CARLYLE REAL ESTATE LTD PARTNERSHIP XIV /IL/, 10-K405, 1998-03-30

CARLYLE REAL ESTATE LTD PARTNERSHIP XIV /IL/
10-K405, 1998-03-30
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year
ended December 31, 1997 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, Illinois 60611
(Address of principal executive office) (Zip Code)

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

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

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

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

LIMITED PARTNERSHIP INTERESTS
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

<PAGE>

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. . . . . . . . . . 17

Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 27

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 28

Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 75

PART III

Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . 75

Item 11. Executive Compensation . . . . . . . . . . . 78

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 79

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 80

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 80

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . 85

<PAGE>

PART I

ITEM 1. BUSINESS

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

The registrant, Carlyle Real Estate Limited Partnership-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 offering closed July 15,
1985. No holder of Interests (herein after "Holder" or "Holders of
Interests") has made any additional capital contribution after such date.
The Holders of Interests share in their portion of the benefits of
ownership of the Partnership's real property investments according to the
number of Interests held.

The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are or have been held by fee title, leasehold estates
and/or through joint venture partnership interests. The Partnership's real
estate investments are or have been 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 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
indirect interests in the 237 Park Avenue and 1290 Avenue of the Americas
investment properties and the Partnership's interest in the Wells Fargo
Center - South Tower and Piper Jaffray Tower, no later than December 31,
1999, barring any unforeseen economic developments.

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

<PAGE>

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1997,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL 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)(d)
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 (f)
3. Scottsdale Financial
Center I
Scottsdale,
Arizona. . . . . . 106,800 9/28/84 12/17/93 fee ownership of land and
sq.ft. improvements
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
5. 237 Park Avenue
Building
New York,
New York . . . . . 1,140,000 8/14/84 (i) 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 (i) fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships)
(c)

<PAGE>

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)(f)
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 10/11/96 fee ownership of land and
improvements (through joint
venture partnership) (c)(f)
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 (e)
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) (h)

<PAGE>

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 -
South 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)
16. Louis Joliet Mall
Joliet, Illinois . 305,000 7/31/85 5% fee ownership of land and
sq.ft. improvements (g) (h)
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)(e)
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 3/27/96 fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (e)

<PAGE>

<FN>
- -----------------------
(a)The computation of this percentage for properties held at
December 31, 1997 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.

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

(d)Reference is made to the Notes for a description of the sale of the
Partnership's interest in this investment property.

(e)Reference is made to the Notes for a description of the disposition
of this investment property.

(f)Reference is made to the Notes for a description of the sale of this
investment property.

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

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

(i)The original invested capital percentage for the 237 Park Avenue
Building and the 1290 Avenue of the Americas Building was 7% and 15%,
respectively. Reference is made to the Notes for a description of the
reorganization and restructuring of the Partnership's interests in these
investment properties.

</TABLE>

<PAGE>

The Partnership's real property investments are subject to competition
from similar types of properties (including in certain areas properties
owned by affiliates of the General Partners or properties owned by certain
of the joint venture partners) in the respective vicinities in which they
are located. Such competition is generally for the retention of existing
tenants. 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, 1997 are adequately insured.
Although there is earthquake insurance coverage for a portion of the value
of the Partnership's investment properties, the Corporate General Partner
does not believe that such coverage for the entire replacement cost of the
investment properties is available on economic terms.

Reference is made to Item 6 and to the Notes filed with this annual
report for a schedule of minimum lease payments to be received in each of
the next five years, and in the aggregate thereafter, under leases in
effect at the Partnership's investment property as of December 31, 1997.

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

The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1997 and 1996 for the Partnership's investment properties owned
during 1997:

<PAGE>

<TABLE>
<CAPTION>
1996 1997
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

1. 237 Park Avenue
Building
New York, New York . . . Advertising/
Insurance/Paper/
Real Estate
Investment 98% 98% 98% * * * * *

2. 1290 Avenue of the
Americas Building
New York, New York . . . Financial Services 78% 71% 81% * * * * *

3. 1090 Vermont Avenue
Building
Washington, D.C. . . . . Trade Associations 91% 88% 88% 84% 84% 84% 91% 93%

4. Piper Jaffray Tower
Minneapolis,
Minnesota. . . . . . . . Legal Services/
Advertising/
Financial Services 98% 98% 98% 98% 98% 98% 93% 93%

5. 900 Third Avenue
Building
New York, New York . . . Legal Services/
Detective Agency/
Financial Services 97% 98% 98% 98% 98% 98% 97% 97%

6. Wells Fargo Center -
South Tower
Los Angeles,
California . . . . . . . Business Infor-
mation Systems 95% 97% 92% 92% 93% 90% 90% 90%

7. Louis Joliet Mall
Joliet, Illinois . . . . Retail 77% 80% 79% 82% 82% 80% 82% 84%

<PAGE>

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

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

An "*" indicates that the joint venture which owns the property was restructured, and therefore, such
information is not meaningful for the Partnership. Reference is made to the Notes for further information
regarding the reorganized and restructured ventures.

</TABLE>

<PAGE>

ITEM 3. LEGAL PROCEEDING

The Partnership is not subject to any material legal proceedings.

Reference is made to the Notes for a discussion of certain litigation
involving the Partnership related to the 900 Third Avenue investment
property.

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 1997 and 1996.

PART II

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

As of December 31, 1997, there were 41,235 record Holders of the
400,863.85692 Interests outstanding 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, which, may be granted or withheld in its sole
and absolute discretion. The rights of a transferee of Interests who does
not become a substituted Limited Partner will be limited to the rights to
receive his share of profits or losses and cash distributions from the
Partnership, and such transferee will not be entitled to vote such
Interests or have other rights of a Limited Partner. No transfer will be
effective until the first day of the next succeeding calendar quarter after
the requisite transfer form satisfactory to the Corporate General Partner
has been received by the Corporate General Partner. The transferee
consequently will not be entitled to receive any cash distributions or any
allocable share of profits or losses for tax purposes until such next
succeeding calendar quarter. Profits or losses from operations of the
Partnership for a calendar year in which a transfer occurs will be
allocated between the transferor and the transferee based upon the number
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 the Notes 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. The mortgage loans secured by the 900 Third Avenue,
Wells Fargo Center - South Tower and Piper Jaffray Tower investment
properties restrict the use by the joint ventures which own such properties
of the cash flows from those properties as discussed more fully in the
Notes. In addition, the purchase money notes issued by JMB/NYC in
connection with its acquisition of interests in the 237 Park Avenue and
1290 Avenue of the Americas investment properties require that any
distributions payable to JMB/NYC with respect to such investment properties

<PAGE>

be applied to reduce the outstanding principal and interests on the
purchase notes.

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

<PAGE>

<TABLE>

ITEM 6. SELECTED FINANCIAL DATA

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

DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

<CAPTION>
1997 1996 1995 1994 1993
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . $ 11,393,348 11,830,330 19,054,756 23,597,310 25,596,437
============ =========== =========== =========== ===========
Earnings (loss) before
gains on sale or
disposition of
investment properties. . $ 8,080,035 152,923,409 (27,465,134) (24,870,881) (72,733,375)
Gains (losses) on sale
of investment
properties by uncon-
solidated ventures
or on sale or
disposition of
investment properties . -- 2,928,068 (14,886,886) 1,702,082 26,281,496
Extraordinary items . . . -- 23,622,011 35,711,359 (3,000,000) --
Cumulative effect of an
accounting change. . . . -- (16,000,000) -- -- --
------------ ----------- ----------- ----------- -----------
Net earnings (loss) . . . $ 8,080,035 163,473,488 (6,640,661) (26,168,799) (46,451,879)
============ =========== =========== =========== ===========

<PAGE>

1997 1996 1995 1994 1993
------------- ------------- ----------- ------------ ------------
Net earnings (loss) per
Interest (b):
Earnings (loss) before
gains on sale or
disposition of invest-
ment properties . . . $ 19.35 366.18 (65.74) (59.53) (177.06)
Gains (losses) on sale of
investment properties
by unconsolidated
ventures or on sale
or disposition
of investment
properties. . . . . . -- 7.23 (36.75) 4.20 64.88
Extraordinary items. . -- 58.33 87.94 (7.18) --
Cumulative effect of
an accounting
change. . . . . . . . -- (38.31) -- -- --
------------ ----------- ----------- ----------- -----------
Net earnings (loss) . . . $ 19.35 393.43 (14.55) (62.51) (112.18)
============ =========== =========== =========== ===========

Total assets. . . . . . . $ 63,829,469 60,002,966 106,113,792 147,075,454 149,516,685
Long-term debt. . . . . . $ 51,768,623 48,359,317 26,000,000 25,794,970 98,747,743
Cash distributions
per Interest (c). . . . $ -- -- 20.00 -- --
============ =========== =========== =========== ===========

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

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

(b) The net earnings (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 Holders of Interests since the inception
of the Partnership have represented a return of capital for financial reporting purposes.

</TABLE>

<PAGE>

<TABLE>

SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1997

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>

1993 . . . . . 82% $13.56
1994 . . . . . 79% 13.53
1995 . . . . . 88% 13.29
1996 . . . . . 82% 14.65
1997 . . . . . 84% 15.37
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal 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>

<PAGE>

<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 1997
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1998 5 19,101 $195,096 5%
1999 10 13,060 317,069 8%
2000 7 13,320 200,053 5%
2001 8 4,179 188,084 5%
2002 8 9,366 303,239 8%
2003 9 19,227 389,252 10%
2004 10 29,497 542,177 14%
2005 16 45,512 798,109 20%
2006 7 23,220 415,470 11%
2007 6 15,725 355,980 9%
<FN>
(1) Excludes leases that expire in 1998 for which renewal leases or leases with replacement
tenants have been executed as of January 9, 1998.
</TABLE>

<PAGE>

<TABLE>

Property
- --------

Piper Jaffray
Tower
a) The net rentable square feet ("NRA") occupancy rate and average base rent per
square foot as of December 31, 1997 were as follows:

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

1993 . . . . . 98% $16.92
1994 . . . . . 98% 15.84
1995 . . . . . 98% 15.01
1996 . . . . . 98% 14.66
1997 . . . . . 93% 15.37
<FN>
(1) Average base rent per square foot is based on NRA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option(s)
------------------- ----------- --------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>

Piper Jaffray, Inc.
(financial services) 310,111 $6,468,810 03/31/00 N/A
Campbell, Mithun, Esty
(advertising) 160,520 2,510,411 12/31/04 N/A

</TABLE>

<PAGE>

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

Annualized Percent of
Number of Approx. Total Base Rent Total 1997
Year Ending Expiring NRA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1998 5 7,790 $ 146,345 1%
1999 3 2,052 37,615 .4%
2000 10 347,194 6,865,462 66%
2001 5 19,200 139,202 1%
2002 2 23,231 204,754 2%
2003 4 70,493 804,465 8%
2004 2 161,480 2,631,155 25%
2005 1 3,740 16,272 .2%
2006 0 -- -- 0%
2007 0 -- -- 0%
<FN>
(1) Excludes leases that expire in 1998 for which renewal leases or leases with replacement
tenants have been executed as of January 23, 1998
</TABLE>

<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

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

In March 1997 some of the Holders of Interests received from a third
party unaffiliated with the Partnership an unsolicited offer to purchase up
to 18,000 Interests at $10 per Interest. In addition, in July 1997, some
of the Holders of Interests received from another third party unaffiliated
with the Partnership an unsolicited offer to purchase up to 4.5% of the
Interests at $20 per Interest. Both of such offers have expired. The
board of directors of JMB Realty Corporation ("JMB"), the Corporate General
Partner, has established a special committee (the "Special Committee")
consisting of certain directors of JMB to deal with all matters relating to
tender offers for Interests, including any and all responses to such tender
offers. The Special Committee has retained independent counsel to advise
it in connection with any tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to such tender offers. The Special Committee
on behalf of the Partnership, recommended against acceptance of these
offers, on the basis that, among other things, the offer prices were
inadequate. As of the date of this report, the Partnership believes that
approximately 1.38% of the Interests have been purchased by such
unaffiliated third parties either pursuant to such tender offers or through
negotiated purchases. It is possible that other offers for Interests may
be made by unaffiliated third parties in the future, although there is no
assurance that any third party will commence an offer for Interests, the
terms of any such offer or whether any such offer, if made, will be
consummated, amended or withdrawn.

At December 31, 1997, the Partnership had cash and cash equivalents of
approximately $21,052,000. Such funds are available for working capital
requirements. The Partnership has currently budgeted in 1998 approximately
$1,827,000 for tenant improvements and other capital expenditures. Such
items and the Partnership's share of such similar items for its
unconsolidated ventures in 1998 is currently budgeted to be approximately
$2,770,000. Actual amounts expended in 1998 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 of such investments.
However, due to the property specific concerns discussed below, the
Partnership currently considers only Louis Joliet Mall, 1090 Vermont Avenue
and 900 Third Avenue to be potential sources of future cash generated from
operations or sales. 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 property specific concerns discussed below, the Partnership had
suspended operating distributions beginning with the fourth quarter 1991
distribution payable in February 1992.

<PAGE>

The Partnership is maintaining funds for working capital purposes.
The Partnership may decide to commit a portion of these funds for various
purposes (discussed below and in the Notes) at its 900 Third Avenue and
Louis Joliet Mall investment properties beyond the amounts budgeted above.
The Partnership will not commit additional working capital funds for these
purposes unless, among other things, the Partnership believes that upon
sale of the particular property, the Partnership will receive a return of
the incremental funds and a reasonable rate of return thereon.

Piper Jaffray Tower

Occupancy of the building at the end of the fourth quarter of 1997 was
93%.

The property is subject to a mortgage loan in the original principal
amount of $100,000,000, of which approximately $96,127,000 is outstanding
as of December 31, 1997. The lender is essentially entitled to all
operating cash flow. 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 1995, 1996 or 1997. 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 1995 and 1996 totalled $464,178
and $741,627, respectively. During 1997, excess cash flow generated under
this agreement was $385,523 which is expected to be remitted to the lender
during the second quarter of 1998.

In addition, the mortgage loan provides that upon sale or refinancing,
the lender is entitled to prepayment fees as well as a significant level of
proceeds in excess of the then unpaid principal balance prior to
JMB/Piper's receipt of proceeds. While the loan modification provides
JMB/Piper with an opportunity to retain an ownership position in the
property, under the current terms of the modified debt, there must be
significant additional improvement in current market and property operating
conditions resulting in a substantial increase in the value of the property
before JMB/Piper can share in sale or refinancing proceeds. Currently,
Piper generates enough operating cash flow to meet the required debt
service payments. However, Piper may not be able to pay the required debt
service over the next several years as a result of the Popham Haik
("Popham") and Piper Jaffray, Inc. ("PJI") situations discussed below.
JMB/Piper will not commit additional capital to Piper unless, among other
things, it believes that upon sale of the property it will receive a return
of such funds and a reasonable rate of return thereon. If a funding
requirement arises and none of the Piper partners contribute the required
capital, the lender would likely take title to the property. Such
disposition of the Property would result in JMB/Piper, and therefore the
Partnership, recognizing a significant amount of gain for financial
reporting and Federal income tax purposes with no corresponding
distributable proceeds.

<PAGE>

On a monthly basis, Piper 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. At December 31, 1997, the balance of such escrow account totaled
approximately $4,722,000. 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, 1997, the manager has deferred approximately $3,852,000
($1,839,000 of which represents deferred fees due to affiliates through
November 1994, of which $919,500 is the Partnership's share) of management
fees.

During the second quarter of 1997, Piper executed an amendment to the
existing lease agreement with Popham. Under the terms of the agreement,
Popham immediately surrendered approximately 57,000 square feet of leased
space leaving approximately 47,000 square feet occupied by Popham. Popham
continued to pay rent and all charges in accordance with its original lease
on the remaining and give-back space through July 31, 1997. Popham's rent
on the remaining square footage increased to a market rate effective on
August 1, 1997. There was no adjustment to the lease expiration date
(January, 2003) on the remaining space. Piper has released approximately
23,000 square feet of the Popham give-back space. During the third
quarter, Popham informed Piper that effective in November 1997, it would
cease operations as Popham and consolidate with another law firm, Hinshaw &
Culberson ("Hinshaw"). Popham has claimed that at that time, its lease
with the building would terminate and the building would have to look to
the net assets of the disbanded Popham firm in satisfaction of the
remaining lease liability. In December, Piper signed a non-binding letter
of intent with Hinshaw to lease 31,920 square feet of the Popham space for
a term of five years, commencing January 1, 1998, at a market rental rate
which exceeds Popham's modified rate which became effective in August 1997.

Popham had paid its modified rent through the end of 1997. Commencing in
January 1998, Hinshaw began paying rent in accordance with the letter of
intent. In addition, assuming a lease is finalized with Hinshaw in
accordance with the letter of intent, Piper has agreed to terminate
Popham's lease effective December 31, 1997 with no further consideration.
There are no assurances that Piper will be successful in finalizing this
lease transaction or that it will be compensated in any way for the
termination of Popham's lease. As a result, the property's operating cash
flow has been and is expected to continue to be adversely affected due to
increased vacancy and leasing costs associated with releasing a portion of
the space given back or vacated by Popham.

PJI has leased an additional 22,712 square feet of space currently
under lease to another tenant with a lease expiration date of December 31,
1997. PJI's lease start date will be January 1, 1998 with a lease
expiration date coterminous with the remainder of its space on March 31,
2000. Throughout 1997, Piper discussed an early renewal with PJI which
(after the expansion discussed above) occupies 332,823 square feet or
approximately 46% of the building's rentable square feet, with a lease
expiration date at March 31, 2000. Piper and PJI were unable to come to
terms and during the fourth quarter of 1997, PJI announced that it would be
moving to a new building (to be built in Minneapolis) upon expiration of
its existing lease in 2000.

As of September 30, 1997, the JMB/Piper venture has classified the
remaining assets as held for sale or disposition. These assets will
therefore no longer be subject to continued depreciation.

<PAGE>

Wells Fargo Center - South Tower

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 vacancy rate of approximately 25% in the marketplace. The Partnership
expects that the competitive market conditions 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.

During 1996, the Partnership, the joint venture partner, and the
lenders reached an agreement to modify the mortgage note and the promissory
note. In conjunction with the note modifications, the Maguire/Thomas
Partners - South Tower LLC was converted to a limited liability company
with members' interests in the same ratio as the prior venture ownership
interests. The conversion of the Partnership's interest to a member's
interest in a limited liability company eliminates any potential additional
obligation of the Partnership in the future to provide additional funds
under the previous joint venture agreement. As a result, previously
recognized losses of $5,712,902 have been reversed and the Partnership's
1997 share of income (approximately $152,000) has not been recognized as
such amount is not considered realizable. Since the terms of the
agreements make it unlikely that the Partnership would recover any
incremental investment, the Partnership has decided not to commit any
significant additional amounts to the property. Reference is made to the
Notes for a further description of these events.

JMB/NYC

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

As part of the Agreement, JMB/NYC and the Olympia & York affiliates
agreed to file a pre-arranged bankruptcy plan for reorganization under
Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring
of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and
the debt encumbering the two properties remaining after the sale of 2
Broadway. In June 1995, the 2 Broadway Joint Ventures filed their pre-
arranged bankruptcy plans for reorganization, and in August 1995, the
bankruptcy court entered an order confirming their plans of reorganization.

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

<PAGE>

confirmed by the Court on September 20, 1996 and became effective October
10, 1996 ("Effective Date"). The Plan provides that JMB/NYC has an
indirect limited partnership interest which, before taking into account
significant preferences to other partners, equals approximately 4.9% of the
reorganized and restructured ventures owning 237 Park and 1290 Avenue of
the Americas (the "Properties"). Neither O&Y nor any of its affiliates has
any direct or indirect continuing interest in the Properties. The new
ownership structure gives control of the Properties to an unaffiliated real
estate investment trust ("REIT") which is owned primarily by holders of the
first mortgage debt which encumbered the Properties prior to the
bankruptcy. JMB/NYC has, under certain limited circumstances, through
January 1, 2001 rights of consent regarding sale of the Properties or the
consummation of certain other transactions that significantly reduce
indebtedness of the Properties. In general, at any time on or after
January 2, 2001, an affiliate of the REIT has the right to purchase
JMB/NYC's interest in the Properties for certain amounts relating to the
operations of the Properties. There can be no assurance that such REIT
affiliate will not exercise such right on or after January 2, 2001. If
such REIT affiliate exercises such right to purchase, due to the level of
indebtedness remaining on the Properties, the original purchase money notes
payable by JMB/NYC, and the significant preference levels within the
reorganized structure and liabilities of the Partnership, it is unlikely
that such purchase would result in any significant distributions to the
partners of the Partnership. Additionally, at any time, JMB/NYC has the
right to require such REIT affiliate to purchase the interest of JMB/NYC in
the Properties for the same price at which such REIT affiliate can require
JMB/NYC to sell such interest as described above.

The restructuring and reorganization discussed above eliminates any
potential additional obligation of the Partnership in the future to provide
additional funds under its previous joint venture agreements(other than
that related to a certain indemnification agreement provided in connection
with the restructuring). The Affiliated Partners entered into a joint and
several obligation to indemnify, through a date no later than January 2,
2001, the REIT to the extent of $25 million to ensure their compliance with
the terms and conditions relating to JMB/NYC's indirect limited partnership
interest in the restructured and reorganized joint ventures that own the
Properties. The Affiliated Partners contributed approximately $7.8 million
(of which the Partnership's share was approximately $3.9 million) to
JMB/NYC which was deposited into an escrow account as collateral for such
indemnification. These funds have been invested in stripped U.S.
Government obligations with a maturity date of February 15, 2001. The
Partnership's share of the reduction of the maximum unfunded obligation
under the indemnification agreement recognized as income is a result of
interest earned on amounts contributed by the Partnership and held in
escrow by JMB/NYC. Such income earned reduces the Partnership's share of
the maximum unfunded obligation under the indemnification agreement, which
is reflected as a liability in the accompanying financial statements.

The provisions of the indemnification agreement generally prohibit the
Affiliated Partners from taking actions that could have an adverse effect
on the operations of the REIT. Compliance, therefore, is within the
control of the Affiliated Partners and non-compliance with such provisions
by either the Partnership or the other Affiliated Partners is highly
unlikely. Therefore, it is highly likely that the Partnership's share of
the collateral will be returned (including interest earned) at the
termination of the indemnification agreement.

1090 Vermont Avenue Building

Occupancy at this office building at the end of the fourth quarter of
1997 was 93%. The manager, on behalf of the 1090 Vermont venture,
finalized leases with the National Institute of Building Services
Corporation (12,392 square feet) and Steelcase, Inc. (5,176 square feet)
and Strickland & Ashe (2,218 square feet). These tenants moved into the
building during the third and fourth quarter of 1997. Leasing costs
associated with these leases were funded from the 1090 Vermont venture's
working capital funds.

<PAGE>

During the third quarter of 1997, the Partnership commenced marketing
the property for sale. The sale of the property is subject to the joint
venture partner's right of first refusal to purchase the Partnership's
interest in the venture for an amount which would be received by the
Partnership in connection with a third party sale of the property. In the
fourth quarter of 1997, the Partnership obtained a non-binding letter of
intent to sell the property to an unaffiliated third party. The
Partnership property notified the venture partner and in January 1998 the
venture partner notified the Partnership that it was exercising its right
of first refusal. As a result, the venture partner will purchase the
Partnership's interest for an amount equal to what the Partnership would
have received in the sale to the unaffiliated third party. The Partnership
expects that the sale of its interest will close in the second quarter of
1998. A sale at the proposed terms would result in a gain for both
financial reporting and Federal income tax purposes in 1998. However,
there can be no assurance that such sale will be finalized.

900 Third Avenue Building

Occupancy of this building at the end of the fourth quarter of 1997
was 97%.

Progress Partners is currently in negotiations with the building's
major tenant, Schulte, Roth & Zabel (120,991 square feet with a lease
expiration date of May 31, 2000), for an early renewal and expansion of its
lease. There are no assurances that an early renewal or expansion of this
tenant's lease will be achieved.

Pursuant to the extension on the mortgage loan, net cash flow (as
defined) is paid into an escrow account controlled by the lender. The
escrow account, including interest earned thereon, will be used by Progress
Partners for payment of property taxes and releasing costs associated with
leases which expire in 1999 and 2000 (approximately 50% of the building
including the Schulte, Roth & Zabel lease discussed above). The remaining
proceeds in this escrow plus interest earned thereon, if any, will be
released to Progress Partners once 90% of such space has been renewed or
released. During 1997, approximately $9,423,000 has been deposited into
escrow from net cash flow from property operations. Additionally,
approximately $5,173,000 has been withdrawn from the escrow account for
payment of real estate taxes in 1997.

JMB/900 is currently involved in litigation. Recent discussions
involved a settlement whereby JMB/900 would purchase all the unaffiliated
venture partner interests in Progress Partners. In December 1997, two of
the unaffiliated venture partners filed for bankruptcy which has stalled
settlement discussions. A more detailed discussion of these situations is
contained in the Notes. There are no assurances that a settlement will be
finalized on this or any other terms. The Partnership will not commit
capital to the purchase of the unaffiliated venture partner interests
unless, among other things, it believes that upon sale of the property, the
Partnership will receive a return of such funds and a reasonable rate of
return thereon.

<PAGE>

Louis Joliet Mall

Occupancy of this mall at the end of the fourth quarter of 1997 was
84% (excluding the effect of the move-out of General Cinema, Inc. in 1994).

The Partnership is currently in final lease negotiations with a replacement
operator for General Cinema, Inc. (approximately 5% of the mall space)
which continues to pay rent on its vacated space in accordance with its
lease that expires in December 1998. In connection with the proposed new
lease, the Partnership will be required to contribute between approximately
$700,000 and $800,000 to reconfigure the current four screen cinema to a
six screen cinema. However, there can be no assurances that a lease will
be finalized with a replacement operator. A significant portion of the
mall's vacant space is contained in three large spaces which have been very
difficult to lease due to their size and location within the mall. The
manager is exploring the opportunity to lease some of this space to larger
"big box" space users which in the past have not occupied mall space.
Given their size, these types of tenants generally pay lower rents than
typical regional and national mall tenants. In addition, the Partnership
would likely need to commit substantial capital toward the build-out of
this space for these users. The Partnership will not commit additional
capital to this property for build out or other leasing costs unless, among
other things, it believes that upon sale of the property, the Partnership
will receive a return of such funds and a reasonable rate of return
thereon.

During 1997, the Partnership agreed to dismiss the litigation
regarding the lease termination for a former tenant, Al Baskin Co., with
the resolution as to the amount of the Partnership's claim against the
former tenant, and the acceptance of such claim by the bankruptcy estate.
The Partnership's claim in the amount of $315,000 (reduced from a maximum
amount of approximately $415,000) had been accepted as an unsecured claim
by the bankruptcy estate. In May 1997, the Partnership, upon disposition
of its claim, received approximately $108,000 representing its share of
available proceeds from the bankruptcy estate.

Yerba Buena Office Building

In June 1992, title to the Yerba Buena Office Building in San
Francisco, California was transferred to the lender by the joint venture (a
partnership comprised of the Partnership, two other limited partnerships
sponsored by the Partnership's Corporate General Partner and four
unaffiliated limited partners). In return for a smooth transition of title
and management of the property, the joint venture was able to negotiate the
right to share in future sale proceeds, if any, above certain specified
levels. In addition, the joint venture had a right of first opportunity to
purchase the property during the time frame of June 1995 through May 1998
should the lender wish to market the property for sale. The lender sold
the property to an unaffiliated third party during 1996. The sale price
did not generate a level of distributable proceeds where the joint venture
would have been entitled to a share. However, the joint venture was not
given an opportunity to purchase the property on the same terms it was sold
for. The joint venture has filed a suit against the lender for breach of
its obligation. There are no assurances that the joint venture will
recover any amounts as a result of this action.

<PAGE>

Turtle Creek

In March 1989, the lender on the Turtle Creek Centre in Dallas, Texas
realized upon its security by taking title to the property because the
Partnership's venture partner defaulted upon its obligation to make the
required debt service payments. In April 1992, the Partnership signed a
settlement agreement with the venture partner and its principals. Under
the terms of the settlement, the Partnership was to receive total principal
payments of $4,075,000 over a six year period ending April 1998. The final
payment of $1,425,000 was due in April 1998. The venture partner contacted
the Partnership to discuss payment of this amount at the end of 1997 with a
small discount on the total amount due. The Partnership agreed to accept a
payment of $1,400,000 if paid by the end of the year. The Partnership
received the final payment on December 31, 1997.

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. 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 generally 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 partner in an investment
might become unable or unwilling to fulfill its financial or other
obligations, or that such joint venture partner 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 may seek 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.

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 Holders of Interests. 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. In such regard, certain of the properties have been
classified by the Partnership or its ventures as held for sale or
disposition, and therefore, will no longer be subject to continued
depreciation. The Partnership currently expects that it will sell or
dispose of its remaining investment properties, with the possible exception
of its indirect interests in the 237 Park Avenue and the 1290 Avenue of the
Americas investment properties and the Partnership's interest in the Wells
Fargo Center - South Tower and Piper Jaffray Tower, no later than the end
of 1999, barring unforeseen economic developments. Although the
Partnership remains hopeful that it will be able to distribute sale
proceeds from the disposition of the 900 Third Avenue, 1090 Vermont Avenue
Building and Louis Joliet Mall investment properties, aggregate
distributions of sale and refinancing proceeds received by Holders of
Interest over the entire term of the Partnership will be substantially less
than one-fourth of their original investment. However, in connection with
sales or other dispositions (including transfers to lenders) of properties

<PAGE>

(or interests therein) owned by the Partnership or its joint ventures,
Holders of Interests may be allocated substantial gain for Federal income
tax purposes, regardless of whether any proceeds are distributable from
such sales or other dispositions. In particular, the Piper Jaffray Tower,
237 Park Avenue, 1290 Avenue of the Americas and the Wells Fargo Center -
South Tower investment properties continue to suffer from the effects of
the high levels of debt secured by each property and provide no cash flow
to the Partnership. While loan and joint venture modifications have been
obtained which enable the Partnership to retain an ownership interest in
these properties, it is currently unlikely under existing arrangements that
the Partnership will receive significant proceeds from operations or sales
of these properties. However, upon disposition, the Partnership, and
therefore the Holders of Interest will recognize a significant amount of
taxable income with no distributable proceeds. For certain Holders of
Interests, such taxable gain may be offset by their suspended passive
activity losses (if any). Each Holder's tax consequences will depend on
such Holder's own tax situation.

RESULTS OF OPERATIONS

At December 31, 1997, 1996 and 1995, the Partnership owned seven,
seven and nine investment properties, respectively, all of which were
operating.

Significant variances between periods reflected in the accompanying
consolidated financial statements not otherwise reported are primarily the
result of the sale of the Mariners Pointe Apartments in October 1996, the
lender realizing upon its security in the Wilshire Bundy Plaza in March
1996, the sale of the Partnership's interest in the 2 Broadway Building in
September 1995, the lender realizing upon its security in the Louisiana
Tower in August 1995, the sale of the Brittany Downs Apartments in 1995,
and the restructurings of the Partnership's interest in JMB/NYC and South
Tower in 1996.

The increase in cash and cash equivalents at December 31, 1997 as
compared to December 31, 1996 and the related increase in other income for
1997 as compared to 1996 and 1995 is primarily due to the receipt of the
final settlement payment of $1,400,000 related to Turtle Creek in December
1997.

The increase in interest, rents and other receivables at December 31,
1997 as compared to December 31, 1996 is primarily due to the timing of
receipt of interest earned on the Partnership's cash investments.

The decrease in unearned rents at December 31, 1997 as compared to
December 31, 1996 is primarily due to the timing of receipts for rental
income at the Louis Joliet Mall.

The decrease in investment in unconsolidated ventures, at equity at
December 31, 1997 as compared to December 31, 1996 is primarily due to the
reversal of a portion of the accrued contingent interest related to the
mortgage loan for the Piper Jaffray Building.

The increase in long-term debt, less current portion at December 31,
1997 as compared to December 31, 1996 is primarily due to interest accruing
on the promissory note secured by the Partnership's interest in Wells
Fargo. The note accrues interest at 17% per annum and is payable from cash
distributions received from Wells Fargo. No such distributions were
received in 1997.

The increase in interest income for the year ended December 31, 1997
as compared to the year ended December 31, 1996 is primarily due to higher
average balance for cash investments in 1997. The decrease for the year
ended December 31, 1996 as compared to the year ended December 31, 1995 is
primarily due to lower average balance for cash investments in 1996.

<PAGE>

The decrease in depreciation for the year ended December 31, 1997 as
compared to the year ended December 31, 1996 is primarily due to the
classification of Louis Joliet Mall as held for sale or disposition as of
December 31, 1996, and therefore, the property is no longer subject to
continuing depreciation.

The decrease in professional fees for the year ended December 31, 1997
as compared to the years ended December 31, 1996 and 1995 is primarily due
to the Partnership no longer incurring legal fees related to the
restructurings in 1996 of the Partnership's interest in Wells Fargo Center
and JMB/NYC's interest in 237 Park and 1290 Avenue of the Americas.

The increase in general and administrative expenses for the year ended
December 31, 1997 as compared to the years ended December 31, 1996 and 1995
is primarily due to an increase in costs for the use of independent third
parties to perform certain administrative services for the Partnership.

The restructuring fee for the year ended December 31, 1996 is due to
the loan modification of the Partnership's note payable to Wells Fargo and
restructuring of the South Tower venture during the fourth quarter of 1996.

The Partnership's share of the reduction of the maximum unfunded
obligation under the indemnification agreement recognized as income for the
period ending December 31, 1997 is a result of interest income earned on
amounts contributed by the Partnership and held in escrow by JMB/NYC. Such
income reduces the Partnership's proportionate share of its unfunded
maximum obligation under the indemnification agreement.

The decrease in Partnership's share of operations of unconsolidated
ventures for the year ended December 31, 1997 as compared to the year ended
December 31, 1996 and the increase for the year ended December 31, 1996 as
compared to the year ended December 31, 1995 is primarily due to the
restructuring of JMB/NYC's interests in the 237 Park Avenue, 1290 Avenue of
the Americas and Wells Fargo Center - South Tower Properties. During 1996,
the Partnership recognized income from restructuring of $163,226,750 which
is included with losses from operations of unconsolidated ventures.
Furthermore, due to the effects of the bankruptcy and related plan of
reorganization of the ventures in which JMB/NYC owns interests, the
Partnership recognized loss from operations of unconsolidated venture of
$496,653 for the year ending December 31, 1996 compared to losses of
$13,588,448 for the year ended December 31, 1995. Pursuant to the terms of
the Plan, JMB/NYC converted its general partnership interest in the joint
ventures which owned the Properties to a limited partnership interest and
accordingly no longer has a commitment to provide financial support to the
joint ventures owning the Properties. As of the Effective Date, the
Partnership has discontinued the application of the equity method of
accounting for its indirect interests in the properties and additional
losses from the investment in unconsolidated venture will not be
recognized. Additionally, the decrease in 1997 is partially offset by the
reversal of $18,600,000 of accrued contingent interest related to the
mortgage loan at the Piper Jaffray Tower. This resulted in additional
income allocated to the Partnership.

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

<PAGE>

which the properties are occupied. In addition, substantially all of the
leases at the Partnership's shopping center investment contain provisions
which entitle the property owner to participate in gross receipts of
tenants above fixed minimum amounts.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

INDEX

Independent Auditors' Report

Consolidated Balance Sheets, December 31, 1997 and 1996

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

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

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

Notes to Consolidated Financial Statements

SCHEDULE
--------

Consolidated Real Estate and Accumulated Depreciation III

SCHEDULES NOT FILED:

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

JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
UNCONSOLIDATED VENTURES OF
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

INDEX

Independent Auditors' Report

Combined Balance Sheets, December 31, 1997 and 1996

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

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

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

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 financial statements or related notes.

<PAGE>

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 venture 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, 1997 and 1996,
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1997, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

As discussed in the Notes to the consolidated financial statements, in
1996, the Partnership and its consolidated venture changed their method of
accounting for long-lived assets and long-lived assets to be disposed of to
conform with Statement of Financial Accounting Standards No. 121.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 25, 1998

<PAGE>

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

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1997 AND 1996

ASSETS
------
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 21,051,953 18,069,904
Interest, rents and other receivables (net of allowance
for doubtful accounts of $27,963 for 1997 and
$22,675 for 1996, respectively) . . . . . . . . . . . . . . . . . 253,069 162,300
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 25,860 25,860
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 292,110 250,603
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . 21,622,992 18,508,667
------------ ------------
Investment properties held for sale or disposition. . . . . . . . . . 33,994,623 33,602,388
------------ ------------

Investment in unconsolidated ventures, at equity. . . . . . . . . . . 6,570,294 6,279,874
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,082,305 1,158,543
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . 559,255 453,494
------------ ------------

$ 63,829,469 60,002,966
============ ============

<PAGE>

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

CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------

1997 1996
------------ ------------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 357,323 251,510
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 1,242,625 1,178,193
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 1,345,828 1,273,858
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 172,492 173,983
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . 593,054 600,100
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . 151,980 276,166
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . 3,863,302 3,753,810
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 17,169 15,168
Investment in unconsolidated ventures, at equity. . . . . . . . . . . 5,650,592 13,156,419
Partnership's share of the maximum unfunded obligation under the
indemnification agreement . . . . . . . . . . . . . . . . . . . . . 8,262,766 8,531,270
Long-term debt, less current portion. . . . . . . . . . . . . . . . . 51,768,623 48,359,317
------------ ------------
Commitments and contingencies

Total liabilities . . . . . . . . . . . . . . . . . . . . . 69,562,452 73,815,984

Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . (15,021,857) (15,345,058)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (1,316,336) (1,316,336)
------------ ------------
(16,337,193) (16,660,394)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . 351,746,836 351,746,836
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . (296,966,598) (304,723,432)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (44,176,028) (44,176,028)
------------ ------------
10,604,210 2,847,376
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . (5,732,983) (13,813,018)
------------ ------------
$ 63,829,469 60,002,966
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $ 8,559,300 10,544,285 17,403,886
Interest income . . . . . . . . . . . . . . . . . 1,056,203 854,307 1,138,093
Other income. . . . . . . . . . . . . . . . . . . 1,777,845 431,738 512,777
------------ ------------ ------------
11,393,348 11,830,330 19,054,756
------------ ------------ ------------
Expenses:
Mortgage and other interest . . . . . . . . . . . 5,893,740 5,971,389 11,041,298
Depreciation. . . . . . . . . . . . . . . . . . . -- 1,462,969 4,155,575
Property operating expenses . . . . . . . . . . . 4,145,604 5,289,810 9,861,497
Professional services . . . . . . . . . . . . . . 537,334 739,065 731,793
Amortization of deferred expenses . . . . . . . . 217,634 367,084 650,512
General and administrative. . . . . . . . . . . . 783,752 659,725 686,912
Restructuring fee . . . . . . . . . . . . . . . . -- 6,118,255 --
------------ ------------ ------------
11,578,064 20,608,297 27,127,587
------------ ------------ ------------
(184,716) (8,777,967) (8,072,831)
Partnership's share of the reduction of the
maximum unfunded obligation under the
indemnification agreement . . . . . . . . . . . . 268,504 -- --
Partnership's share of operations of unconsolidated
ventures (including income from restructuring of
$163,226,750 in 1996) . . . . . . . . . . . . . . 7,996,247 161,701,376 (19,392,303)
------------ ------------ ------------

Earnings (loss) before gain on sale or
disposition of investment properties. . . . . 8,080,035 152,923,409 (27,465,134)

Partnership's share of gains (losses) on sale
of investment properties by unconsolidated
ventures. . . . . . . . . . . . . . . . . . . . . -- 870,837 (29,579,058)
Gain on sales or dispositions of
investment properties . . . . . . . . . . . . . . -- 2,057,231 14,692,172
------------ ------------ ------------
Earnings (loss) before
extraordinary items . . . . . . . . . . . . . 8,080,035 155,851,477 (42,352,020)

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

1997 1996 1995
------------ ------------ ------------
Extraordinary items:
Gain on forgiveness of indebtedness . . . . . . . -- 23,622,011 1,650,638
Partnership's share of gain on
extinguishment of indebtedness of
unconsolidated venture. . . . . . . . . . . . . -- -- 31,264,814
Prepayment penalty on refinanced long-term
debt. . . . . . . . . . . . . . . . . . . . . . -- -- (204,093)
Provision for earthquake repairs. . . . . . . . . -- -- 3,000,000
Cumulative effect of an accounting change . . . . . -- (16,000,000) --
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . . . $ 8,080,035 163,473,488 (6,640,661)
============ ============ ============
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gains on sale or
disposition of investment properties. . . $ 19.35 366.18 (65.74)
Partnership's share of gains (losses)
on sale of investment properties
by unconsolidated ventures. . . . . . . . -- 2.15 (73.02)
Gains on sale or disposition of
investment properties . . . . . . . . . . -- 5.08 36.27
Extraordinary items . . . . . . . . . . . . -- 58.33 87.94
Cumulative effect of an accounting change . -- (38.31) --
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . $ 19.35 393.43 (14.55)
============ ============ ============

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

<PAGE>

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

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(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 earnings
(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)

Net earnings
(loss) . . . -- 5,742,437 -- 5,742,437 -- 157,731,051 -- 157,731,051
------ ----------- ---------- ----------- ----------- ------------ ----------- ------------

<PAGE>

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

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED

GENERAL PARTNERS LIMITED PARTNERS
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- ------------
Balance
(deficits)
Decem-
ber 31,
1996 . . . . 1,000 (15,345,058) (1,316,336) (16,660,394) 351,746,836 (304,723,432) (44,176,028) 2,847,376

Net earnings
(loss) . . . -- 323,201 -- 323,201 -- 7,756,834 -- 7,756,834
------ ----------- ---------- ----------- ----------- ------------ ----------- ------------
Balance
(deficits)
Decem-
ber 31,
1997 . . . .$1,000 (15,021,857) (1,316,336) (16,337,193) 351,746,836 (296,966,598) (44,176,028) 10,604,210
====== =========== ========== =========== =========== ============ =========== ============

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

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $ 8,080,035 163,473,488 (6,640,661)
Items not requiring (providing) cash or
cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . -- 1,462,969 4,155,575
Amortization of deferred expenses . . . . . . 217,634 367,084 650,512
Amortization of discount on long-term debt. . -- -- 257,588
Long-term debt - deferred accrued interest. . 3,737,933 -- --
Partnership's share of the reduction of the
maximum unfunded obligation under the
indemnification agreement . . . . . . . . . (268,504) -- --
Restructuring fee . . . . . . . . . . . . . . -- 6,118,255 --
Partnership's share of operations of
unconsolidated ventures (including income
from restructuring of $163,662,750 in 1996) (7,996,247) (161,701,376) 19,392,303
Partnership's share of gain (loss) on
sale of investment properties by
unconsolidated ventures . . . . . . . . . . -- (870,837) 29,579,058
Gain on sale or disposition of investment
properties. . . . . . . . . . . . . . . . . -- (2,057,231) (14,692,172)
Extraordinary items . . . . . . . . . . . . . -- (23,622,011) (35,711,359)
Cumulative effect of an accounting change . . -- 16,000,000 --
Changes in:
Restricted funds. . . . . . . . . . . . . . . . -- (861,169) (2,340,567)
Interest, rents and other receivables . . . . . (90,769) (113,362) 239,454
Prepaid expenses. . . . . . . . . . . . . . . . -- 31,273 9,665
Escrow deposits . . . . . . . . . . . . . . . . (41,507) 98,715 (315,817)
Accrued rents receivable. . . . . . . . . . . . (105,761) (42,471) 89,377
Accounts payable. . . . . . . . . . . . . . . . 64,432 127,352 460,368
Due to affiliates . . . . . . . . . . . . . . . 71,970 129,878 168,594
Accrued interest. . . . . . . . . . . . . . . . (1,491) 3,474,759 6,213,384
Deferred interest . . . . . . . . . . . . . . . -- -- 1,200,233
Accrued real estate taxes . . . . . . . . . . . (7,046) 158,390 (42,682)
Unearned rents. . . . . . . . . . . . . . . . . (124,186) 172,072 (302,569)
Tenant security deposits. . . . . . . . . . . . 2,001 (7,188) 41,497
Other liabilities . . . . . . . . . . . . . . . -- -- (488,549)
------------ ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . 3,538,494 2,338,590 1,923,232
------------ ----------- -----------

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1997 1996 1995
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases)
of short-term investments. . . . . . . . . . . . -- -- 2,129,166
Additions to investment properties. . . . . . . . (392,235) (608,071) (1,487,605)
Partnership's distributions from
unconsolidated ventures . . . . . . . . . . . . 200,000 3,568,234 1,576,046
Cash proceeds from sale of investment
properties. . . . . . . . . . . . . . . . . . . -- 777,478 2,795,768
Partnership's contributions to
unconsolidated ventures . . . . . . . . . . . . -- (4,368,397) (515,350)
Payment of deferred expenses. . . . . . . . . . . (141,396) (198,100) (330,216)
------------ ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . (333,631) (828,856) 4,167,809
------------ ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . (222,814) -- (376,203)
Proceeds received on restructuring and
refinancing of long-term debt . . . . . . . . . -- 350,000 381,704
Prepayment penalty on long-term debt. . . . . . . -- -- (204,093)
Distributions to general partners . . . . . . . . -- -- (81,017)
Distributions to limited partners . . . . . . . . -- -- (8,020,647)
------------ ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . (222,814) 350,000 (8,300,256)
------------ ----------- -----------
Net increase (decrease) in cash
and cash equivalents. . . . . . . . . . 2,982,049 1,859,734 (2,209,215)

Cash and cash equivalents,
beginning of year . . . . . . . . . . . 18,069,904 16,210,170 18,419,385
------------ ----------- -----------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . $ 21,051,953 18,069,904 16,210,170
============ =========== ===========

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1997 1996 1995
----------- ----------- -----------
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . $ 2,082,634 2,496,630 3,574,186
============ =========== ===========
Non-cash investing and financing activities:
Sale of investment properties:
Total sale proceeds, net of selling expenses. $ -- 7,277,478 17,925,768
Principal balances due on mortgages payable . -- (6,500,000) (15,130,000)
------------ ----------- -----------
Cash proceeds from sale of investment
property, net of selling expenses . . . . . $ -- 777,478 2,795,768
============ =========== ===========
Extraordinary item due to forgiveness
of indebtedness secured by
Brittany Downs Apartments - Phase II. . . . $ -- -- 1,650,638
============ =========== ===========
Extraordinary item due to forgiveness
of indebtedness secured by
Wilshire Bundy Plaza. . . . . . . . . . . . $ -- 23,622,011 --
============ =========== ===========
Gross proceeds from restructuring and
refinancing of long-term debt . . . . . . . $ -- 9,737,838 26,000,000
Principal and interest paid at closing. . . . -- -- (24,985,162)
Prepayment penalty. . . . . . . . . . . . . . -- -- (204,093)
Payment of deferred mortgage expense. . . . . -- -- (429,041)
Restructuring fee . . . . . . . . . . . . . . -- (6,118,255) --
Accrued interest. . . . . . . . . . . . . . . -- (3,269,583) --
------------ ----------- -----------
Proceeds received on restructuring
and refinancing of long-term debt . . $ -- 350,000 381,704
============ =========== ===========
Gain recognized on disposition of investment
properties. . . . . . . . . . . . . . . . . $ -- 2,928,068 14,692,172
============ =========== ===========
Reduction in investment in unconsolidated
venture . . . . . . . . . . . . . . . . . . $ 801,592 1,600,000 --
============ =========== ===========
Reduction in amounts due to affiliates. . . . $ -- (1,600,000) --
============ =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995

GENERAL

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 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
indirect interests in the 237 Park Avenue and 1290 Avenue of the Americas
properties and the Partnership's interest in Wells Fargo Center - South
Tower and Piper Jaffray Tower, not later than December 31, 1999, barring
any unforseen economic developments.

The accompanying consolidated financial statements include the accounts
of the Partnership and its majority-owned venture, Mariners Pointe
Associates ("Mariners Pointe") (prior to its sale in October 1996). 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; 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 LLC (formerly Maguire/Thomas Partners
- - South Tower) ("South Tower").

The Partnership holds an approximate 50% interest in JMB/NYC Office
Building Associates, L.P. ("JMB/NYC") which in turn owns an indirect
approximate 4.9% interest in commercial real estate in the City of New
York, New York consisting of the 237 Park Avenue and 1290 Avenue of the
Americas properties (the "Properties").

The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's indirect 50%
interest in JMB/NYC through Carlyle XIV Associates, L.P. through the
confirmation and acceptance of the Amended Plan of Reorganization and
Disclosure Statement on October 10, 1996 ("Effective Date"). Accordingly,
the financial statements do not include the accounts of JMB/NYC or Carlyle
XIV Associates, L.P. The share of income from unconsolidated venture in
the accompanying Partnership financial statements includes the
Partnership's proportionate share of the operations of the Properties
through the Effective Date, as well as income from restructuring,
consisting primarily of the reversal of previously recognized losses and
adjustments necessary to record the restructuring. During 1996, the
Partnership reversed those previously recognized losses resulting from its
interest in JMB/NYC that it is no longer obligated to fund due to the
conversion of JMB/NYC's general partnership interest in the joint ventures
which owned the Properties to a limited partnership interest and the terms
of the restructuring. The Partnership has no future funding obligations
(other than that related to a certain indemnification agreement provided in
connection with the restructuring) and has no influence or control over the
day-to-day affairs of the joint ventures which own the Properties
subsequent to the Effective Date. Accordingly, the Partnership has
discontinued the application of the equity method of accounting for the

<PAGE>

indirect interests in the Properties and additional losses from the
investment in unconsolidated venture will not be recognized. Should the
unconsolidated venture subsequently report income, the Partnership will
resume applying the equity method on its share of such income only after
such income exceeds net losses not previously recognized.

Due to the restructuring of the Partnership's interest in Wells Fargo
Center - South Tower, as discussed below, the Partnership has ceased loss
recognition relative to its respective real estate investment and has
reversed those previously recognized losses that the Partnership is no
longer obligated to fund, which is reflected as income from restructuring
in 1996 in the Partnership's share of income from operations of
unconsolidated ventures. The Partnership has no future funding obligations
for its investment in Wells Fargo Center - South Tower. Accordingly, the
Partnership has discontinued the application of the equity method of
accounting and additional losses from the investment in Wells Fargo Center
- - South Tower will not be recognized. Should the investment subsequently
report income, the Partnership will resume applying the equity method on
its share of such income only after such income exceeds net losses not
previously recognized.

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, 1997 and 1996 is summarized as follows:

<PAGE>

1997 1996
-------------------------------------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>

Total assets. . . . . . . . . . . . $ 63,829,469 97,077,969 60,002,966 96,200,128

Partners' capital accounts
(deficits):
General partners. . . . . . . . (16,337,193) (16,984,218) (16,660,394) (17,092,692)
Limited partners. . . . . . . . 10,604,210 (157,928,454) 2,847,376 (160,531,826)

Net earnings (loss):
General partners. . . . . . . . 323,201 108,474 5,742,437 5,635,174
Limited partners. . . . . . . . 7,756,834 2,603,372 157,731,051 16,430,347

Net earnings (loss)
per limited
partnership interest. . . . . . . 19.35 6.49 393.43 40.97
=========== =========== =========== =============

</TABLE>

<PAGE>

The net earnings (loss) per limited partnership interest is based upon
the limited partnership interests outstanding at the end of each year
(400,863.85692). Deficit capital accounts will result, through the
duration of the Partnership, in the recognition of net gain to the Holders
of Interests for financial reporting and Federal income tax purposes.
Reference is made to the Notes 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 (approximately $20,289,814 and $16,772,271 at December 31, 1997 and
1996, respectively) as cash equivalents, which includes investments in an
institutional mutual fund which holds U.S. Government obligations, with any
remaining amounts (generally with original maturities of one year or less)
reflected as short-term investments being held to maturity.

Deferred expenses 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.

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

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.

The Partnership has acquired, either directly or through joint
ventures, two apartment complexes, fourteen office buildings and three
shopping centers. Twelve properties have been sold or disposed of by the
Partnership as of December 31, 1997. All of the properties owned at
December 31, 1997 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.

<PAGE>

Maintenance and repair expenses are charged to operations as incurred.

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

Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
requires that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value cannot be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the property's carrying value and the
property's estimated fair value. The Partnership's policy is to consider a
property to be held for sale or disposition when the Partnership has
committed to a plan to sell or dispose of such property and active
marketing activity has commenced or is expected to commence in the near
term or the Partnership has concluded that it may dispose of the property
by no longer funding operating deficits or debt service requirements of the
property thus allowing the lender to realize upon its security. The
$16,000,000 impairment loss on the Wilshire Bundy investment property,
which was categorized as held for sale or disposition at January 1, 1996
upon adoption of SFAS 121, has been reflected in the accompanying
consolidated financial statements as the cumulative effect of an accounting
change as provided by SFAS 121. In accordance with SFAS 121, any
properties identified as "held for sale or disposition" are no longer
depreciated. Adjustments for impairment loss for such properties
(subsequent to the date of adoption of SFAS 121) are made in each period as
necessary to report these properties at the lower of carrying value or fair
value less costs to sell. In certain situations, such estimated fair value
could be less than the existing non-recourse debt which is secured by the
property. There can be no assurance that any estimated fair value of these
properties would ultimately be realized by the Partnership in any future
sale or disposition transaction.

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

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

The results of operations, net of venture partners' share, for
consolidated properties classified as held for sale or disposition as of
December 31, 1997 or sold or disposed of during the past three years were
net income (losses) of $2,192,424, ($106,017) and ($6,842,205),
respectively, for the years ended December 31, 1997, 1996 and 1995.

<PAGE>

In addition, the accompanying financial statements include income
(losses) of $8,749,978, ($1,763,243) and ($1,947,899), respectively, of the
Partnership's share of total property operations of $17,499,927,
($3,526,484) and $1,626,423 of unconsolidated properties held for sale or
disposition as of December 31, 1997 or sold or disposed of in the past
three years.

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

VENTURE AGREEMENTS - GENERAL

The Partnership at December 31, 1997 is a party to six 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 certain of 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
seven office buildings. The venture properties have been financed under
various long-term debt arrangements as described below.

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

INVESTMENT PROPERTIES

ORCHARD ASSOCIATES

The Partnership's interest in Old Orchard Shopping Center (through
Orchard Associates and Old Orchard Urban Venture ("OOUV")) was sold in
September 1993.

OOUV was 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 percentage interests. OOUV could have
received reimbursement, under certain conditions, of up to an additional
$3,400,000 (of which Orchard Associates had a 79.1667% interest) of
previously incurred development costs based upon certain future earnings of
the property (as defined). In December 1996, OOUV received a final
allocation of $2,450,000 (of which the Partnership's share was $969,796) of
such development costs related to the sale of Old Orchard Shopping Center.
The Partnership recognized a gain of $870,837 for financial reporting and
for Federal income tax purposes in 1996.

<PAGE>

At the time of redemption, OOUV retained a portion of the Orchard
Associates redemption proceeds in order to fund certain contingent amounts
which may have been due in the future. In July 1995, OOUV distributed to
Orchard Associates a significant portion of its redemption holdback of
$2,083,644. As a result, the Partnership received its share of the
holdback of $1,041,820. In October 1995, OOUV distributed to Orchard
Associates its share of the pre-sale settlement with Federated Department
Stores of $288,452. As a result, Orchard distributed to the Partnership
its share of the settlement of $144,226. In 1996, OOUV distributed to
Orchard Associates $1,389,210 in proceeds from the settlement of operating
prorations. As a result, Orchard Associates distributed $694,405 to the
Partnership representing its share of such operating prorations. The
Partnership has retained these funds for working capital purposes.

JMB/NYC

JMB/NYC is a limited partnership among Carlyle-XIV Associates, L.P.,
Carlyle-XIII Associates, L.P. and Property Partners, 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, $400,000 (reduced
from $1,200,000 during 1996) 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, $400,000 (reduced
from $1,200,000 during 1996) 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.

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

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

<PAGE>

Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue
and 1290 Avenue of the Americas properties were made in April 1996, and in
August 1996, an Amended Plan of Reorganization and Disclosure Statement
(the "Plan") was filed with the Bankruptcy Court for these Joint Ventures.
The Plan was accepted by the various classes of debt and equity holders and
confirmed by the Court on September 20, 1996 and became effective October
10, 1996 ("Effective Date"). The Plan provides that JMB/NYC has an
indirect limited partnership interest which, before taking into account
significant preferences to other partners, equals approximately 4.9% of the
reorganized and restructured ventures owning 237 Park and 1290 Avenue of
the Americas. Neither O&Y nor any of its affiliates has any direct or
indirect continuing interest in the Properties. The new ownership
structure gives control of the Properties to an unaffiliated real estate
investment trust ("REIT") which is owned primarily by holders of the first
mortgage debt which encumbered the Properties prior to the bankruptcy.
JMB/NYC has, under certain limited circumstances, through January 1, 2001
rights of consent regarding sale of the Properties or the consummation of
certain other transactions that significantly reduce indebtedness of the
Properties.

Pursuant to the indemnification agreement, the Affiliated Partners are
jointly and severally obligated to indemnify, through a date no later than
January 2, 2001, the REIT to the extent of $25 million to ensure their
compliance with the terms and conditions relating to JMB/NYC's indirect
limited partnership interest in the restructured and reorganized joint
ventures that own the Properties. The Affiliated Partners contributed
approximately $7.8 million (of which the Partnership's share was
approximately $3.9 million) to JMB/NYC which was deposited into an escrow
account as collateral for such indemnification. These funds have been
invested in stripped U.S. Government obligations with a maturity date of
February 15, 2001. The Partnership's share of the reduction of the maximum
unfunded obligation under the indemnification agreement recognized as
income, is a result of interest earned on amounts contributed by the
Partnership and held in escrow by JMB/NYC. Such income earned reduces the
Partnership's share of the maximum unfunded obligation under the
indemnification agreement which is reflected as a liability in the
accompanying financial statements.

PIPER JAFFRAY TOWER

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. 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.

<PAGE>

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 $110,458,000 and $95,764,000
at December 31, 1997 and 1996, respectively.

The property is subject to a mortgage loan in the principal amount of
$100,000,000 of which approximately $96,127,000 is outstanding as of
December 31, 1997. 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 the
years ended December 31, 1995, 1996 or 1997. 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 1995 and 1996 totalled
$464,178 and $741,627, respectively. During 1997, excess cash flow
generated under this agreement was $385,523 which is expected to be
remitted to the lender during the second quarter of 1998. On a monthly
basis, Piper 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 escrow balance
as of December 31, 1997 is approximately $4,722,000. 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, 1997, the manager has deferred
approximately $3,852,000 ($1,839,000 of which represents deferred fees due
to affiliates through November 1994) 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 Piper'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 net sale or refinancing
proceeds, if any.

Furthermore, repayment of the loan is subject to a prepayment fee
ranging from 6% to 1% through the maturity date as well as an amount that
will provide the lender with an internal rate of return from 12.75% to
13.59% out of proceeds from the sale or refinancing of the property. After
the prepayment fees, the lender participates in any remaining sale or
refinancing proceeds. For financial reporting purposes, through
December 31, 1995, additional interest expense had been accrued at a rate
of 13.59% per annum. Under the current terms of the modified debt, there
must be a significant improvement in the current market and property
operating conditions resulting in a significant increase in value of the
property in order for JMB/Piper to share in any future net sale or
refinancing proceeds. Therefore, during 1996 and 1997, interest expense of
$10,250,000 was recognized at the loan's stated payment rate.
Additionally, based on the Partnership's estimate of the value of the
building at December 31, 1997, it was determined that the lender is not
expected to receive the entire balance of the loan and interest that Piper
had accrued based on the above mentioned internal rate of return,
contingent upon the sale or refinancing of the property. Therefore, in
1997, $18,600,000 of such interest was reversed and charged to operations.
Total indebtedness, including interest under the mortgage loan, is
approximately $99,769,000 and $119,111,000 at December 31, 1997 and 1996,
respectively. During 1997, JMB/Piper, on behalf of Piper, explored
refinancing alternatives with the underlying lender. The underlying lender
indicated that it would not accept a discounted payoff of its loan, which

<PAGE>

would have been necessary to refinance it. Therefore, JMB/Piper is no
longer pursuing refinancing alternatives.

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 1997, 1996 and 1995.

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 are to be repaid out of
net proceeds. 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 Piper 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, Piper agreed to terminate Larkin's lease in return for
its partial interest in the land under the building and a $1,011,798 note
receivable. The note receivable 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 at any time. As of the date of
this report, all amounts due under the note have been received. The
balance of the note receivable as of December 31, 1997 is $529,262.

The property was classified as held for sale or disposition as of
September 30, 1997 in the accompanying financial statements and, therefore,
was not subject to continuing depreciation.

JMB/900

In 1984, the Partnership acquired, through JMB/900, with C-XV, 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 ("PPI") and an original affiliate of PPI ("JRA") and JMB/900.
In 1986, PPI transferred a portion of its interest to another partnership
("PC-900") 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 limited partner in
PC-900. The current partners of Progress Partners are PPI, JRA and PC-900
(together "Venture Partners") and JMB/900.

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 PPI 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

<PAGE>

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 1995, 1996 and 1997). The source of funds from
which PPI was expected to pay interest were the Guaranteed Payments,
discussed below.

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 (the "Guaranteed Payments"). 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 the Guaranteed Payments. As
a result of the lawsuit discussed below, such amounts have not been
contributed by JMB/900 to pay the Venture Partners and 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
Guaranteed Payments 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' Guaranteed Payments. 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. 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 PPI, 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 the Venture Partners to recover the amounts
contributed and to recover for certain other joint venture obligations on
which the Venture Partners had defaulted. This lawsuit was dismissed on
jurisdictional grounds. Subsequently, however, the FDIC filed a complaint,
since amended, in a lawsuit against PPI, JRA, JMB/900, and other
unaffiliated defendants, which has enabled JMB/900 to refile its previously
asserted claims against the Venture Partners as part of that lawsuit in
Federal court. There is no assurance that JMB/900 will recover the amounts

<PAGE>

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.

During the fourth quarter of 1996, The State of Maryland Deposit
Insurance Fund Corporation (the "MDIFC") commenced an action against PPI
and JRA to collect on a certain note receivable by foreclosing its security
interest in PPI and JRA's interest in Progress Partners. The trial court
in that action has entered summary judgment in favor of MDIFC for in excess
of $6 million and authorized MDIFC to conduct a sale of PPI's and JRA's
interest in Progress Partners. MDIFC then entered into an agreement with
JMB/900 which provided that if MDIFC acquired those interests at the sale,
MDIFC would convey those interests to JMB/900. MDIFC's scheduled sale was
cancelled as a result of the bankruptcy filing of JRA and PPI discussed
below. After the scheduled sale was cancelled, an affiliate of PPI
purchased MDIFC's claims. As a result, there are no assurances that the
agreement with MDIFC or its successor will be consummated.

Concurrent with the lawsuit filed by the MDIFC, FDIC has filed two
additional lawsuits against JMB/900, PPI, JRA, and other non-affiliated
defendants, in an attempt, among other things, to obtain a legal resolution
of competing claims made as to the interests in PC-900 and to challenge the
consent given by JMB/900 in 1990 to allow MDIFC, in the event it acquired
PPI and JRA's interest through foreclosure, to become a partner of Progress
Partners. JMB/900 has been discussing a settlement with the FDIC in which
JMB/900 would purchase the interest of the FDIC and/or PC-900 in Progress
Partners. If a settlement is not achieved and the FDIC pursues these
actions, JMB/900 intends to vigorously defend itself.

In December, 1997, two of the Venture Partners, JRA and PPI, filed for
bankruptcy in order to prevent the foreclosure of their interests by MDIFC.
Since the bankruptcy filing, an affiliate of PPI has effected a settlement
with MDIFC by purchasing its claims. JMB/900 is presently pursuing its
claims against the Venture Partners in the bankruptcy forum and is
attempting to either foreclose on or buy-out the interests of the Venture
Partners in the venture, or to otherwise dispose of those interests
pursuant to a bankruptcy plan. The Venture Partners have threatened to
assert claims against the venture and JMB/900 including claims for unpaid
Guaranteed Payments in the purported amount of $36 million. JMB/900 denies
that such claims are due and owing and contends that, in any event, such
claims are offset by PPI's failure to pay interest on the $20 million loan
discussed above in the amount of approximately $36 million. To the extent
that JMB/900 is required to make contributions to pay for any part of the
purported claim for Guaranteed Payments, a portion of the Guaranteed
Payments actually paid may be allocated to other unsecured creditors of PPI
and JRA and, therefore, JMB/900 may not be returned the full amount of the
interest due on the $20 million loan. However, JMB/900's contributions
would create a preferred return level payable out of future net cash flow
or net sale or refinancing proceeds. Furthermore, JMB/900 has taken the
position that to the extent that is 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, but the Venture Partners have disputed this characterization.

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 expenditures and after
repayment of costs associated with and deposits made by Progress Partners
in connection with the loan extension (totaling approximately $3,229,000 of
which approximately $1,335,000 was advanced to Progress Partners by
JMB/900) was paid into an escrow account controlled by the lender. Such
escrow including interest earned thereon can be used by Progress Partners
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
Progress Partners once 90% of such leased space has been renewed or
released. As of July 1996, all of the amounts advanced by Progress
Partners have been repaid to Progress Partners and subsequently distributed

<PAGE>

to JMB/900 (of which the Partnership's share was approximately $1,000,000).

The escrow balance at December 31, 1997 is approximately $4,658,000.

The Partnership will not commit additional capital to this property
unless, among other things, it believes that upon sale of the property, the
Partnership will receive a return of such funds and a reasonable rate of
return thereon.

WELLS FARGO CENTER - 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 original South Tower agreement generally provided
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 be distributed or allocated to the Partnership and the Affiliated
Partner in proportion to their aggregate capital contributions.

Annual cash flow was to 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 was 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, were 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 were to be allocated to the Partnership and Affiliated
Partner. In addition, operating profits, up to the amount of any annual
cash flow distribution, were 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 would 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 return 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 would 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.

The mortgage note secured by the property (with a balance of
approximately $178,221,000 and accrued interest of approximately $1,488,000
as of December 31, 1997), matured December 1, 1994. The Partnership and
the joint venture had been in discussions with the lender regarding an
extension of the mortgage note. The venture continued to make interest

<PAGE>

payments to the lender under the original terms of the mortgage note and
was required to escrow all available cash flow. In the fourth quarter of
1996, the joint venture and the lender reached an agreement to modify the
mortgage note. The agreement provides that the mortgage note secured by
the property be extended to September, 2003 at an interest rate of 10% with
all excess cash flow being escrowed for future tenant improvements and
principal payments. In addition, upon sale or refinancing of the property
subsequent to September 1, 1999, the mortgage loan requires payment of
participation interest (as defined) of any excess proceeds. The mortgage
lender received a $2,000,000 extension fee paid by the venture partners in
their ownership percentages (of which the Partnership's share was
$350,000).

The promissory note secured by the Partnership's interest in the joint
venture matured December 1, 1994. The Partnership had been in discussion
with the lender regarding an extension of the promissory note. The
Partnership has ceased making debt service payments on the promissory note.

In the fourth quarter of 1996, the Partnership reached an agreement with
the lender to modify the promissory note (with a principal balance of
$12,250,000 and accrued interest of approximately $3,270,000 prior to
modification). The Partnership's amended and restated promissory note has
an adjusted balance of approximately $26,349,000 consisting of the original
principal loan balance, unpaid accrued interest, the Partnership's share of
the mortgage loan extension fee and a restructuring fee of approximately
$6,118,000. The promissory note is due September 2003 and accrues interest
at 17% per annum. The loan requires payments of cash flow distributed by
the venture from either property operations or sales proceeds as well as a
portion of the property management fee paid to the venture partner. The
loan is secured solely by the Partnership's interest in the property.

In conjunction with the note modifications, the South Tower was
converted to a limited liability company with members' interests in the
same ratio as the prior venture ownership interests. The conversion of the
Partnership's interest to a member's interest in a limited liability
company eliminates any potential additional obligation of the Partnership
in the future to provide additional funds under its previous joint venture
agreement. As a result, previously recognized losses of $5,712,902 have
been reversed and the Partnership's 1997 share of income (approximately
$152,000) has not been recognized as such amount is not considered
realizable.

At maturity of the loan, it is not anticipated that further
modifications or extensions can be obtained. 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 Federal income tax purposes with
no corresponding distributable proceeds. Since the terms of the agreement
make it unlikely that the Partnership would recover any incremental
investment, the Partnership has decided not to commit any significant
additional amounts to the property.

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 damages
resulting from their defaults. On April 3, 1992, the Partnership signed a

<PAGE>

settlement agreement with the joint venture partner and its principals.
Under the terms of the settlement, the Partnership was 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 was represented by a promissory note issued to the Partnership in
the amount of $3,425,000. The note provided 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 provided for annual principal payments of
$400,000 due every April for five years with a final payment in the amount
of $1,425,000 which was scheduled to be due on April 3, 1998. The venture
partner contacted the Partnership to discuss payment of this amount at the
end of 1997. The Partnership agreed to accept a payment of $1,400,000 if
paid by the end of 1997. The Partnership received the final payment on
December 31, 1997. Due to the uncertainty of collection of the settlement
amounts, settlement payments have been reflected in other income when
collected.

WILSHIRE BUNDY PLAZA

The Partnership had commenced discussions with the existing lender for
a possible debt modification on its mortgage loan which matured 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. 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 transferred to the lender on March 27,
1996. As a result of the transfer of title, the Partnership was relieved
of all obligations related to the property, including an estimated $100,000
in earthquake repairs related to the January 17, 1994 earthquake in
Southern California as discussed below. The property was classified as
held for sale or disposition as of January 1, 1996 and therefore was not
subject to continued depreciation. The accompanying consolidated financial
statements include $16,000,000 as the cumulative effect of an accounting
change to record value impairment and $23,622,011 of extraordinary gain on
extinguishment of debt upon the lender's taking title to the property for
the year ended December 31, 1996. The Partnership recognized a gain of
approximately $9,200,000 for Federal income tax purposes in 1996 with no
corresponding distributable proceeds.

During June 1995, the Partnership received notice from the City of Los
Angeles 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, the cost
of making the necessary repairs was estimated at approximately $100,000.
Accordingly, the extraordinary item recorded for such costs in 1994 of $3
million was reversed in the Partnership's 1995 consolidated financial
statements.

BRITTANY DOWNS APARTMENTS - PHASE I AND II

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.

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,

<PAGE>

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.

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.

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 retained 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.

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

<PAGE>

the partners of the additional capital contributed. As of December 31,
1997, the total remaining unpaid additional capital contributed, including
the unpaid return thereon, is $1,973,166, of which the Partnership's share
is $986,583.

During the third quarter of 1997, the Partnership commenced marketing
the property for sale. The Partnership's ability to sell the property is
subject to the joint venture partner's right of first refusal to purchase
the Partnership's interest in the joint venture for an amount which would
be received by the Partnership in connection with a third party sale of the
property. In the fourth quarter of 1997, the Partnership obtained a non-
binding letter of intent to sell the property to an unaffiliated third
party. The Partnership properly notified the venture partner, and in
January 1998 the venture partner notified the Partnership that it was
exercising its right of first refusal. As a result, the venture partner
will purchase the Partnership's interest for an amount equal to what the
Partnership would have received in the sale to the unaffiliated third
party. The Partnership expects that the sale of the interest in the joint
venture will close in the second quarter of 1998. A sale at the proposed
terms would result in a gain for both financial reporting and Federal
income tax purposes in 1998. However, there can be no assurance that such
sale will be finalized.

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
was October 1, 1996. Under terms of the loan extension, the loan bore
interest at 2.75% above the floating weekly tax exempt rate.

In 1995, the joint venture commenced marketing the property for sale.
In October 1996, the joint venture sold the Mariners Pointe Apartments to
an unaffiliated third party. The sales price was $7,600,000 (before
selling costs and prorations), of which approximately $788,000 was received
in cash at closing and $6,500,000 represented the purchaser's assumption of
the underlying debt. The joint venture was also returned all amounts held
by the underlying lender in a collateral account. Upon receipt of the net
sale proceeds and proceeds from the collateral account, the joint venture
distributed such proceeds to the Partnership. The joint venture partner
received no distributions in connection with this transaction. As a result
of the sale during 1996, the joint venture allocated gains to the
Partnership of approximately $2,100,000 for financial reporting purposes
and approximately $4,700,000 for Federal income tax purposes. The property
was classified as held for sale or disposition as of January 1, 1996, and
therefore, was not subject to continued depreciation after such date.

YERBA BUENA OFFICE BUILDING

<PAGE>

LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1997 and
1996:
1997 1996
----------- -----------
17% promissory note; secured by the
Partnership's interest in the Wells
Fargo Center South Tower office building
in Los Angeles, California; principal
and accrued interest due September 2003. $26,348,759 22,610,827

8.03% first mortgage note; secured
by the Louis Joliet Mall in
Joliet, Illinois; monthly interest
only payments of $173,983 until
May 1997; beginning May 1, 1997,
monthly principal and interest
payments of $201,189 until November 1,
2002 when the remaining balance
of $23,751,765 is due. . . . . . . . . . 25,777,187 26,000,000
------------ ------------
Total debt. . . . . . . . . . . 52,125,946 48,610,827
Less current portion
of long-term debt . . . . . . 357,323 251,510
------------ ------------
Total long-term debt. . . . . . $ 51,768,623 48,359,317
============ ============

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

1998. . . . . . . . . . $ 357,323
1999. . . . . . . . . . 387,096
2000. . . . . . . . . . 419,350
2001. . . . . . . . . . 454,291
2002. . . . . . . . . . 24,159,127

PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Holders
of Interests and 4% to the General Partners. Profits from the sale of
investment properties are to be allocated to the General Partners to the
greatest of (i) 1% of such profits, (ii) the amount of cash distributions
to the General Partners, or (iii) an amount which will reduce the General
Partners' capital account deficits (if any) to a level consistent with the
gain anticipated to be realized from the sale of properties. Losses from
the sale of investment properties are to be allocated 1% to the General
Partners. The remaining profits and losses will be allocated to the
Holders of Interests.

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

The Partnership Agreement provides that, 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 Holders of Interests and 15% to the General
Partners. However, prior to such distributions being made, the Holders of
Interests are entitled to receive 99% of net sale or refinancing proceeds
and the General Partners shall receive 1% until the Holders of Interests
have received (i) cash distributions of net sale or refinancing proceeds in

<PAGE>

an amount equal to the Holders' 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
Holders' 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 Holders of Interests have not received the
amounts in (i) and (ii) above, the General Partners will be required to
return all or a portion of the 1% distribution of net sale or refinancing
proceeds described above up to an amount equal to such deficiency in
payments to the Holders of Interests pursuant to (i) and (ii) above. The
Holders of Interests have not received and are not expected to receive over
the remaining term of the Partnership, distributions to the levels
described above. Accordingly, $1,742,000 of proceeds have been deferred
for the General Partners at December 31, 1997. The General Partners have
received $121,527 of sale proceeds as of December 31, 1997 representing its
1% share of total sale distributions made which will be required to be
returned to the Partnership before liquidation of the Partnership.

LEASES - AS PROPERTY LESSOR

At December 31, 1997, the Partnership's principal asset is one
shopping mall. The Partnership has determined that all leases relating to
this property are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of the property,
excluding cost of land, is depreciated over the estimated useful life.
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, such leases provide for additional rent
based upon percentages of tenant sales volumes. A substantial portion of
the ability of retail tenants to honor their leases is dependent upon the
retail economic sector.

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:

1998. . . . . . . . . . $ 3,787,423
1999. . . . . . . . . . 3,447,839
2000. . . . . . . . . . 3,252,929
2001. . . . . . . . . . 3,119,555
2002. . . . . . . . . . 2,835,810
Thereafter. . . . . . . 7,005,129
-----------
$23,448,685
===========

Additional rent based upon percentages of tenants' sales volumes
included in rental income aggregated $437,532, $638,884 and $472,344 for
the years ended December 31, 1997, 1996 and 1995, respectively.

TRANSACTIONS WITH AFFILIATES

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, 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, 1997, 1996 and 1995 are as follows:

<PAGE>

UNPAID AT
DECEMBER 31,
1997 1996 1995 1997
-------- -------- -------- ------------
Property management
and leasing fees . . $284,751 273,795 433,723 --
Insurance commissions 33,198 28,745 64,121 --
Reimbursement (at
cost) for accounting
services . . . . . . 31,183 23,190 178,371 13,176
Reimbursement (at
cost) for portfolio
management services. 73,802 53,223 73,169 18,107
Reimbursement (at
cost) for legal
services . . . . . . 14,301 11,557 10,599 2,806
Reimbursement (at
cost) for administra-
tive charges and
other out-of-pocket
expenses . . . . . . 369 4,684 203,318 --
-------- -------- --------- -------
$437,604 395,194 963,301 34,089
======== ======== ========= =======

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

Reference is made to the JMB/NYC discussion above regarding the
Partnership's obligation to fund, on demand, $400,000 and $400,000 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, 1997,
these obligations bore interest at 5.93% per annum and interest accrued on
these obligations was $548,523.

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 above.
Such fees deferred by the affiliate were approximately $1,839,000, of which
$919,500 is the Partnership's share, at December 31, 1997.

Effective January 1, 1994, certain officers and directors of the
Corporate General Partner acquired interests in a company which, among
other things, provided 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 and through March 27, 1996, the date of disposition, were
approximately $11,600 and $2,900, respectively, 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.

INVESTMENT IN UNCONSOLIDATED VENTURES

Summary combined financial information for JMB/Piper, JMB/Piper II,
JMB/900, 1090 Vermont, Wells Fargo Center - South Tower and their
unconsolidated ventures as of and for the years ended December 31, 1997 and
1996 is presented below.

<PAGE>

1997 1996
-------------- --------------

Current assets. . . . . . . . . . $ 24,794,458 19,088,667
Current liabilities . . . . . . . (17,174,163) (15,658,749)
-------------- --------------
Working capital (deficit) . . 7,620,295 3,429,918
-------------- --------------
Investment properties, net. . . . 303,295,449 313,943,511
Other assets. . . . . . . . . . . 55,178,757 58,597,201
Other liabilities . . . . . . . . (3,463,866) (6,270,436)
Long-term debt. . . . . . . . . . (382,675,620) (411,676,331)
-------------- --------------
Partners' capital (deficit) . $ (20,044,985) (41,976,137)
============== ==============
Represented by:
Invested capital. . . . . . . . $ 316,716,544 316,716,544
Cumulative distributions. . . . (114,135,154) (113,495,154)
Cumulative income (losses). . . (222,626,375) (245,197,527)
-------------- --------------
$ (20,044,985) (41,976,137)
============== ==============
Total income. . . . . . . . . . . $ 91,294,780 92,016,328
============== ==============
Expenses applicable to
operating income. . . . . . . . $ 69,851,004 95,820,488
============== ==============
Net income (loss) (including
income from reversal of
accrued contingent
interest of $18,600,000
in 1997). . . . . . . . . . . . $ 21,443,776 (3,804,160)
============== ==============

Total income, expenses related to operating loss and net loss for the
above mentioned ventures for the year ended December 31, 1995 were
$89,571,732, $105,260,956 and ($15,689,224).

During 1996, as a result of the restructuring of Wells Fargo Center -
South Tower, the Partnership reversed previously recognized losses from the
unconsolidated venture. The Partnership's capital (deficit) in Wells Fargo
Center - South Tower differs from its investment in the unconsolidated
venture as reflected in the accompanying financial statements due to the
Partnership's 1996 reversal of previously recognized losses. The
Partnership's 1997 share of income from Wells Fargo Center - South Tower
(approximately $152,000) has not been recognized as such amount is not
considered realizable.

<PAGE>

<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997

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 IMPROVEMENTS IMPROVEMENTS INTEREST IMPROVEMENTS TOTAL (D)
-------------- ----------- ------------ --------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING MALL:
Joliet,
Illinois. . $25,777,187 4,100,414 35,752,871 9,179,402 4,100,414 44,932,273 49,032,687
----------- --------- ---------- --------- --------- ---------- ----------

Total . . $25,777,187 4,100,414 35,752,871 9,179,402 4,100,414 44,932,273 49,032,687
=========== ========= ========== ========= ========= ========== ==========

</TABLE>

<PAGE>

<TABLE> SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1997
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING MALL:
Joliet, Illinois . . . . . $15,038,064 1978 7/31/85 5-30 years 554,714
----------- -------
Total. . . . . . . . . $15,038,064 554,714
=========== =======
<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, 1997 for Federal income tax purposes was $48,345,494.
(C) Amounts disclosed exclude current accrued interest.

</TABLE>

<PAGE>

<TABLE> SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997

(D) Reconciliation of real estate owned:

<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . . . $ 48,640,452 112,841,793 161,748,228
Additions during period. . . . . . . . . . . . . 392,235 608,071 1,487,605
Disposals during period. . . . . . . . . . . . . -- (48,809,412) (50,394,040)
Provision for value impairment . . . . . . . . . -- (16,000,000) --
------------ ------------ ------------
Balance at end of period . . . . . . . . . . . . $ 49,032,687 48,640,452 112,841,793
============ ============ ============

(E) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . . . $ 15,038,064 36,814,248 49,431,004
Depreciation expense . . . . . . . . . . . . . . -- 1,462,969 4,155,575
Disposals. . . . . . . . . . . . . . . . . . . . -- (23,239,153) (16,772,331)
------------ ------------ ------------
Balance at end of period . . . . . . . . . . . . $ 15,038,064 15,038,064 36,814,248
============ ============ ============

</TABLE>

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV:

We have audited the combined financial statements of JMB/Piper I
Associates ("JMB/Piper") and JMB/Piper II Associates ("JMB/Piper II"),
unconsolidated ventures of Carlyle Real Estate Limited Partnership - XIV
("Partnership") as listed in the accompanying index. In connection with
our audits of the combined financial statements, we also have audited the
combined financial statement schedule listed in the accompanying index.
These combined financial statements and combined financial statement
schedule are the responsibility of the General Partners of the Partnership.

Our responsibility is to express an opinion on these combined financial
statements and combined financial statement schedule based on our audits.

In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position
of JMB/Piper and JMB/Piper II, unconsolidated ventures of Carlyle Real
Estate Limited Partnership - XIV as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1997, in conformity with generally
accepted accounting principles. Also in our opinion, the related combined
financial statement schedule, when considered in relation to the basic
combined financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 25, 1998

<PAGE>

<TABLE>
JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED BALANCE SHEETS

DECEMBER 31, 1997 AND 1996

ASSETS
------
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 733,133 73,641
Rents and other receivables, net of allowance
for doubtful accounts of approximately $209,421
and $142,812 for 1997 and 1996, respectively. . . . . . . . . . . 163,356 (35,672)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 55,276 55,276
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 4,721,865 3,933,246
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . 5,673,630 4,026,491
------------ -----------
Investment property - Schedule III:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 4,766,320
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . -- 112,068,994
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . -- (46,882,483)
------------ -----------
Total property held for investment,
net of accumulated depreciation . . . . . . . . . . . . . -- 69,952,831
------------ -----------
Property held for sale or disposition . . . . . . . . . . . . . . . 67,644,328 --
------------ -----------
Total investment property . . . . . . . . . . . . . . . . . 67,644,328 69,952,831
------------ -----------
Venture partners' deficit in ventures . . . . . . . . . . . . . . . . 21,325,813 20,198,437
Note receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 528,452 621,095
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,755,023 1,968,673
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . 1,928,536 2,852,703
------------ -----------
$ 98,855,782 99,620,230
============ ===========

<PAGE>

JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED BALANCE SHEETS - CONTINUED

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

1997 1996
------------ -----------
Current liabilities:
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . $ 4,338,264 4,421,610
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 5,414,041 3,565,144
Long-term debt - principal reduction accrual. . . . . . . . . . . . 385,523 741,627
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . 20,915 8,295
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . 10,158,743 8,736,676
------------ -----------
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 10,311 8,406
Long-term debt - accrued contingent interest. . . . . . . . . . . . . 3,642,763 22,242,763
Long-term debt, less current portion. . . . . . . . . . . . . . . . . 95,741,149 96,126,672

Commitments and contingencies
------------ -----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . 109,552,966 127,114,517
------------ -----------
Partners' capital accounts (deficits):
Carlyle-XIV:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . 32,527,205 32,527,205
Cumulative net income (loss). . . . . . . . . . . . . . . . . . . (23,655,535) (32,054,087)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (14,225,051) (14,225,051)
------------ -----------
(5,353,381) (13,751,933)
------------ -----------
Venture Partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . 32,536,784 32,536,784
Cumulative net income (loss). . . . . . . . . . . . . . . . . . . (23,655,536) (32,054,087)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (14,225,051) (14,225,051)
------------ -----------
(5,343,803) (13,742,354)
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . (10,697,184) (27,494,287)
------------ -----------

$ 98,855,782 99,620,230
============ ===========

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

<PAGE>

<TABLE>
JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $ 21,418,528 20,516,724 19,826,931
Interest income . . . . . . . . . . . . . . . . . 99,316 108,233 123,917
------------ ------------ ------------
21,517,844 20,624,957 19,950,848
------------ ------------ ------------
Expenses:
Mortgage and other interest . . . . . . . . . . . 10,250,000 10,250,000 15,907,143
Depreciation. . . . . . . . . . . . . . . . . . . 2,647,695 3,524,730 3,514,561
Property operating expenses . . . . . . . . . . . 11,293,964 11,183,021 10,039,372
Amortization of deferred expenses . . . . . . . . 256,458 334,116 369,317
Reversal of accrued contingent interest . . . . . (18,600,000) -- --
------------ ------------ ------------
5,848,117 25,291,867 29,830,393
------------ ------------ ------------

15,669,727 (4,666,910) (9,879,545)
Venture partners' share of ventures' operations . . 1,127,376 1,498,601 1,508,363
------------ ------------ ------------

Net earnings (loss) . . . . . . . . . . . $ 16,797,103 (3,168,309) (8,371,182)
============ ============ ============

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

<PAGE>

<TABLE>
JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<CAPTION>
VENTURE
CARLYLE-XIV PARTNERS TOTAL
------------ ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1994. . . . . . . . . . . . $ (7,719,687) (7,710,109) (15,429,796)

Capital contributions . . . . . . . . . . . . . . . 505,000 505,000 1,010,000
Net earnings (loss) . . . . . . . . . . . . . . . . (4,185,591) (4,185,591) (8,371,182)
------------ ----------- -----------

Balance at December 31, 1995. . . . . . . . . . . . (11,400,278) (11,390,700) (22,790,978)

Cash distributions. . . . . . . . . . . . . . . . . (767,500) (767,500) (1,535,000)
Net earnings (loss) . . . . . . . . . . . . . . . . (1,584,155) (1,584,154) (3,168,309)
------------ ----------- -----------

Balance at December 31, 1996. . . . . . . . . . . . (13,751,933) (13,742,354) (27,494,287)

Net earnings (loss) . . . . . . . . . . . . . . . . 8,398,552 8,398,551 16,797,103
------------ ----------- -----------

Balance at December 31, 1997. . . . . . . . . . . . $ (5,353,381) (5,343,803) (10,697,184)
============ =========== ===========

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

<PAGE>

<TABLE>
JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $16,797,103 (3,168,309) (8,371,182)
Items not requiring cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . 2,647,695 3,524,730 3,514,561
Amortization of deferred expenses . . . . . . . 256,458 334,116 369,317
Venture partners' share of ventures' operations (1,127,376) (1,498,601) (1,508,363)
Changes in:
Rents and other receivables,net. . . . . . . . (199,028) (54,775) (82,442)
Accrued rents receivable . . . . . . . . . . . 924,167 927,230 690,986
Accounts payable . . . . . . . . . . . . . . . 1,848,897 822,873 759,824
Accrued real estate taxes. . . . . . . . . . . (83,346) 1,022,046 174,345
Long-term debt - accrued contingent interest . (18,600,000) (854,167) 5,708,278
Unearned rents . . . . . . . . . . . . . . . . 12,620 (93,194) 89,150
Tenant security deposits . . . . . . . . . . . 1,905 (4,294) 8,588
Escrow deposits. . . . . . . . . . . . . . . . (788,619) (790,109) (681,685)
------------ ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . 1,690,476 167,546 671,377
------------ ----------- -----------
Cash flows from investing activities:
Additions to investment property. . . . . . . . . (339,192) (364,545) (318,174)
Payments on notes receivable. . . . . . . . . . . 92,643 94,121 86,308
Payment of deferred expenses. . . . . . . . . . . (42,808) (17,221) (51,384)
------------ ----------- -----------
Net cash used in investing activities . . (289,357) (287,645) (283,250)
------------ ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . (741,627) (464,178) (353,251)
Cash contributions from Carlyle-XIV . . . . . . . -- -- 505,000
Cash distributions to Carlyle-XIV . . . . . . . . -- (767,500) --
Cash contributions from venture partners. . . . . -- -- 505,000
Cash distributions to venture partners. . . . . . -- (767,500) --
------------ ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . (741,627) (1,999,178) 656,749
------------ ----------- -----------

<PAGE>

JMB/PIPER ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED STATEMENTS OF CASH FLOWS - CONTINUED

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

Net increase (decrease) in cash
and cash equivalents . . . . . . . . . 659,492 (2,119,277) 1,044,876

Cash and cash equivalents,
beginning of the year . . . . . . . . . 73,641 2,192,918 1,148,042
------------ ----------- -----------
Cash and cash equivalents,
end of the year . . . . . . . . . . . . $ 733,133 73,641 2,192,918
============ =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . $ 10,250,000 11,104,167 10,198,865
============ =========== ===========

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

<PAGE>

JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 1997, 1996 and 1995

OPERATIONS AND BASIS OF ACCOUNTING

The accompanying combined financial statements have been prepared for
the purpose of complying with Rule 3.09 of Regulation S-X of the Securities
and Exchange Commission. They include the accounts of the unconsolidated
joint ventures, JMB/Piper Associates I ("JMB/Piper") and JMB/Piper II
Associates ("JMB/Piper II"), in which Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV" or "Partnership") owns a direct interest.

JMB/Piper holds a majority interest in OB/Joint Venture II Limited
Partnership which, in turn with unaffiliated partners, owns a majority
interest in 222 S. Ninth Street Limited Partnership ("222 South"). 222
South owns a commercial office building ("Piper Jaffray Tower") in downtown
Minneapolis, Minnesota. JMB/Piper also holds a majority interest in
OB/Joint Venture I Limited Partnership ("OB/I") with JMB/Piper II holding
the other minority interest. OB/I owns the land underlying 222 South's
office building. Business activities consist of rentals to a variety of
commercial companies, and the ultimate sale or disposition of such real
estate. All transactions between the combined ventures have been
eliminated in the combined financial statements.

The preparation of financial statements in accordance with GAAP
requires the 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.

JMB/Piper and JMB/Piper II have classified Piper Jaffray Tower as held
for sale as of September 30, 1997, and therefore, has not been subject to
continued depreciation beyond that date.

The accounting policies of the JMB/Piper and JMB/Piper II are the same
as those of the Partnership. Accordingly, reference is made to the Notes
to the Partnership's financial statements filed with this annual report.
Such notes are incorporated herein by reference.

VENTURE AGREEMENT

A description of the venture agreement is contained in the Notes to
Consolidated Financial Statements of Carlyle-XIV. Such note is hereby
incorporated herein by reference.

LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1997 and
1996:

1997 1996
----------- ----------
10.5% per annum mortgage note; secured by
Piper Jaffray Tower; payable in monthly
installments of interest only of $854,167
until maturity in January 2020 . . . . . $96,126,672 96,868,299

Less long-term debt
principal reduction . . . . . . . 385,523 741,627
----------- ----------
Total long-term debt. . . . . . . . $95,741,149 96,126,672
=========== ==========

<PAGE>

Furthermore, repayment of the loan is subject to a prepayment fee
ranging from 6% to 1% through the maturity date as well as an amount that
will provide the lender with an internal rate of return from 12.75% to
13.59% out of proceeds from the sale or refinancing of the property. After
the prepayment fees, the lender participates in any remaining sale or
refinancing proceeds. For financial reporting purposes, through
December 31, 1995, additional interest expense had been accrued at a rate
of 13.59% per annum. Under the current terms of the modified debt, there
must be a significant improvement in the current market and property
operating conditions resulting in a significant increase in value of the
property in order for JMB/Piper to share in any future net sale or
refinancing proceeds. Therefore, during 1996 and 1997, interest expense of
$10,250,000 was recognized at the loan's stated payment rate.
Additionally, based on JMB/Piper's estimate of the value of the building at
December 31, 1997, it was determined that the lender is not expected to
receive the entire balance of the loan and interest that Piper had accrued
based on the above mentioned internal rate of return, contingent upon the
sale or refinancing of the property. Therefore, in 1997, $18,600,000 of
such interest was reversed and charged to operations. Total indebtedness
including interest under the mortgage loan is approximately $99,769,000 and
$119,111,000 at December 31, 1997 and 1996, respectively.

LEASES - As Property Lessor

At December 31, 1997, JMB/Piper and JMB/Piper II's principal asset is
an office building. JMB/Piper and JMB/Piper II have determined that all
leases relating to the property are properly classified as operating
leases; therefore, rental income is reported when earned. Leases range in
term from one to 25 years and provide for fixed minimum rent and partial to
full reimbursement of operating costs. A substantial portion of the
ability of the office tenants at Piper Jaffray Tower to honor their leases
is dependent upon the office economic sector.

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

1998 . . . . . . . . . . $10,981,448
1999 . . . . . . . . . . 10,971,855
2000 . . . . . . . . . . 5,722,682
2001 . . . . . . . . . . 3,864,448
2002 . . . . . . . . . . 3,482,907
Thereafter . . . . . . . 5,344,847
-----------
$40,368,187
===========

<PAGE>

<TABLE>
SCHEDULE III

JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997

COSTS
CAPITALIZED
INITIAL COST SUBSEQUENT GROSS AMOUNT AT WHICH CARRIED
TO VENTURES (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
------------------------- -------------- ------------------------------------
BUILDINGS LAND, BUILDINGS
ENCUMBRANCE AND BUILDINGS AND AND
(C) LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (D)
----------- ----------- --------------------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE BUILDING:
Piper Jaffray
Tower
Minneapolis,
Minnesota . $96,126,672 4,400,998 96,546,781 16,226,727 4,766,320 112,408,186 117,174,506
=========== =========== ========== ========== ========== =========== ===========

</TABLE>

<PAGE>

<TABLE>
SCHEDULE III

JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1997
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OFFICE BUILDING:
Piper Jaffray
Tower
Minneapolis,
Minnesota . . . . . . . . . . . . 49,530,178 12/84 12/84 5 - 30 years 4,263,895
=========== =========
<FN>

Notes:

(A) The initial cost to JMB/Piper and JMB/Piper II 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, 1997 for Federal income tax purposes was
approximately $105,968,000.

</TABLE>

<PAGE>

<TABLE>
SCHEDULE III

JMB/PIPER I ASSOCIATES AND JMB/PIPER II ASSOCIATES
(UNCONSOLIDATED VENTURES OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV)

COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997

(D) Reconciliation of real estate owned:
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>

Balance at beginning of period . . . . . . . . . $116,835,314 116,470,769 116,152,595
Additions during period. . . . . . . . . . . . . 339,192 364,545 318,174
------------ ------------ ------------
Balance at end of period . . . . . . . . . . . . $117,174,506 116,835,314 116,470,769
============ ============ ============

(E) Reconciliation of accumulated depreciation:

Balance at beginning of period . . . . . . . . . $ 46,882,483 43,357,753 39,843,192
Depreciation expense . . . . . . . . . . . . . . 2,647,695 3,524,730 3,514,561
------------ ------------ ------------
Balance at end of period . . . . . . . . . . . . $ 49,530,178 46,882,483 43,357,753
============ ============ ============

</TABLE>

<PAGE>

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

There were no changes of in or disagreements with accountants during
1996 or 1997.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. Substantially all of the
outstanding shares of JMB are owned, directly or indirectly, by certain of
its officers, directors, members of their families and their affiliates.
JMB has responsibility for all aspects of the Partnership's operations,
subject to the requirement that purchases and sales of real property must
be approved by the Associate General Partner of the Partnership, ABPP
Associates, L.P., which is an Illinois limited partnership. The limited
partners of the Associate General Partner are generally officers, directors
and affiliates of JMB or its affiliates.

The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services have been and may
in the future be provided to the Partnership or its investment properties
by affiliates of the General Partners, including property management
services and insurance brokerage services. In general, such services are
to be provided on terms no less favorable to the Partnership than could be
obtained from independent third parties and are otherwise subject to
conditions and restrictions contained in the Partnership Agreement. The
Partnership Agreement permits the General Partners and their affiliates to
provide services to, and otherwise deal and do business with, persons who
may be engaged in transactions with the Partnership, and permits the
Partnership to borrow from, purchase goods and services from, and otherwise
to do business with, persons doing business with the General Partners or
their affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.

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

<PAGE>

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

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

There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 3, 1998. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 3,
1998. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.

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

<PAGE>

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

Judd D. Malkin (age 60) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is also a director of Urban Shopping Centers,
Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment
trust in the business of owning, managing and developing shopping centers.
He is a Certified Public Accountant.

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

Burton E. Glazov (age 59) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.

Stuart C. Nathan (age 56) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.

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

John G. Schreiber (age 51) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Advisors, L.P.,
an affiliate of the Blackstone Group, L.P. Mr. Schreiber is also a
director of USC, Inc., a trustee of Amli Residential Property Trust and a
director of a number of investment companies advised or managed by T. Rowe
Price Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.

H. Rigel Barber (age 48) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.

Glenn E. Emig (age 50) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.

Gary Nickele (age 45) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.

Gailen J. Hull (age 49) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.

Howard Kogen (age 62) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Holders of Interests, and a
share of profits or losses. Reference is made to the Notes for a
description of such transactions, distributions and allocations. In 1997
the General Partners received no distributions and Corporate General
Partner received no management fees. The General Partners received a share
of Partnership income for tax purposes aggregating $108,474 in 1997.

An affiliate of the Corporate General Partner provided property
management services during 1997 for Louis Joliet Mall. In 1997, such
affiliate earned property management and leasing fees amounting to $284,751
for such services, all of which were paid as of December 31, 1997. 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 agreed to defer
receipt of its property management fees, which aggregated $1,839,000
through November 1994 at December 31, 1997. 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 $477,515 in 1997, 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 1997
aggregating $33,198 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 1997, the Corporate General Partner of the Partnership was
due reimbursement for such expenses in the amount of $74,171, of which
$18,107 was unpaid at December 31, 1997. Additionally, the General
Partners are also entitled to reimbursements for legal and accounting
services. Such costs for 1997 were $45,484, of which $15,982 was unpaid as
of December 31, 1997.

The Partnership had obligations to fund, on demand, $1,200,000 and
$1,200,000 to Carlyle Managers, Inc. and Carlyle Investors, Inc.,
respectively, of additional paid-in capital (reflected in amounts due to
affiliates in the accompanying consolidated financial statements). During
1996, these obligations were reduced to $400,000 and $400,000,
respectively. As of December 31, 1997, these obligations bore interest at
5.93% per annum and interest accrued on these obligations was $548,523.

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

<PAGE>

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 and Assignee
Interests therein JMB Realty Corporation 5 Interests (1) Less than 1%
indirectly

Limited Partnership
Interests and Assignee
Interests therein Corporate General Partner, 18.48473 Interests (1) (2) (3) 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 11.92207 Interests owned by two officers for which each such officer has sole investment and
voting power as to such Interests so owned.

(3) Includes 1.56266 Interests owned by an estate for which an officer acts as co-executor and is deemed to
have shared voting and investment power.

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>

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

PART IV

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

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

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

(2) Exhibits.

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

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

3-C. Acknowledgement of rights and duties of the
General Partners of the Partnership between ABPP Associates, L.P. (a
successor Associated General Partner of the Partnership) and JMB Realty
Corporation as of December 31, 1995 is hereby incorporated by reference to
Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-15962)
dated March 21, 1997.

4-A. 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-B. 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.

4-C. Documents relating to the modification and
extension of the mortgage loan secured by Wells Fargo-South Tower is hereby
incorporated by reference to the Partnership's Report for December 31, 1996
on Form 10-K (File No. 0-15962) dated March 21, 1997.

4-D. Amended and restated promissory note between
Wells Fargo Bank and the Partnership is hereby incorporated by reference to
the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-
15962) dated March 21, 1997.

4-E. Loan modification agreement of Wells Fargo
Bank is hereby incorporated by reference to the Partnership's Report for
December 31, 1996 on Form 10-K (File No. 0-15962) dated March 21, 1997.

<PAGE>

10-A. 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-B. 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-C. 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-D. 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-E. Second Amended and Restated Articles of
Partnership of JMB/NYC Office Building Associates, L.P. is hereby
incorporated by reference to the Partnership's Report for December 31, 1993
on Form 10-K (File No. 0-15962) dated March 28, 1994.

10-F. 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-G. 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-H. $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-I. $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.

<PAGE>

10-J. Assumption Agreements dated October 14, 1994
made by 237 Park Avenue Associates and by 1290 Associates in favor and for
the benefit of O&Y Equity Company, L.P., O&Y NY Building Corp. and JMB/NYC
Office Building Associates, L.P., 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-K. Assumption Agreements dated October 14, 1994
made by O&Y Equity Company, L.P., and by O&Y NY Building Corp. and by
JMB/NYC Office Building Associates, L.P. in favor and for the benefit of 2
Broadway Associates and 2 Broadway Land Company, 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-L. 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-M. 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-N. 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-O. Agreement of Sale between 2 Broadway
Associates, L.P. and 2 Broadway Acquisition Corp. dated August 10, 1995, is
hereby incorporated by reference to the Partnership's Report for December
31, 1995 on Form 10-K (File No. 0-15962) dated March 25, 1996.

<PAGE>

10-P. Agreement of Conversion of 1290 Associates
into 1290 Associates, L.L.C. dated October 10, 1995 among JMB/NYC Office
Building Associates, L.P., an Illinois limited partnership, O&Y Equity
Company, L.P., a Delaware limited partnership and O&Y NY Building Corp., a
Delaware corporation, is hereby incorporated by reference to the
Partnership's Report for December 31, 1995 on Form 10-K (File No. 0-15962)
dated March 25, 1996.

10-Q. Agreement of Conversion of 237 Park Avenue
Associates into 237 Park Avenue Associates, L.L.C., dated October 10, 1995
among JMB/NYC Office Building Associates, L.P., an Illinois limited
partnership, O&Y Equity Company, L.P., a Delaware limited partnership and
O&Y NY Building Corp., a Delaware corporation, is hereby incorporated by
reference to the Partnership's Report for December 31, 1995 on Form 10-K
(File No. 0-15962) dated March 25, 1996.

10-R. Trustee's Deed of Sale dated March 27, 1996
relating to the conveyance of title and interest in Wilshire Bundy Plaza to
Teachers Insurance and Annuity Association of America (Grantee) by Chicago
Title Company (Trustee) for Carlyle Real Estate Limited Partnership - XIV
(Trustor) is incorporated herein by reference to the Partnership's Report
for March 31, 1996 on Form 10-Q (File No. 0-15962) dated May 10, 1996.

10-S. Disclosure Statement for the Second Amended
Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C. dated August 9, 1996, is hereby incorporated by
reference to the Partnership's Report for September 30, 1996 on Form 10-Q
(File No. 0-15962) dated November 8, 1996.

10-T. Purchase Agreement as amended including
exhibits thereto, dated August 29, 1996 between Mariners Pointe Associates,
Ltd. and Mariners Pointe L.L.C. is hereby incorporated by reference to the
Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-15962)
dated March 21, 1997.

10-U. Documents relating to the operating agreement
of Maguire Thomas Partners-South Tower, L.L.C. are hereby incorporated by
reference to the Partnership's Report for December 31, 1996 on Form 10-K
(File No. 0-15962) dated March 21, 1997.

10-V. Consent of Director of Carlyle-XIV Managers,
Inc. (known as Carlyle Managers, Inc.) dated October 31, 1996 is hereby
incorporated by reference to the Partnership's Report for December 31, 1996
on Form 10-K (File No. 0-15962) dated March 21, 1997.

<PAGE>

10-W. Consent of Director of Carlyle-XIII, Managers,
Inc. (known as Carlyle Investors, Inc.) dated October 31, 1996 is hereby
incorporated by reference to the Partnership's Report for December 31, 1996
on Form 10-K (File No. 0-15962) dated March 21, 1997.

10-X. Allonge to demand note between Carlyle Real
Estate Limited Partnership-XIV and Carlyle Managers, Inc. dated October 31,
1996 is hereby incorporated by reference to the Partnership's Report for
December 31, 1996 on Form 10-K (File No. 0-15962) dated March 21, 1997.

10-Y. Allonge to demand note between Carlyle Real
Estate Limited Partnership-XIV and Carlyle Investors, Inc., dated October
31, 1996 is hereby incorporated by reference to the Partnership's Report
for December 31, 1996 on Form 10-K (File No. 0-15962) dated March 21, 1997.

10-Z. Indemnification agreement between Property
Partners, L.P., Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates,
L.P. dated as of October 10, 1996 is hereby incorporated by reference to
the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-
15962) dated March 21, 1997.

10-AA. Agreement of Limited Partnership of 237/1290
Lower Tier Associates, L.P. dated as of October 10, 1996 is hereby
incorporated by reference to the Partnership's Report for December 31, 1996
on Form 10-K (File No. 0-15962) dated March 21, 1997.

10-BB. Amended and Restated Limited Partnership
Agreement of 237/1290 Upper Tier Associates, L.P. dated as of October 10,
1996 is hereby incorporated by reference to the Partnership's Report for
December 31, 1996 on Form 10-K (File No. 0-15962) dated March 21, 1997.

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 1997 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.

<PAGE>

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, 1998

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

By: JMB Realty Corporation
Corporate General Partner

JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 25, 1998

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

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

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

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

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

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

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

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

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

EXHIBIT INDEX

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

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

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

4-A. 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

4-C. Documents relating to the modification
and extension of the mortgage loan
secured by Wells Fargo-South Tower Yes

4-D. Amended and restated promissory note
of Wells Fargo Bank Yes

4-E. Loan modification agreement of
Wells Fargo Bank Yes

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

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

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

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

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

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

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

EXHIBIT INDEX - CONTINUED

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

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

10-K. 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. Yes

10-L. 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. Yes

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

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

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

EXHIBIT INDEX - CONTINUED

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

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

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

10-S. Trustee's Deed of Sale dated
March 27, 1996 relating to the
conveyance of title and interest
in Wilshire Bundy Plaza to
Teachers Insurance and Annuity
Association of America (Grantee)
by Chicago Title Company
(Trustee) for Carlyle Real Estate
Limited Partnership - XIV (Trustor) Yes

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

10-U. Purchase Agreement as amended including
exhibits thereto, dated August 29,
1996 between Mariners Pointe Associates,
Ltd. and Mariners Pointe, L.L.C. Yes

10-V. Documents relating to the operating
agreement of Maguire Thomas Partners-
South Tower, L.L.C.

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

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

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

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

EXHIBIT INDEX - CONTINUED

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

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

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

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

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

21. List of Subsidiaries No

24. Powers of Attorney No

27. Financial Data Schedule No

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 until its sale in
October 1996; 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 has an indirect limited partnership interest
which equals approximately 4.9% of the reorganized and restructured
ventures owning 237 Park Avenue and 1290 Avenue of the Americas (the
"Properties"). The new ownership structure gives control of the Properties
to a newly-organized real estate investment trust which is owned primarily
by holders of the first mortgage debt which encumbered the Properties prior
to the bankruptcy. Prior to the restructuring, JMB/NYC was a member or
partner in (i) 237 Park Avenue Associates, L.L.C., a New York limited
liability company, (formerly 237 Park Avenue Associates, a New York general
partnership) which holds title to the 237 Park Avenue Building, (ii) 1290
Associates, L.L.C., a New York limited liability company, (formerly 1290
Associates, a New York general partnership) which holds title to the 1290
Avenue of the Americas Building, (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; Maguire
Thomas Partners-South Tower, a limited liability company, which holds title
to Wells Fargo Center-IBM Tower located in Los Angeles, California; 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 the Notes 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, 1997, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.

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

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

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

The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1997,
and any and all amendments thereto, the 30th day of January, 1998.

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

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

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

<PAGE>

EXHIBIT 24

POWER OF ATTORNEY

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

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

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

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

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

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

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

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

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

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

<CASH> 21,051,953
<SECURITIES> 0
<RECEIVABLES> 571,039
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,622,992
<PP&E> 33,994,623
<DEPRECIATION> 0
<TOTAL-ASSETS> 63,829,469
<CURRENT-LIABILITIES> 3,863,302
<BONDS> 51,768,623
<COMMON> 0
0
0
<OTHER-SE> (5,732,983)
<TOTAL-LIABILITY-AND-EQUITY> 63,829,469
<SALES> 8,559,300
<TOTAL-REVENUES> 11,393,348
<CGS> 0
<TOTAL-COSTS> 4,363,238
<OTHER-EXPENSES> 1,321,086
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,893,740
<INCOME-PRETAX> (184,716)
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,080,035
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,080,035
<EPS-PRIMARY> 19.35
<EPS-DILUTED> 19.35

</TABLE>