no rent
is due, the ventures accrue prorated rental income for the full period of
occupancy. In addition, although certain leases provide for step increases
in rent during the lease term, the ventures recognize the total rent due on
a straight-line basis over the entire lease. Such amounts are reflected in
accrued rents receivable in the accompanying balance sheets. Straight-line
rental income was $1,615,968, $885,365 and $24,448 for the years ended
December 31, 1995, 1994 and 1993, respectively.

Maintenance and repair expenses are charged to operations as incurred.

Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives. An affiliate of the joint venture
partners perform certain maintenance and repair work and construction of
certain tenant improvements at the investment properties.

Provisions for value impairment (as discussed below) are recorded with
respect to the investment properties whenever the estimated future cash
flows from a property's operations and projected sale are less than the
property's net carrying value.

In conjunction with the negotiations with representatives of the first
mortgage lender regarding a loan restructure, the Olympia & York affiliates
reached an agreement with the first mortgage lender whereby effective
January 1, 1993, the Olympia & York affiliates are limited to taking
distributions of $250,000 on a monthly basis from the Three Joint Ventures
reserving the remaining excess cash flow in a separate interest-bearing
account to be used exclusively to meet the obligations of the Three Joint
Ventures as approved by the lender. Such reserved amounts, of
approximately $9,356,000 and $23,930,000 in the aggregate at December 31,
1995 and 1994, respectively, are classified as restricted funds in the
accompanying combined balance sheet.

As more fully discussed in Note 3(c) of Carlyle-XIV financial
statements filed with this annual report, due to the potential sale of the
2 Broadway building at a sales price significantly below its original
carrying value, net of depreciation, (the property was sold in September
1995) the 2 Broadway venture made a provision for value impairment on such
investment property of $192,627,560 during 1993. The provision for value
impairment was allocated $136,534,366 and $56,093,194 to the O&Y affiliates
and to JMB/NYC, respectively. Such provision was allocated to the partners
to reflect their respective ownership percentages before the effect of the
non-recourse purchase notes including related accrued interest.

Amounts due from the Olympia & York affiliates aggregated $15,417,785
and $13,608,787, respectively, at December 31, 1995 and 1994. Due to the
financial difficulties of O&Y and its affiliates, as more fully discussed
in Note 3(c) of the consolidated financial statements of Carlyle-XIV filed
with this annual report, and the resulting uncertainty of collectibility of
these amounts from the Olympia & York affiliates, JMB/NYC has recorded a
provision for doubtful accounts for the full receivable amount of
$15,417,785 and $13,608,787 at December 31, 1995 and 1994, respectively,
which is reflected in the accompanying combined financial statements.

Due to the uncertainty of collectibility of amounts due from certain
tenants at the Three Joint Venture investment properties, a provision for
doubtful accounts of $2,753,710, $3,609,771 and $11,551,049 at December 31,
1995, 1994 and 1993, respectively, is reflected in the accompanying
combined financial statements.

Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments," requires all
entities to disclose the SFAS 107 value of all financial assets and
liabilities for which it is practicable to estimate. Value is defined in
the Statement as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The Combined Ventures believe the carrying amount of
their financial instruments classified as current assets and liabilities
(excluding current portion of long-term debt) approximates SFAS 107 value
due to the relatively short maturity of these instruments. SFAS 107 states
that quoted market prices are the best evidence of the SFAS 107 value of
financial instruments, even for instruments traded only in thin markets.
The first mortgage loan is evidenced by certain bonds which are traded in
extremely thin markets. As of December 31, 1995 and through the date of
this report, a limited number of bonds have been sold and purchased in
transactions arranged by brokers for amounts ranging from approximately
$.66 to $.68 on the dollar. Assuming a rate of $.66 on the dollar, the
implied SFAS 107 value of the bonds (with an aggregate carrying balance of
$902,603,491 in the accompanying Combined Financial Statements) would be
approximately $596,000,000. Due to the significant discount at which the
bonds are currently trading, the SFAS 107 value of the JMB/NYC non-recourse
promissory notes payable and related deferred interest (aggregating
$80,437,137), which are effectively subordinated in payment to the bonds,
would be at a discount significantly greater than that at which the bonds
are currently traded. Due to, among other things, the likely inability to
obtain comparable financing under current market conditions and property
specific competitive conditions, and the unresolved issues with venture
partners as well as the alleged defaults on the first mortgage loan, the
Combined Ventures would likely be unable to refinance these properties to
obtain such calculated debt amounts reported (see notes 3 and 5.) The
Combined Ventures have no other significant financial instruments.

No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the venture partners rather than the
ventures.

(2) VENTURE AGREEMENTS

A description of the venture agreements is contained in Note 3(c) of
the Partnership's financial statements filed with this annual report. Such
note is incorporated herein by reference.

(3) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995 and
1994:
1995 1994
------------ ------------
First mortgage loan bearing
interest at the short-term
U.S. Treasury obligation note
rate plus 1-3/4% with a minimum
rate on the loan of 7% per annum;
allocated among and cross-
collaterally secured by the
237 Park Avenue Building and the
1290 Avenue of the Americas Building;
payments of principal and interest
based upon a 30-year
amortization schedule are due
monthly; however, commencing on a
date six months following the
attainment of a certain level
of annualized cash flow, any
interest in excess of 12% per
annum may be accrued, to the
extent that monthly cash flow
is insufficient to pay the full
monthly debt service, by adding
such deferred amount to the
outstanding balance of the loan;
the loan is in alleged default
at December 31, 1994 and 1995
(Reference is made to Note 3(c)
of the Partnership's financial
statements filed with this
annual report as to the calculation
of interest rate with reference
to this first mortgage loan);
the stated maturity of principal
(of $857,784,000) and accrued
interest is March 1999. . . $902,603,491 913,398,422

Less current portion
of long-term debt 902,603,491 913,398,422
-------------- -------------
Total long-term debt$ -- --
============== =============

The allocation of the first mortgage loan among the JMB/NYC joint
ventures (which is non-recourse to the joint ventures) is as follows:

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

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

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

(4) LEASES

As Property Lessor

At December 31, 1995, the properties in the combined group consisted
of two office buildings. All leases relating to the properties are
properly classified as operating leases; therefore, rental income is
reported when earned and the cost of each of the properties, excluding the
cost of land, is depreciated over the estimated useful lives. Leases with
commercial tenants range in term from one to 17 years and provide for fixed
minimum rent and partial to full reimbursement of operating costs.
Affiliates of the joint venture partners have lease agreements and occupy
approximately 95,000 square feet of space at 237 Park Avenue at rental
rates which approximate market.

During the fourth quarter of 1994, the 1290 Associates venture
negotiated an amendment with a tenant at 1290 Avenue of the Americas,
Deutsche Bank Financial Products Corporation, under which the tenant will
surrender space on the 12th and 13th floors (137,568 square feet or
approximately 7% of the building's leasable space) on or before June 30,
1996. The original lease (as amended) was to terminate on December 31,
2003. The amendment also added space on the 8th and 9th floors (44,360
square feet or approximately 2% of the building's leasable space) which
will expire on or before December 31, 1997. In consideration for this
amendment, the tenant paid an early termination fee of $29,000,000 to the
Joint Venture on December 1, 1994. John Blair & Co. (a tenant at 1290
Avenue of the Americas, which had leased 253,193 square feet or
approximately 13% of the building's leasable space) filed for Chapter 11
bankruptcy protection in 1993. Because much of the John Blair space had
been subleased, the Joint Venture had been collecting approximately 70% of

uncertainty regarding the collection of the balance of the monthly rents
from John Blair, a provision for doubtful accounts related to rents and
other receivables and accrued rents receivable aggregating $7,659,366 was
recorded at December 31, 1993 related to this tenant. During the second
quarter of 1994, a settlement was reached whereby the Joint Venture
received a $7,000,000 lease termination fee which included settlement of
past due amounts. In conjunction with the settlement, effective July 1,
1994, John Blair was released from all future lease obligations and the
Joint Venture now has direct leases with the original John Blair
subtenants. Such subtenants occupy 228,398 square feet or approximately
11% of the building's leasable space. JMB/NYC is amortizing the Deutsche
Bank and John Blair lease termination fees over the remaining terms of the
amended lease and leases with former subtenants, respectively.

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

$1,050,734,346
==============

(5) NOTES PAYABLE

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

1995 1994
----------- ----------
Promissory notes payable to an
affiliate of the unaffiliated
venture partners in the Three
Joint Ventures, bearing interest
at 12.75% per annum; cross-
collaterally secured by JMB/NYC's
interests in the Three Joint
Ventures one of which is addi-
tionally secured by $19,000,000 of
distributable proceeds from two
of the Three Joint Ventures;
interest accrues and is deferred,
compounded monthly, until
December 31, 1991; monthly
payments of accrued interest,
based upon the level of distri-
butions to JMB/NYC, thereafter
until maturity; principal and
accrued interest due March 20,
1999. Accrued deferred interest
of $47,164,545 and $93,853,559
is outstanding at December 31,
1995 and 1994, respectively $33,272,592 34,158,225
----------- ----------
Less current portion of
notes payable. . . . . -- --
----------- ----------
Long-term notes payable. $33,272,592 34,158,225
=========== ==========

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

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

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

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

<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<CAPTION>

COST
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
UNCONSOLIDATED VENTURES (A) ACQUISITION AT CLOSE OF PERIOD (B)
----------------------------------------------------------------------------------
LAND AND BUILDINGS BUILDINGS LAND AND BUILDINGS
LEASEHOLD AND AND LEASEHOLD AND
ENCUMBRANCE(C) INTEREST IMPROVEMENTSIMPROVEMENTS INTEREST IMPROVEMENTS TOTAL (E)
-------------- ------------------------------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE
BUILDING:
New York,
New York
(237 Park
Avenue). .$360,961,491 79,653,996 226,634,894 1,312,776 79,653,996 227,947,670 307,601,666
New York,
New York
(1290 Avenue
of the
Americas).541,642,000 90,952,993 556,434,718 8,848,434 84,285,719 571,950,426 656,236,145
------------ ----------- ----------- ----------- ----------- ----------- -----------

Total .$902,603,491 170,606,989 783,069,612 10,161,210 163,939,715 799,898,096 963,837,811
============ =========== =========== =========== =========== =========== ===========

</TABLE>

<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DEPRECIATION(F) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
--------------- ------------ ------------------------- -----------
<S> <C> <C> <C> <C> <C>
OFFICE BUILDING:
New York, New York
(237 Park Avenue). . $ 86,212,869 1981 8/14/84 5-30 years 9,250,111
New York, New York
(1290 Avenue of
the Americas). . . . 228,017,972 1963 7/27/84 5-30 years 19,058,789
------------ ----------

Total . . . . . . $314,230,841 28,308,900
============ ==========

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

Notes:
(A) The initial cost represents the original purchase price of the property, including amounts incurred
subsequent to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1995 for Federal income tax purposes was
approximately $1,004,958,700.
(C) Reference is made to Note 5 of Combined Financial Statements for the current outstanding principal
balances and a description of the notes payable secured by JMB/NYC's interests in the Three Joint Ventures which
are not included in the amounts stated above.
(D) Includes provision for value impairment 1290 Avenue of the Americas of $50,446,010 recorded
September 30, 1992.

</TABLE>

<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995

(E) Reconciliation of real estate owned:

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

Balance at end of period. . . . . . . . $ 963,837,811 1,125,372,821 1,122,949,035
============== ============= =============

(F) Reconciliation of accumulated depreciation:

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

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

</TABLE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

There were no changes of in or disagreements with accountants during
1994 or 1995.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. Substantially all of the
outstanding shares of JMB are owned by certain of its officers, directors,
members of their families and affiliates. JMB has responsibility for all
aspects of the Partnership's operations, subject to the requirement that
sales of real property must be approved by the Associate General Partner of
the Partnership, ABPP Associates, L.P. Effective December 31, 1995, ABPP
Associates, L.P. acquired all of the partnership interests in Realty
Associates-XIV, L.P., the Associate General Partner, and elected to
continue the business of Realty Associates-XIV, L.P. ABPP Associates,
L.P., an Illinois limited partnership with JMB as its sole general partner,
continues as the Associate General Partner. The Associate General Partner
shall be directed by a majority in interest of its limited partners (who
are generally officers, directors and affiliates of JMB or its affiliates)
as to whether to provide its approval of any sale of real property (or any
interest therein) of the Partnership. The Partnership is subject to
certain conflicts of interest arising out of its relationships with the
General Partners and their affiliates as well as the fact that the General
Partners and their affiliates are engaged in a range of real estate
activities. Certain services have been and may in the future be provided
to the Partnership or its investment properties by affiliates of the
General Partners, including property management services and insurance
brokerage services. In general, such services are to be provided on terms
no less favorable to the Partnership than could be obtained from
independent third parties and are otherwise subject to conditions and
restrictions contained in the Partnership Agreement. The Partnership
Agreement permits the General Partners and their affiliates to provide
services to, and otherwise deal and do business with, persons who may be
engaged in transactions with the Partnership, and permits the Partnership
to borrow from, purchase goods and services from, and otherwise to do
business with, persons doing business with the General Partners or their
affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.

The names, positions held and length of service therein of each
director and the executive and certain other officers of the Corporate
General Partner of the Partnership are as follows:

SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------

Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Chief Executive Officer 8/01/93
Executive Vice President 1/02/87
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91

There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 5, 1996. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 5,
1996. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.

JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XV ("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI
("Carlyle-XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-
XVII"), JMB Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage
Partners, Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB
Income Properties, Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-X
("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"),JMB
Income Properties, Ltd.-XII ("JMB Income-XII") and JMB Income Properties,
Ltd.-XIII ("JMB Income-XIII"). JMB is also the sole general partner of the
associate general partner of most of the foregoing partnerships. Most of
the foregoing directors and officers are partners in the Associate General
Partner and also officers and/or directors of various affiliated companies
of JMB including Income Growth Managers, Inc. (the corporate general
partner of IDS/JMB Balanced Income Growth, Ltd. ("IDS/BIG"), Arvida/JMB
Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.) and
Arvida/JMB Managers-II, Inc. (the general partner of Arvida/JMB Partners,
L.P.-II ("Arvida-II")). Most of such directors and officers are also
partners, directly or indirectly, of certain partnerships which are
associate general partners in the following real estate limited
partnerships: the Partnership, Carlyle-VII, Carlyle-IX, Carlyle-X,
Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XV, Carlyle-XVI, Carlyle-
XVII, JMB Income-VI, JMB Income-VII, JMB Income-IX, JMB Income-X, JMB
Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage Partners, Mortgage

Partners-II, Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income
Plus, Carlyle Income Plus-II and IDS/BIG.

The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:

Judd D. Malkin (age 58) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc.,
an affiliate of JMB that is a real estate investment trust in the business
of owning, managing and developing shopping centers. He is a Certified
Public Accountant.

Neil G. Bluhm (age 58) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.

Burton E. Glazov (age 57) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.

Stuart C. Nathan (age 54) has been associated with JMB since July,
1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.

A. Lee Sacks (age 62) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.

John G. Schreiber (age 49) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. Since 1994, Mr. Schreiber has also
served as a Trustee of Amli Residential Property Trust, a publicly-traded
real estate investment trust that invests in multi-family properties. Mr.
Schreiber is also a director of Urban Shopping Centers, Inc., an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is also a director of a
number of investment companies advised or managed by T. Rowe Price
Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.

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

Glenn E. Emig (age 48) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.

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

Gailen J. Hull (age 47) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.

Howard Kogen (age 60) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Limited Partners, and a
share of profits or losses. Reference is made to Notes 5 and 9 for a
description of such transactions, distributions and allocations. In 1995,
1994 and 1993, the General Partners received distributions of $81,017 (all
of which were distributable sale or refinancing proceeds), $0 and $0,
respectively, and the Corporate General Partner received management fees of
$0, $0 and $0, respectively.

An affiliate of the Corporate General Partner provided property
management services during 1995 for Louis Joliet Mall. In 1995 such
affiliate earned property management and leasing fees amounting to $433,723
for such services, all of which were paid as of December 31, 1995. Another
affiliate of the Corporate General Partner earned and received $11,600 for
certain property management services for Wilshire Bundy Plaza in 1995. In
addition, an affiliate of the Corporate General Partner had managed the
Piper Jaffray Tower through November 1994. In conjunction with the August
1992 loan modification, the affiliated property manager had agreed to defer
receipt of its property management fees which aggregated $1,839,000 at
December 31, 1995. As set forth in the Prospectus of the Partnership, the
Corporate General Partner must negotiate such agreements on terms no less
favorable to the Partnership than those customarily charged for similar
services in the relevant geographical area (but in no event at rates
greater than 6% of the gross income from a property), and such agreements
must be terminable by either party thereto, without penalty, upon 60 days'
notice. In December 1994 the affiliated property manager entered into an
agreement with an unaffiliated third party for the sub-management of the
900 Third Avenue building. Property management fees for this property were
$452,518 in 1995, all of which were paid to the sub-manager.

JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1995
aggregating $64,121 in connection with the provision of insurance coverage
for certain of the real property investments of the Partnership. Such
commissions are at rates set by insurance companies for the classes of
coverage provided.

The General Partners of the Partnership or their affiliates may be
reimbursed or paid for their direct expenses or out-of-pocket expenses and
salary and salary-related expenses relating to the administration of the
Partnership and the operation of the Partnership's real property
investments. In 1995, the Corporate General Partner of the Partnership was
due reimbursement for such expenses in the amount of $276,487, of which
$84,757 was unpaid at December 31, 1995. Additionally, the General
Partners are also entitled to reimbursements for legal and accounting
services. Such costs for 1995 were $188,970, all of which were paid as of
December 31, 1995.

The Partnership has an 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 (reflected in amounts due to
affiliates in the accompanying consolidated financial statements). As of
December 31, 1995, these obligations bore interest at 5.83% per annum and
interest accrued on these obligations was $343,979.

The Partnership is permitted to engage in various transactions
involving the General Partners and their affiliates, as described in Item
10.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

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

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

Limited Partnership
Interests Corporate General Partner, 16.9 Interests (1) (2) Less than 1%
its officers and
directors and the
Associate General
Partner as a group

<FN>

(1) Includes 5 Interests owned by the Initial Limited Partner of the Partnership for which JMB, as its
indirect majority shareholder, is deemed to have sole voting and investment power.

(2) Includes 11.9 Interests owned by officers or their relatives for which an officer has investment and
voting power as to such Interests so owned.

No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.

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

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

</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

(1) Financial Statements (See Index to Financial Statements
filed with this annual report).

(2) Exhibits.

3-A.* Amended and Restated Agreement of Limited
Partnership.

3-B.* Assignment Agreement by and among the
Partnership, the General Partners and the Initial Limited Partner.

4-A. Long-term debt documents relating to the first
mortgage loan secured by the Wilshire Bundy Plaza in Los Angeles,
California are hereby incorporated by reference to the Partnership's Report
on Form 8-K (File No. 0-15962) dated February 19, 1986.

4-B. Long-term debt documents relating to the first
mortgage loan secured by the 2 Broadway, 1290 Avenue of the Americas and
237 Park Avenue Buildings are hereby incorporated by reference to the
Partnership's Post-Effective Amendment #1 to the Partnership's Registration
Statement on Form S-11 (File No. 0-15962) dated June 4, 1984.

4-C. Long-term debt documents relating to the
refinancing of the first mortgage loan secured by the 1090 Vermont office
building in Washington, D.C. are hereby incorporated by reference to the
Partnership's Report on Form 10-K (File No. 0-15962) dated March 27, 1995.

4-D. Long-term debt documents relating to the
September 1995 refinancing of the first and second mortgage loans secured
by the Louis Joliet Mall are hereby incorporated by reference to the
Partnership's Report on Form 10-Q (File No. 0-15962) dated November 9,
1995.

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. 0-15962) 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 (File No. 0-15962) 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 (File No. 0-15962) dated June 4, 1984.

10-D. 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 (File No. 0-15962) dated June 4, 1984.

10-E. 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.
0-15962) dated August 1, 1985.

10-F.* 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.

10-G. 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 dated
May 14, 1993.

10-H. 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. 0-15962) dated
May 14, 1993.

10-I. 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. 0-15962) dated March 28, 1994.

10-J. 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.
0-15962) for August 30, 1993, dated November 12, 1993.

10-K. 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 0-15962) dated March 28, 1994.

10-L. 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. 0-15962) dated March 28, 1994.

10-M. $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. 0-15962) dated March 28, 1994.

10-N. $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. 0-15962) dated March 28, 1994.

10-O. Proposed Restructure of Two Broadway, 1290
Avenue of the Americas and 237 Park Avenue, New York, New York and Summary
of Terms dated October 14, 1994, is hereby incorporated by reference to the
Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-15962)
dated March 27, 1995.

10-P. Assumption Agreements dated October 14, 1994
made by 237 Park Avenue Associates and by 1290 Associates in favor and for
the benefit of O&Y Equity Company, L.P., O&Y NY Building Corp. and JMB/NYC
Office Building Associates, L.P., are hereby incorporated by reference to
the Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-
15962) dated March 27, 1995.

10-Q. Assumption Agreements dated October 14, 1994
made by O&Y Equity Company, L.P., and by O&Y NY Building Corp. and by
JMB/NYC Office Building Associates, L.P. in favor and for the benefit of 2
Broadway Associates and 2 Broadway Land Company, are hereby incorporated by
reference to the Partnership's Report for December 31, 1994 on Form 10-K
(File No. 0-15962) dated March 27, 1995.

10-R. Lockbox and forbearance agreements related to
the mortgage note secured by the Wells Fargo Building, are hereby
incorporated by reference to the Partnership's Report for December 31, 1994
on Form 10-K (File No. 0-15962) dated March 27, 1995.

10-S. Amendment No. 1 to the Agreement of Limited
Partnership of Carlyle-XIV Associates, L.P. dated January 1, 1994 by and
between Carlyle Investors, Inc. a Delaware corporation, as general partner,
and Carlyle Real Estate Limited Partnership-XIV, an Illinois limited
partnership, as limited partner, is hereby incorporated by reference to the
Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-15962)
dated May 11, 1995.

10-T. Amendment No. 1 to the Second Amended and
Restated Articles of Partnership of JMB/NYC Office Building Associates,
L.P. dated January 1, 1994 by and between Carlyle Managers, Inc. a Delaware
corporation, as general partner, and Carlyle-XIII Associates, L.P. a
Delaware limited partnership, Carlyle-XIV Associates, L.P. a Delaware
limited partnership and Property Partners, L.P. a Delaware limited
partnership, as the limited partners, is hereby incorporated by reference
to the Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-
15962) dated May 11, 1995.

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

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

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

21. List of Subsidiaries.

24. Powers of Attorney.

27. Financial Data Schedule.

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

* Previously filed as Exhibits 3-B, 3-C and 10-H to the Partnership's
Report for December 31, 1992 on Form 10-K of the Securities Exchange Act
(File No. 0-15962) filed on March 30, 1993 and hereby incorporated herein
by reference.

Although certain additional long-term debt instruments of the
Registrant have been excluded from Exhibit 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such agreements
to the Securities and Exchange Commission upon request.

(b) No reports on Form 8-K were filed since the beginning of the
last quarter of the period covered by this report.

No annual report for the year 1995 or proxy material has been sent
to the Partners of the Partnership. An annual report will be sent to the
Partners subsequent to this filing.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

By: JMB Realty Corporation
Corporate General Partner

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

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

By: JMB Realty Corporation
Corporate General Partner

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

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

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

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

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

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

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

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

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

EXHIBIT INDEX

DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----

3-A. Pages 8-18, 68-71, A-7 to A-12
and A-14 to A-20 of Prospectus
of the Partnership dated
June 4, 1984 Yes

3-B. Amended and Restated Agreement of
Limited Partnership Yes

3-C. Assignment Agreement by and among
the Partnership, the General Partners
and the Initial Limited Partners is
filed herewith Yes

4-A. -
4-B. Long-Term Debt Documents are hereby
incorporated herein by reference Yes

4-C. Long-term debt documents relating
to the refinancing of the first
mortgage loan secured by the
1090 Vermont Office Building
in Washington, D.C. Yes

10-A -
10-E. Acquisition Documents are hereby
incorporated herein by reference Yes

10-F. Agreement dated March 25, 1993
between JMB/NYC and the Olympia
& York affiliates Yes

10-G. Settlement Agreement dated March 12,
1993 between the Resolution Trust
Corporation and Carlyle-XIV Yes

10-H. Agreement of Limited Partnership
of Carlyle-XIV Associates, L.P. Yes

10-I. Second Amended and Restated Articles
of Partnership of JMB/NYC Office
Building Associates Yes

10-J. Documents relating to the sale by
the Partnership of its interest
in the Old Orchard Venture Yes

10-K. Amended and Restated Certificate
of Incorporation of Carlyle-XIV
Managers, Inc. (known as Carlyle
Managers, Inc.) Yes

10-L. Amended and Restated Certificate
of Incorporation of Carlyle-XIII
Managers, Inc. (known as Carlyle
Investors, Inc.) Yes

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

EXHIBIT INDEX - CONTINUED

DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----
10-M. $1,200,000 demand note between
Carlyle-XIV Associates, L.P. and
Carlyle Managers, Inc. Yes

10-N. $1,200,000 demand note between
Carlyle-XIV Associates, L.P. and
Carlyle Investors, Inc. Yes

10-O. Proposed Restructure of Two Broadway,
1290 Avenue of the Americas and
237 Park Avenue, New York, New York
and Summary of Terms dated October
14, 1994 Yes

10-R. Lockbox and forbearance agreements
related to the mortgage note secured
by the Wells Fargo Building. Yes

10-S. Amendment No. 1 to the Agreement of
Limited Partnership of Carlyle-XIV
Associates, L.P. dated January 1, 1994
by and between Carlyle Investors, Inc.,
a Delaware corporation, as general partner,
and Carlyle Real Estate Limited
Partnership-XIV, an Illinois limited
partnership, as limited partner. Yes

10-T. Amendment No. 1 to the Second Amended
and Restated Articles of Partnership of
JMB/NYC Office Building Associates, L.P.
dated January 1, 1994; by and between
Carlyle Managers, Inc., a Delaware
corporation, as general partner, and
Carlyle-XIII Associates, L.P., a Delaware
limited partnership, Carlyle-XIV Associates,
L.P., a Delaware limited partnership and
Property Partners, L.P., a Delaware limited
partnership, as the limited partners.Yes

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

EXHIBIT INDEX - CONTINUED

DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----

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

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

21. List of Subsidiaries No

24. Powers of Attorney No

27. Financial Data Schedule No

AGREEMENT OF SALE

BETWEEN

2 BROADWAY ASSOCIATES, L.P.

AS SELLER,

AND

2 BROADWAY ACQUISITION, CORP.

AS PURCHASER

TABLE OF CONTENTS

PAGE

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

ARTICLE II: Deposit, Purchase Price and Apportionments 2

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

iii
AGREEMENT OF SALE

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

ARTICLE I: SALE OF PROPERTY

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

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

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

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

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

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

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

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

ARTICLE II: DEPOSIT, PURCHASE PRICE AND APPORTIONMENTS

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

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

2.3 PRORATIONS.

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

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

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

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

(iv) assessments, if any;

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

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

(vii)interest on tenant security deposits if applicable;

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

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

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

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

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

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

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

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

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

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

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

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

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

2.4 TAX REDUCTION PROCEEDINGS.

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

2.5 CLOSING EXPENSES.

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

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

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

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

(d) GAINS TAX.

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

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

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

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

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

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

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

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

ARTICLE III: TITLE AND SURVEY

3.1 PERMITTED EXCEPTIONS.

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

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

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

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

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

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

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

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

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

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

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

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

3.2 OTHER TITLE MATTERS.

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

-8-
default under paragraph (b) below) Seller shall not have succeeded in
removing, remedying or complying with such liens, encumbrances or other
objections at the expiration of any such adjournment or if for any reason
whatsoever (except as set forth in Section 7.2 below) Seller shall have
failed to satisfy any other condition to Closing contained in this
Agreement at the expiration of any such adjournment, and, in either case,
shall not elect or shall not be entitled to further adjourn the Closing,
and if Purchaser shall still be unwilling to waive the same and to
consummate the Closing without abatement or reduction of the Purchase Price
or credit or allowance of any kind, this Agreement shall be, and be deemed
to be, canceled, the Deposit shall be promptly returned to Purchaser, and
the parties shall have no further obligations under this Agreement except
those which are expressly stated to survive the termination thereof.

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

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

ARTICLE IV: COVENANTS; ASSUMPTION OF BROKERAGE AGREEMENTS;
REPRESENTATIONS

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

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

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

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

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

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

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

-10-
approval or disapproval. If Purchaser fails to respond within said five
(5) business day period Purchaser shall be deemed to have granted approval
or consent.

4.2 PURCHASER'S COVENANTS

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

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

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

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

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

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

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

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

4.4 REPRESENTATIONS.

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

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

ARTICLE V: THE CLOSING

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

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

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

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

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

-13-
effect on the Closing Date without, recourse or warranty, in the form
attached as EXHIBIT J hereto, which shall include Purchaser's assumption of
Seller's obligations under the Leases and Contracts accruing from and after
the Closing Date;

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

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

(f) the Proration Agreement, executed by Seller;

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

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

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

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

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

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

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

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

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

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

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

(d) the Proration Agreement, executed by Purchaser;

-14-
(e) the RET Return, the RPT Return and the Gains Tax Document
executed and acknowledged by Purchaser, together with the payments, if any,
require by Section 2.5 above;

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

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

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

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

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

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

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

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

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

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

-15-
prior to the Closing (or such earlier date as is specified with respect to
a particular condition), then the party to this Agreement whose obligations
are conditioned upon the satisfaction of such condition may terminate this
Agreement by notice delivered to the other party at or prior to the
Closing; provided, however, if the failure to satisfy such condition is due
to the default of the party required to satisfy the same, the other party
may pursue its remedies under Article VII. In the event of any termination
of this Agreement, the lien of the Purchaser against the Property shall
wholly cease and, in addition to any other obligations of the parties which
are expressly stated herein to survive such termination, the parties'
respective obligations to instruct the Title Company to return the Deposit,
shall survive.

ARTICLE VII: TERMINATION, DEFAULT AND REMEDIES

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

7.2 DEFAULT BY SELLER

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

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

7.3 DEFAULT BY PURCHASER.

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

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

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

ARTICLE VIII: MISCELLANEOUS

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

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

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

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

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

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

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

If to Seller:

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

with a copy to:

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

-18-
and to :

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

If to Purchaser:

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

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

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

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

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

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

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

8.8 BINDING EFFECT: ASSIGNMENT.

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

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

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

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

8.10 RECORDATION.

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

-20-
8.11 APPROVAL. Whenever a party is required no to unreasonably
withhold its consent, and if no specific period of time is set forth in
which a response shall be given, such party shall also not unreasonably
delay the same.

8.12 SURVIVAL.

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

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

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

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

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

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

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

-21-
8.17 EMPLOYEE ARRANGEMENTS.

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

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

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

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

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

-22-
IN WITNESS WHEREOF. Seller and purchaser have executed this Agreement as
of the date first written above.

SELLER:

2 BROADWAY ASSOCIATES, L.P.

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

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

PURCHASER:

2 BROADWAY ACQUISITION CORP.

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

-23-

AGREEMENT OF CONVERSION

1290 ASSOCIATES

INTO

1290 ASSOCIATES, L.L.C.

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

W I T N E S S E T H:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Co-Partner 53.5%

Investor 46.5%

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

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

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

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

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

Co-Partner 53.5%

Investor 46.5%

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

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

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

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

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

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

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

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

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

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

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

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

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

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

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

By: Carlyle Managers, Inc.
General Partner

By:
Name:
Title:

O&Y EQUITY COMPANY, L.P.

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

By:
Name:
Title:

O&Y NY BUILDING CORP.

By:
Name:
Title:

AGREEMENT OF CONVERSION

237 PARK AVENUE ASSOCIATES

INTO

237 PARK AVENUE ASSOCIATES, L.L.C.

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

WITNESSETH:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Co-Partner 53.5%

Investor 46.5%

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

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

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

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

Co-Partner 53.5%

Investor 46.5%

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

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

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

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

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

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

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

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

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

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

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

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

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

BY: Carlyle Managers, Inc.
General Partner

By:
Name: Stuart Chatman
Title: President

O&Y EQUITY COMPANY, L.P.

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

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

O&Y NY BUILDING CORP.

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

EXHIBIT 21

LIST OF SUBSIDIARIES

The Partnership is a partner of the following joint ventures: 1090
Vermont Ave., N.W. Associates Limited Partnership, a limited partnership,
which holds title to the 1090 Vermont Avenue Building in Washington, D.C.;
Mariners Pointe Associates, a limited partnership, which holds title to the
Mariners Pointe Apartments in Stockton, California; Carlyle-XIV Associates,
L.P., an Illinois limited partnership which is a partner of JMB/NYC Office
Building Associates, L.P., an Illinois limited partnership, which is a
member or partner in (i) 237 Park Avenue Associates, L.L.C., a New York
limited liability company (converted from a New York general partnership in
1995) which holds title to the 237 Park Avenue Building, (ii) 1290
Associates, L.L.C., a New York limited liability company (converted from a
New York general partnership in 1995), which holds title to the 1290 Avenue
of the Americas Building, (iii) 2 Broadway Associates, a New York general
partnership, which held title to the 2 Broadway Building until its sale in
September 1995 and (iv) 2 Broadway Land Company, a New York general
partnership, which held title to the land underlying 2 Broadway Building
until its sale in September 1995 (all of these office buildings are in New
York, New York); JMB/Piper Jaffray Tower Associates, a general partnership,
which is a partner in (i) OB Joint Venture II, a general partnership, which
is a partner of 222 South Ninth Street Limited Partnership, a limited
partnership, which holds title to the Piper Jaffray Tower office building
in Minneapolis, Minnesota, and (ii) OB Joint Venture, a general
partnership, which holds title to the land underlying the Piper Jaffray
Tower office building; JMB/Piper Jaffray Tower Associates II, a general
partnership, which also is a partner in OB Joint Venture, a general
partnership, which holds title to the land underlying the Piper Jaffray
Tower office building; 900 3rd Avenue Associates, a general partnership,
which is a partner of Progress Partners, a general partnership, which holds
title to 900 Third Avenue Building located in New York, New York; Old
Orchard Associates a general partnership which recently held an interest in
the Old Orchard Shopping Center in Skokie (Chicago), Illinois. Generally,
the developer of the property is a partner in the joint ventures, however,
the partners in the JMB/NYC Office Building Associates, L.P. JMB/Piper
Jaffray Tower Associates, JMB/Piper Jaffray Tower Associates II, 900 3rd
Avenue Associates and Orchard Associates are affiliates of the General
Partners of the Partnership. Reference is made to Notes 3(b), 3(c) and
3(d) for a description of the terms of such joint venture partnerships.
The Partnership is a 40% shareholder in Carlyle Managers, Inc. and a 40%
shareholder in Carlyle Investors, Inc both of which are Illinois
corporations.

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XIV, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1995, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.

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

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

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

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

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

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

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

EXHIBIT 24

POWER OF ATTORNEY

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

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

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

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

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

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

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

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

<ARTICLE> 5

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

<CIK> 0000737291
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

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

<CASH> 16,210,170
<SECURITIES> 0
<RECEIVABLES> 3,284,062
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,494,232
<PP&E> 112,841,793
<DEPRECIATION> 36,814,248
<TOTAL-ASSETS> 106,113,792
<CURRENT-LIABILITIES> 72,169,436
<BONDS> 26,000,000
<COMMON> 0
0
0
<OTHER-SE> (177,286,506)
<TOTAL-LIABILITY-AND-EQUITY> 106,113,792
<SALES> 17,403,886
<TOTAL-REVENUES> 19,054,756
<CGS> 0
<TOTAL-COSTS> 14,667,584
<OTHER-EXPENSES> 1,418,705
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,041,298
<INCOME-PRETAX> (8,072,831)
<INCOME-TAX> 0
<INCOME-CONTINUING> (27,465,134)
<DISCONTINUED> (14,886,886)
<EXTRAORDINARY> 35,711,359
<CHANGES> 0
<NET-INCOME> (6,640,661)
<EPS-PRIMARY> (14.55)
<EPS-DILUTED> (14.55)

</TABLE>