CARLYLE REAL ESTATE LTD PARTNERSHIP XIV /IL/, 10-Q, 1999-11-15

CARLYLE REAL ESTATE LTD PARTNERSHIP XIV /IL/
10-Q, 1999-11-15
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended
September 30, 1999 Commission file number 0-15962

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

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

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

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

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

<PAGE>

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

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

Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . 19

PART II OTHER INFORMATION

Item 5. Other Information. . . . . . . . . . . . . . . . . 26

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 27

<PAGE>

<TABLE>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998

(UNAUDITED)

ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 19,901,778 6,875,849
Interest, rents and other receivables (net of allowance for
doubtful accounts of $0 and $72,746 at September 30,
1999 and December 31, 1998, respectively) . . . . . . . . . . . . . 312,918 685,990
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,118 25,860
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 352,268
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 20,220,814 7,939,967
------------ ------------
Investment property held for sale or disposition. . . . . . . . . . . . -- 34,434,318
------------ ------------

Investment in unconsolidated ventures, at equity. . . . . . . . . . . . 10,990,888 5,068,160
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 856,169
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . -- 570,862
------------ ------------
$ 31,211,702 48,869,476
============ ============

<PAGE>

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

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

SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . $ -- 387,096
Accounts payable and other current liabilities. . . . . . . . . . . . 248,416 774,360
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 1,014,924 1,415,702
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 170,101
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . -- 545,000
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . 1,263,340 3,292,259
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . -- 19,919
Investment in unconsolidated ventures, at equity. . . . . . . . . . . . 8,480,620 5,958,542
Partnership's share of the maximum unfunded obligation under
the indemnification agreement . . . . . . . . . . . . . . . . . . . . 8,287,020 7,994,262
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . 32,890,142 55,119,460
------------ ------------
Commitments and contingencies

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 50,921,122 72,384,442

Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (15,141,848) (15,069,445)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (1,817,374) (1,817,374)
------------ ------------
(16,958,222) (16,885,819)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . . 351,746,836 351,746,836
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (292,284,638) (296,162,587)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (62,213,396) (62,213,396)
------------ ------------
(2,751,198) (6,629,147)
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . . (19,709,420) (23,514,966)
------------ ------------
$ 31,211,702 48,869,476
============ ============
<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

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1999 1998 1999 1998
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . $ 454,085 2,136,483 4,986,031 6,629,893
Interest income . . . . . . . . . . . . . . . . 183,313 302,328 299,818 873,130
Other income. . . . . . . . . . . . . . . . . . -- -- -- 186,042
---------- ---------- ---------- ----------
637,398 2,438,811 5,285,849 7,689,065
---------- ---------- ---------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . 1,103,806 1,465,523 4,026,039 4,402,111
Property operating expenses . . . . . . . . . . 603,774 816,454 2,557,552 2,936,319
Professional services . . . . . . . . . . . . . 25,743 29,240 659,275 390,552
Amortization of deferred expenses . . . . . . . 15,707 47,236 108,415 138,274
Management fees to Corporate General Partner. . -- 556,709 -- 556,709
General and administrative. . . . . . . . . . . 170,666 154,128 560,691 451,916
---------- ---------- ---------- ----------
1,919,696 3,069,290 7,911,972 8,875,881
---------- ---------- ---------- ----------
(1,282,298) (630,479) (2,626,123) (1,186,816)
Partnership's share of the reduction of the
maximum unfunded obligation under the
indemnification agreement . . . . . . . . . . . 67,126 67,126 201,378 201,378
Partnership's share of operations of
unconsolidated ventures . . . . . . . . . . . . (1,860,286) (96,396) (1,257,200) 179,825
---------- ---------- ---------- ----------
Earnings (loss) before gain on sale of
investment property or interest in
unconsolidated venture. . . . . . . . . (3,075,458) (659,749) (3,681,945) (805,613)

Gain on sale of investment property . . . . . . . 7,598,499 -- 7,598,499 --
Gain on sale of interest in unconsolidated
venture . . . . . . . . . . . . . . . . . . . . -- -- -- 2,601,685
---------- ---------- ---------- ----------
Earnings (loss) before extra-
ordinary item . . . . . . . . . . . . . 4,523,041 (659,749) 3,916,554 1,796,072

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1999 1998 1999 1998
----------- ---------- ----------- ----------

Extraordinary item - write-off of
unamortized deferred financing costs. . . . . . (111,008) -- (111,008) --
---------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . . . . $4,412,033 (659,749) 3,805,546 1,796,072
========== ========== ========== ==========

Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on sale
of investment property or interest
in unconsolidated venture . . . . . . $ (7.37) (1.58) (8.82) (1.93)
Gain on sale of investment property . . 18.77 -- 18.77 --
Gain on sale of interest in
unconsolidated venture. . . . . . . . -- -- -- 6.43
Extraordinary item. . . . . . . . . . . (.27) -- (.27) --
---------- ---------- ---------- ----------

Net earnings (loss) . . . . . . . . . . $ 11.13 (1.58) 9.68 4.50
========== ========== ========== ==========

Cash distributions per limited
partnership interest. . . . . . . . . . $ -- 35.00 -- 35.00
========== ========== ========== ==========

<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

NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)

<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,805,546 1,796,072
Items not requiring (providing) cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 108,415 138,274
Long-term debt - deferred accrued interest. . . . . . . . . . . . . . . 2,803,449 2,803,449
Partnership's share of the reduction of the maximum unfunded
obligation under the indemnification agreement. . . . . . . . . . . . (201,378) (201,378)
Partnership's share of operations of unconsolidated ventures. . . . . . 1,257,200 (179,825)
Gain on sale of investment property . . . . . . . . . . . . . . . . . . (7,598,499) --
Gain on sale of interest in unconsolidated venture. . . . . . . . . . . -- (2,601,685)
Extraordinary item. . . . . . . . . . . . . . . . . . . . . . . . . . . 111,008 --
Changes in:
Interest, rents and other receivables . . . . . . . . . . . . . . . . . 373,072 (19,916)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,742 (30,325)
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352,268 91,235
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . 12,349 (8,706)
Accounts payable and other current liabilities. . . . . . . . . . . . . (525,944) (577,570)
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,359 632,586
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . (170,101) (1,775)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . (545,000) (180,554)
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (19,919) 1,050
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . (124,433) 1,660,932
------------ -----------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (1,321,967) (189,062)
Partnership's distributions from unconsolidated ventures. . . . . . . . . -- 584,492
Partnership's contributions to unconsolidated ventures. . . . . . . . . . (4,657,850) (146,241)
Cash proceeds from sale of investment property. . . . . . . . . . . . . . 19,407,079 --
Cash proceeds from sale of interest in unconsolidated venture . . . . . . -- 4,726,981
Refund (payment) of deferred expenses, net. . . . . . . . . . . . . . . . (54,867) 61,176
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . 13,372,395 5,037,346
------------ -----------

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1999 1998
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (222,033) (265,293)
Distributions to Limited Partners . . . . . . . . . . . . . . . . . . . . -- (14,029,064)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . . (222,033) (14,294,357)
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . . 13,025,929 (7,596,079)
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 6,875,849 21,051,953
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 19,901,778 13,455,874
============ ===========

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 1,353,286 1,600,437
============ ===========
Non-cash investing and financing activities:
Sale of investment property:
Sale price, net of selling expenses . . . . . . . . . . . . . . . . . $ 44,604,909 --
Assumption of mortgage payable. . . . . . . . . . . . . . . . . . . . (25,197,830) --
------------ -----------
Cash proceeds from sale of investment property. . . . . . . . . . . $ 19,407,079 --
============ ===========

Sale of interest in unconsolidated venture:
Gain on sale of interest in unconsolidated venture. . . . . . . . . . $ -- 2,601,685
Basis in unconsolidated venture . . . . . . . . . . . . . . . . . . . -- 2,125,296
------------ -----------
Cash proceeds from sale of interest in unconsolidated
venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 4,726,981
============ ===========

Reduction in amounts due to affiliates. . . . . . . . . . . . . . . . . . $ (494,136) --
============ ===========

Reduction in Partnership's investment . . . . . . . . . . . . . . . . . . $ 494,136 --
============ ===========

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

<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 1999 AND 1998

(UNAUDITED)

GENERAL

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1998 which are
included in the Partnership's 1998 Annual Report on Form 10-K filed on
March 22, 1999 (File No. 0-15962) as certain footnote disclosures which
would substantially duplicate those contained in such audited financial
statements have been omitted from this report. Capitalized terms used but
not defined in this quarterly report have the same meanings as in the
Partnership's 1998 Annual Report on Form 10-K.

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

The Partnership adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" ("SFAS 121") as required in
the first quarter of 1996. The Partnership's policy is to consider a
property to be held for sale or disposition when the Partnership has
committed to a plan to sell or dispose of such property and active
marketing activity has commenced or is expected to commence in the near
term or the Partnership has concluded that it may dispose of the property
by no longer funding operating deficits or debt service requirements of the
property thus allowing the lender to realize upon its security. In
accordance with SFAS 121, any properties identified as "held for sale or
disposition" are no longer depreciated. The unconsolidated Venture's
commitment to a plan for sale or disposal of the Piper Jaffray Tower has,
to date, however not resulted in a sale or disposition. As a result, the
unconsolidated venture has made an adjustment to record depreciation
expense as of June 30, 1999 that would have been recognized had the Piper
Jaffray Tower not been considered "held for sale or disposition". Further,
the unconsolidated venture has begun to record depreciation expense for
this property commencing July 1, 1999. As of December 31, 1996, the
Partnership had committed to a plan to sell the Louis Joliet Mall
investment property, its last remaining consolidated property. The net
results of operations for the nine months ended September 30, 1999 and 1998
for the consolidated property classified as held for sale or disposition
for the past two years were income of $1,209,555 and $2,156,124,
respectively. The accompanying consolidated financial statements include
earnings of $1,257,634 and $851,687, as the Partnership's share of total
property operations of $4,115,529 and $3,154,619 for unconsolidated
properties for the nine months ended September 30, 1999 and 1998,
respectively, which are held for sale or disposition or have been sold or
disposed of during the past two years.

Certain amounts in the 1998 financial statements have been
reclassified to conform with the 1999 presentation.

<PAGE>

TRANSACTIONS WITH AFFILIATES

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees and certain of its officers, and for
other direct expenses relating to the administration of the Partnership and
the operation of the Partnership's investments. Fees, commissions and
other expenses required to be paid by the Partnership to the General
Partners and their affiliates as of September 30, 1999 and for the nine
months ended September 30, 1999 and 1998 were as follows:

Unpaid at
September 30,
1999 1998 1999
-------- ------- -------------
Property management
and leasing fees . . . . . . $267,324 236,930 --
Insurance commissions . . . . 31,315 30,846 --
Management fees to
Corporate General
Partner. . . . . . . . . . . -- 556,709 --
Reimbursement (at cost)
for out-of-pocket salary
and salary-related
expenses related to the
on-site and other costs
for the Partnership and
its investment properties. . 165,710 114,595 53,954
-------- ------- -------
$464,349 939,080 53,954
======== ======= =======

The Partnership had obligations, which bore interest ranging from
4.62% to 5.35% per annum in 1999, to fund, on demand, $400,000 and $400,000
to Carlyle Mangers, Inc. and Carlyle Investors, Inc., respectively, of
additional paid-in capital. In June 1999, the obligations to Carlyle
Managers, Inc. and Carlyle Investors, Inc. were reduced so that as of
September 30, 1999, the obligations and the cumulative interest accrued on
these obligations totaled $960,970 (reflected in amounts due to affiliates
in the accompanying consolidated financial statements). These obligations
were further reduced through a series of transactions and fully retired in
October, 1999.

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 pursuant to a loan modification.
Such fees deferred by the affiliate were approximately $1,839,000 (of which
approximately $919,500 is the Partnership's share) at September 30, 1999.
The unconsolidated venture's obligation to the affiliate is not reflected
in the consolidated balance sheets as of September 30, 1999 and
December 31, 1998. Such deferred amount does not bear interest and is
expected to be paid in future periods.

JMB/NYC

As a result of the 1996 restructuring, JMB/NYC has an indirect limited
partnership interest which, before taking into account significant
preferences to other partners, equals approximately 4.9% of the reorganized
and restructured ventures owning 237 Park and 1290 Avenue of the Americas
(collectively, 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"), owned primarily by holders of the first
mortgage debt that encumbered the Properties prior to the bankruptcy.
JMB/NYC has,

<PAGE>

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 an amount based on a formula relating to the operations of
the Properties (the "Formula Price"). There can be no assurance that such
REIT affiliate will not exercise such right on or after January 2, 2001.
In addition, the non-recourse purchase money note made by JMB/NYC for its
interests in the Properties, which is secured by JMB/NYC's interests in the
Properties and had outstanding principal and accrued and deferred interest
of approximately $129,400,000 at September 30, 1999, matures on January 2,
2001. If such REIT affiliate exercises such right to purchase, for the
reasons discussed below, it is unlikely that such purchase would result in
any significant distributions to the partners of the Partnership.
Additionally, at any time, JMB/NYC has the right to require such REIT
affiliate to purchase the interest of JMB/NYC in the Properties for the
Formula Price.

Pursuant to the indemnification agreement, generally until the earlier
of the sale of (i) the Properties and (ii) JMB/NYC's indirect limited
partnership interest in the restructured and reorganized joint ventures
that own the Properties, the Affiliated Partners are jointly and severally
obligated to indemnify 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 joint ventures. 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 exercise of the purchase right by the REIT affiliate discussed above
or a sale or certain other transactions involving direct or indirect
interests in the Properties unless such transaction requires JMB/NYC's
consent. Compliance, therefore, is within the control of the Affiliated
Partners and non-compliance with such provisions by either the Partnership
or the other Affiliated Partners is highly unlikely. Therefore, the
Partnership expects its share of the collateral to be returned (including
interest earned) after the termination of the indemnification agreement.

During 1996, as a result of the adoption of the Plan, JMB/NYC
discontinued the application of the equity method of accounting for its
investments in unconsolidated ventures and reversed those previously
recognized losses from the unconsolidated ventures except for an amount
equal to the maximum obligation under the indemnification agreement of
$25,000,000. Also, the Partnership has discontinued the application of the
equity method of accounting for the indirect interests in the Properties
and additional losses from the investment will not be recognized. Should
the unconsolidated venture subsequently report income, the Partnership will
resume applying the equity method on its share of such income only after
such income exceeds net losses not previously recognized.

<PAGE>

In October 1999, JMB/NYC entered into an agreement (the "Restructuring
Agreement"), pursuant to which, among other things, JMB/NYC's interests in
237 Park Avenue ("237 Park") and 1290 Avenue of the Americas ("1290 Avenue
of the Americas") would be restructured. Under the Restructuring
Agreement, the partnership that owns 237 Park would be converted to a
limited liability company ("237 Park LLC"). The membership interest in 237
Park LLC that is owned by a partnership (the "Upper Tier Partnership") in
which JMB/NYC is a limited partner with a 99% interest would be contributed
to a partnership (the "Acquiring Partnership") unaffiliated with either
JMB/NYC or the REIT that is acquiring the other membership interests in 237
Park LLC from the REIT and one of its affiliates. In exchange for the
interest in 237 Park LLC, the Upper Tier Partnership would receive a
limited partnership interest in the Acquiring Partnership having a fair
market value (determined in accordance with the partnership agreement of
the Acquiring Partnership) of approximately $500,000. (JMB/NYC's total
investment in the Acquiring Partnership would be significantly less than 1%
of the Acquiring Partnership.) The Acquiring Partnership owns a portfolio
of investments in addition to 237 Park. JMB/NYC would have the right,
during the month of July of each calendar year commencing with 2001, to
cause a sale of the interest in the Acquiring Partnership for a price equal
to the greater of the fair market value of such interest (determined in
accordance with the partnership agreement of the Acquiring Partnership) and
a specified amount, of which JMB/NYC's share would be $500,000. In
addition, the general partner of the Acquiring Partnership would have the
right, during the month of January of each calendar year commencing with
2002, to purchase the interest in the Acquiring Partnership for a price
equal to the greater of the fair market value of such interest (determined
as described above) and a specified amount, of which JMB/NYC's share would
be $650,000.

The Partnership believes that the restructuring, by itself, of
JMB/NYC's indirect interest in 237 Park, if completed as currently
contemplated by the Restructuring Agreement, would not result in the
Partnership (or the Holders of Interests) recognizing any income for
Federal income tax purposes. In addition, although under the terms of the
Restructuring Agreement JMB/NYC would not be able to cause a sale of the
interest in the Acquiring Partnership prior to 2001, the earliest date on
which such interest could be purchased at the election of the general
partner of the Acquiring Partnership would be January 2002. In the absence
of JMB/NYC's earlier election to cause a sale of its interest in the
Acquiring Partnership, this would extend by a year (to January 2002 from
January 2001) the date on which JMB/NYC's indirect interest in 237 Park is
currently subject to purchase at the election of an affiliate of the REIT.

Under the transactions provided for by the Restructuring Agreement,
JMB/NYC's indirect interest in 1290 Avenue of the Americas would also be
modified, although the REIT would continue to own the controlling interest
in the property. In general, the REIT would have the right to sell 1290
Avenue of the Americas or the REIT's interest in the property or permit a
sale of more than 51% of the stock in the REIT, during the period from
January 1, 2000 through February 28, 2001, provided that JMB/NYC received
the greater of (i) an amount based on a formula relating to the operations
of the property (the "1290 Formula Price"), and (ii) $4,500,000. Although
the REIT would be able to cause a sale of the entire property one year
earlier than previously, which would result in the Partnership's (and the
Holders of Interests') recognition of income for Federal income tax
purposes from such a transaction, JMB/NYC would be entitled to receive a
minimum specified amount (determined as described above) in connection with
such sale. An affiliate of the REIT would also have the right, during the
month of March of each calendar year commencing with 2001, to purchase
JMB/NYC's indirect interest in the property for the greater of (x) the 1290
Formula Price and (y) $1,400,000. In addition, JMB/NYC would have the
right, during the month of September of each calendar year commencing with
2001, to require an affiliate of the REIT to purchase JMB/NYC's indirect
interest in the property for the greater of (1) the 1290 Formula Price, and
(2) $1,000,000.

<PAGE>

In connection with the above transactions, approximately $4,460,000 in
face amount at maturity of U.S. Treasury securities currently held as
collateral for the indemnification obligations of the Affiliated Partners
would be released from escrow and returned to the Affiliated Partners. The
remaining face amount of the securities would be held as collateral for the
indemnification obligations of the Affiliated Partners generally until 90
days after the earlier of the sale of 1290 Avenue of the Americas and the
sale of JMB/NYC's indirect interest in 1290 Avenue of the Americas. In
addition, the maximum potential liability of the Affiliated Partners under
their indemnification obligations would be reduced from $25,000,000 to
approximately $14,286,000.

The closing of the transactions provided for by the Restructuring
Agreement, which is expected to occur in the fourth quarter of 1999, is
subject to the satisfaction of various conditions, and there is no
assurance that such conditions will be satisfied or that any of such
transactions will close.

The Affiliated Partners may seek to purchase a portion of the rights
to the purchase money note and the related security agreement to allow the
Affiliated Partners to retain a substantial amount of the proceeds JMB/NYC
may ultimately be entitled to receive from the sale of its interest in 1290
Avenue of the Americas, its interest in the Acquiring Partnership and/or
any other transaction provided for by the restructuring. Such purchase of
a portion of the purchase money note might result in the Partnership (and
the Holders of Interests) recognizing some income for Federal income tax
purposes. There is no assurance that the Affiliated Partners will be
successful in obtaining such an interest in the purchase money note.

Due to the level of indebtedness remaining on the Properties, the
significant preference levels to other partners within the reorganized
joint ventures owning the Properties and the purchase money note payable by
JMB/NYC, it is unlikely that JMB/NYC will make any significant
distributions to the Partnership at any time.

JMB/PIPER

Occupancy of the building at the end of the third quarter of 1999 was
89%.

JMB/Piper had discussed an early renewal with PJI, which occupies
335,684 square feet or approximately 46% of the building's rentable square
feet, with a lease expiration date at May 31, 2000. Piper and PJI were
unable to come to terms and PJI announced that it would be moving to a new
building (to be built in Minneapolis) upon expiration of its existing lease
in 2000. The property manager is actively pursuing replacement tenants for
the PJI space; however, given the competitive nature of the downtown
Minneapolis market, it is unlikely that all of the PJI space can be
released quickly enough to generate enough cash flow to fund the required
debt service payments.

The property is subject to a mortgage loan in the original principal
amount of $100,000,000, of which approximately $95,741,000 is outstanding
as of September 30, 1999. The lender is essentially entitled to all
operating cash flow. During 1998, no excess cash flow was generated.
However, the lender disputed certain amounts included in the calculation of
cash flow for the years 1997 and 1998. This resulted in JMB/Piper owing an
additional amount of cash flow (approximately $122,000) for 1997. In
settling such dispute, the lender and JMB/Piper agreed to have the
additional cash flow paid directly from the escrow account with the balance
paid to JMB/Piper for excess capital costs incurred (approximately
$77,000), which JMB/Piper received in the fourth quarter of 1999.

<PAGE>

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 will not be able to pay the required debt
service upon the expiration of PJI's lease in May 2000, as discussed above.

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.

As a result of a flood in 1997, the property incurred significant
repair costs in 1998. Piper completed such repairs and substantially all
of the balance (approximately $1,100,000) was reimbursed by the insurance
carrier in the second quarter of 1999. JMB/Piper made certain advances to
Piper for such costs, which were repaid upon reimbursement from the
insurance carrier. In 1999, JMB/Piper made additional advances for payment
of real estate taxes. At September 30, 1999, JMB/Piper was owed
approximately $350,000 related to such advances. This remaining amount was
repaid in the fourth quarter of 1999.

JMB/900

Occupancy of this building at the end of the third quarter of 1999 was
98%.

Progress Partners had been negotiating with the building's major
tenant, Schulte, Roth & Zabel (139,948 square feet with a lease expiration
date of May 31, 2000), for an early renewal and expansion of its lease.
However, in the second quarter of 1998, the tenant informed Progress
Partners of its intent to vacate all of its space upon the expiration of
its current lease.

Pursuant to the extension of 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, was to 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,
was to be released to Progress Partners once 90% of such space had been
renewed or released. During 1999, prior to the sale of the property,
approximately $7,934,000 had been deposited into escrow from net cash flow
from property operations. The escrow balance at closing of the property
sale was approximately $16,083,000. Such escrow was released to Progress
Partners upon the sale of the property as discussed below.

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 effected a settlement with
MDIFC by purchasing its claims. JMB/900 pursued certain claims against the
Venture Partners in the bankruptcy forum and sought to either foreclose on
or buy-out the interests of the Venture Partners in Progress Partners, or
to otherwise dispose of those interests pursuant to a bankruptcy plan. The
Venture Partners asserted claims against Progress Partners and JMB/900
including claims for unpaid Guaranteed Payments in the purported amount of
$36 million. JMB/900 denied that such claims were due and owing.

<PAGE>

In July 1998, JMB/900 entered into an agreement with the Venture
Partners and a judgment creditor of JRA and PPI (such judgment creditor,
JRA and PPI, are hereinafter collectively referred to as the "Progress
Parties") to resolve outstanding claims. The agreement was subject to
occurrence of various terms and conditions, which failed to occur. In a
further effort to resolve outstanding claims and to place JMB/900 in a
position to control and market the 900 Third Avenue Building, JMB/900
entered into a settlement agreement with the Progress Parties effective as
of March 17, 1999 ("Settlement Agreement"). The Settlement Agreement
generally provides for the settlement and release of all claims and causes
of action by and against JMB/900 and the Progress Parties related to or
arising from the joint venture relationship or the property including,
without limitation, any claims by the Venture Partners to Guaranteed
Payments and any claims by Progress Partners for capital contributions from
JMB/900. Under the Settlement Agreement and related transactions, JMB/900
and an affiliate acquired all of the right, title and interest of the
Progress Parties in the property, Progress Partners and PC-900 and resolved
all outstanding litigation in exchange for a total payment of $16.0
million, $13.5 million of which was paid at closing of the Settlement
Agreement with the remaining $2.5 million paid upon the sale of the
property as discussed below. In a related agreement and for the payment of
$300,000 and the release of various claims, the litigation and claims by
and between the FDIC and JMB/900 were resolved and dismissed. As part of
the settlement, the limited partnership interests in PC-900 were assigned
to 14-15 Office Associates, L.P. ("Office Associates"), in which JMB/900
owns a 99% limited partnership interest. P-C 900's interest in Progress
Partners was then transferred to JMB/900 and Office Associates, which
became the sole remaining partners in Progress Partners. Amendments to the
joint venture agreement of Progress Partners were made to effectuate the
terms of the settlement and the substitution of partners.

In July 1999, JMB/900, through Progress Partners, entered into a
contract to sell the 900 Third Avenue Building to an unaffiliated third
party. On November 2, 1999, JMB/900 sold the property for approximately
$163,000,000. Upon closing, JMB/900 received cash of approximately
$61,700,000 (net of closing costs but before prorations). The cash
received is also net of the repayment of the mortgage loan secured by the
property of approximately $87,000,000, a prepayment penalty of
approximately $5,800,000 and the final payment to the Progress Parties
pursuant to the Settlement Agreement of approximately $2,500,000. As a
result of this sale, JMB/900 expects to recognize a gain of approximately
$55,000,000 and $78,000,000 for financial reporting and Federal Income tax
purposes, respectively. The Partnership's share of such items is expected
to be approximately $18,300,000 and $26,000,000, respectively. As is
customary in such transactions, JMB/900 agreed to certain representations,
warranties and covenants with stipulated survival periods, which expire on
September 15, 2000. Although it is not expected, JMB/900 may ultimately
have some liability under such representations, warranties and covenants,
which are limited to actual damages and shall in no event exceed
$2,000,000. As required by the sale agreement, JMB/900 has placed this
amount into an escrow account.

As the venture had committed to a plan to sell or dispose of the
property, the 900 Third Avenue Building was classified as held for sale or
disposition as of July 1, 1998, and therefore, has not been subject to
continued depreciation beyond such date for financial reporting purposes.

LOUIS JOLIET MALL

The Partnership had negotiated a lease with a replacement operator for
General Cinema, Inc. (approximately 5% of the mall space). In connection
with the lease, the Partnership agreed to contribute $700,000 to
reconfigure the current four screen cinema to a six screen cinema. An
amendment to the lease was negotiated pursuant to which the Partnership
agreed to contribute an additional $220,000 to pay for a portion of the
cost overruns incurred in connection with the reconfiguration. The cinema
opened in May 1999.

<PAGE>

In March 1999, the Partnership entered into a contract for the sale of
the Louis Joliet Mall to BRE/Louis Joliet LLC ("BRE"). In light of issues
concerning one or more of the tenants at the Mall, BRE terminated the sale
contract. The Partnership was able to negotiate an amended sale contract
and on July 30, 1999 sold the property to BRE. The purchase price of the
property was $45,400,000. A portion of the purchase price was the
assumption of the mortgage loan (approximately $25,200,000) by BRE at the
closing of the sale. The Partnership received cash at closing (net of
closing costs and before prorations) of approximately $19,400,000. The
Partnership recognized a gain of approximately $7,600,000 for financial
reporting purposes and expects to recognize a gain of approximately
$22,000,000 for Federal income tax purposes in 1999. In addition, in
connection with the sale of the property and as is customary in such
transactions, the Partnership agreed to certain representations, warranties
and covenants with a stipulated survival period which expires on
January 30, 2000. Although it is not expected, the Partnership may
ultimately have some liability under such representations, warranties and
covenants, which is limited to actual damages and shall in no event exceed
$1,500,000 in the aggregate.

As the Partnership had committed to a plan to sell or dispose of the
property, Louis Joliet Mall was classified as held for sale or disposition
as of December 31, 1996, and therefore has not been subject to continued
depreciation beyond such date for financial reporting purposes.

WELLS FARGO CENTER

The mortgage note secured by the property (with a balance of
approximately $173,000,000 as of September 30, 1999), as extended, matures
September, 2003. All excess cash flow is 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
unaffiliated venture partner, on behalf of the venture, has been in
discussions with the mortgage lender regarding a possible extension of the
September 1, 1999 participation date referred to above. There can be no
assurance that any agreement with respect to such extension will be
reached.

A promissory note secured by the Partnership's interest in the joint
venture, which has an adjusted principal balance of approximately
$21,988,000, and accrued interest of approximately $10,902,000 at
September 30, 1999 is due September 2003. The note 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 nonrecourse and secured solely by the Partnership's interest in the
joint venture.

Due to the significant level of indebtedness, it is unlikely that the
Partnership will receive any significant future proceeds from operations,
sale or refinancing. The disposition of the Partnership's ownership
interest in the property is therefore expected to result in a gain for
Federal income tax purposes with no corresponding distributable proceeds.
The Partnership has decided not to commit any significant additional
amounts to the property.

Due to the restructuring of the Partnership's interest in Wells Fargo
Center - South Tower in 1996, the Partnership has ceased loss recognition
relative to its real estate investment and has reversed those previously
recognized losses that the Partnership is no longer obligated to fund. The
Partnership has no future funding obligation 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.

<PAGE>

1090 VERMONT

The Partnership had been marketing the property for sale (on behalf of
the Venture). On November 26, 1997, the Partnership obtained a non-binding
letter of intent to sell the property to an unaffiliated third party.
Pursuant to the joint venture agreement, the venture partner had the right
of first refusal to purchase the Partnership's interest in the joint
venture. The venture partner was required to purchase the Partnership's
interest for the same amount it would have received from the sale of the
property to the proposed third party less payment of the outstanding
mortgage obligation. On December 30, 1997, the Partnership properly
notified the venture partner of its intent to sell the property for
$27,000,000. The venture partner exercised its right to first refusal, and
on May 29, 1998, the venture partner purchased the Partnership's interest
in the joint venture.

The Partnership received cash at closing of approximately $4,700,000
after payment of closing costs. The property was classified as held for
sale as of December 31, 1996 and has not been subject to continued
depreciation from such date for financial reporting purposes. In addition,
as a result of the sale, the Partnership recognized a gain for financial
reporting purposes of approximately $2,600,000 and a gain for Federal
income tax purposes in 1998 of $4,650,000. The Partnership has no future
liability for any representations, warranties and covenants as a result of
the sale.

YERBA BUENA OFFICE BUILDING

Due to the default of the joint venture that owned the Yerba Buena
Office Building (a partnership comprised of the Partnership, two other
partnerships sponsored by the Partnership's Corporate General Partner, and
four unaffiliated limited partners) in the payment of required debt
service, the former lender to such joint venture realized on its security
by taking title to the property in June 1992. In return for a smooth
transition of title and management of the property (relative to which the
existing property manager that was affiliated with the Partnership's
Corporate General Partner agreed to continue to manage the property), the
joint venture was able to negotiate, among other things, a right of first
opportunity to purchase the property during the time frame from June 1995
through May 1998 should the lender wish to market the property for sale.
The lender sold the property in 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 for which it was
sold. As previously reported, such joint venture filed a lawsuit against
the lender for breach of its obligations. In June 1998, the court granted
the lender's motion for summary judgment and dismissed the lawsuit. The
joint venture has appealed such dismissal. There is no assurance that the
litigation will ultimately be successful or that the Partnership will
ultimately realize any amounts (or avoid any payments) with respect
thereto. During the quarter, the joint venture reached an agreement in
principle with the lender to settle the lawsuit. If such agreement in
principle is finalized, the Partnership will not be liable for the former
lender's legal fees. There can be no assurance that this settlement will
be consummated on these or any other terms. In addition, the former lender
has filed a claim and received an order against the joint venture for legal
fees expended in the litigation. The joint venture and the former lender
agreed to cap the fee award and the joint venture then posted a bond on
that amount. If the joint venture's appeal is successful, it will have no
obligation for the former lender's legal fees. In December 1998, one of
the affiliated venture partners, to resolve its claims and liabilities,
paid an agreed upon amount to the joint venture in respect of its estimated
liabilities related to the litigation and withdrew from the venture.

<PAGE>

UNCONSOLIDATED VENTURES - SUMMARY INFORMATION

Summary income statement information for JMB/Piper, JMB/Piper II and
JMB/900 for the nine months ended September 30, 1999 and 1998 are as
follows:

1999 1998
----------- ----------

Total income from properties
(unconsolidated). . . . . . . . . . . $32,049,387 32,289,886
=========== ==========

Operating profit (loss) of ventures . . $ (914,138) 1,378,301
=========== ==========

Partnership's share of
operating profit (loss) . . . . . . . $(1,257,200) (36,472)
=========== ==========

ADJUSTMENTS

In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of September 30,
1999 and for the three and nine months ended September 30, 1999 and 1998.

<PAGE>

PART I. FINANCIAL INFORMATION

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

Reference is made to the notes (the "Notes") to the accompanying
consolidated financial statements for additional information concerning
certain of the Partnership's investment properties.

The board of directors of JMB Realty Corporation ("JMB") the Corporate
General Partner of the Partnership, 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 in the
Partnership, including any and all responses to such tender offer.

During 1998, some of the Holders of Interests received unsolicited
offers from unaffiliated third parties to purchase less than 5% of the
Interests in the Partnership at prices ranging from $15 to $21 per
Interest. The Special Committee recommended against acceptance of these
offers on the basis that, among other things, the offer prices were
inadequate. These offers have expired. In May 1999, an unaffiliated third
party made an unsolicited offer to purchase less than 5% of the Interests
at $25 per Interest. The unaffiliated third party subsequently renewed
such offer in July and September 1999 with the last expiration date in
October 1999. The Special Committee recommended against acceptance of the
offer on the basis that among other things, the offer price was inadequate.

As of the date of this report, the Partnership is aware that approximately
1.66% of the Interests in the Partnership have been purchased by all such
unaffiliated third parties either pursuant to such 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 September 30, 1999, the Partnership had cash and cash equivalents
of approximately $19,902,000 and certain escrowed amounts held by the
Partnership's unconsolidated ventures (which are restricted as to their use
as discussed below). Such funds are available for the payment of the
Partnership's share of leasing costs and capital improvements of its
investment properties, working capital requirements and distributions to
partners. The Partnership currently expects to make a distribution to the
Holders of Interests of proceeds related to the sale of Louis Joliet Mall
of approximately $12,000,000 ($30 per interest) in November 1999.

As discussed below, in March 1999, JMB/900 settled various claims and
acquired the interests of the FDIC and the unaffiliated venture partners in
Progress Partners, which owns the 900 Third Avenue office building, for
$16,300,000, of which $13,800,000 was paid upon closing of the various
transactions. In connection with these transactions, the Partnership
contributed its proportionate share (approximately $4,600,000) of the
$13,800,000 to JMB/900 to effect these transactions. The remaining amount
was paid at the sale of the property as discussed below.

<PAGE>

JMB/900. Under the Settlement Agreement and related transactions, JMB/900
and an affiliate acquired all of the right, title and interest of the
Progress Parties in the property, Progress Partners and PC-900 and resolved
all outstanding litigation in exchange for a total payment of $16.0
million, $13.5 million of which was paid at closing of the Settlement
Agreement with the remaining $2.5 million to be paid upon the earlier of
(i) closing of a sale of the property by Progress Partners or (ii)
January 3, 2000. In a related agreement and for the payment of $300,000
and the release of various claims, the litigation and claims by and between
the FDIC and JMB/900 were resolved and dismissed. As part of the
settlement, the limited partnership interests in PC-900 were assigned to
14-15 Office Associates, L.P. ("Office Associates"), in which JMB/900 owns
a 99% limited partnership interest. P-C 900's interest in Progress
Partners was then transferred to JMB/900 and Office Associates, which
became the sole remaining partners in Progress Partners. Amendments to the
joint venture agreement of Progress Partners were made to effectuate the
terms of the settlement and the substitution of partners.

In March 1999, the Partnership entered into a contract for the sale of
the Louis Joliet Mall to BRE/Louis Joliet LLC (the "BRE"). However, BRE
terminated this sale contract in light of certain tenant issues at the
Mall. The Partnership was able to negotiate an amended sale contract and
on July 30, 1999 sold the property to BRE. The purchase price of the
property was $45,400,000. A portion of the purchase price was the
assumption of the mortgage loan (approximately $25,200,000) by BRE at the
closing of the sale. The Partnership received cash at closing (net of
closing costs and before prorations) of approximately $19,400,000. As part
of the prorations at closing, BRE received a credit for the unpaid amount
(approximately $497,000) that the Partnership agreed to contribute to
reconfigure the cinema. The Partnership recognized a gain of approximately
$7,600,000 for financial reporting purposes and expects to recognize a gain
of approximately $22,000,000 for Federal income tax purposes in 1999. In
addition, in connection with the sale of the property and as is customary
in such transactions, the Partnership has agreed to certain
representations, warranties and covenants with stipulated survival period
which expires on January 30, 2000. Although it is not expected, the
Partnership may ultimately have some liability under such representations,
warranties and covenants, which is limited to actual damages and shall in
no event exceed $1,500,000 in the aggregate.

<PAGE>

The Partnership had budgeted at September 30, 1999 approximately
$693,000 for its share of tenant improvements and other capital
expenditures for the JMB/Piper unconsolidated ventures during the current
year. Actual amounts expended in 1999 may vary depending upon a number of
factors including actual leasing activity, results of property operations,
liquidity considerations and market conditions over the course of the year.

The source of capital for such items is existing working capital. The
900 Third Avenue (prior to its sale), Piper Jaffray and Wells Fargo Center
- - South Tower investment properties are restricted as to their use of
excess cash flows by escrow agreements negotiated pursuant to loan
modifications. Amounts held in escrow for a particular property may be
used for payment of tenant improvements and possibly other expenses related
to the particular property. Due to property specific concerns discussed in
the Notes to the accompanying consolidated financial statements, the
Partnership currently considers the 900 Third Avenue Office Building to be
its last significant source of liquidity.

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. As discussed above, the joint
venture that owns the 900 Third Avenue Building has sold the property in
November, 1999. The Partnership currently expects to retain its indirect
interests in the 237 Park Avenue and the 1290 Avenue of the Americas
investment properties and the Partnership's interests in the Piper Jaffray
Tower and Wells Fargo Center - South Tower beyond 1999. However, as
discussed in the Notes, after expiration of PJI's lease at the Piper
Jaffray Tower in May 2000, the operating cash flow from the property is not
expected to be sufficient to pay the required debt service under the
mortgage loan secured by the property. 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 thereof. If a fund requirement arises and the
Piper partners do not contribute the required capital, the lender will
likely take title to the property.

Although the Partnership expects that it will be able to distribute
proceeds from the sale of the 900 Third Avenue investment property,
aggregate distributions of sale and refinancing proceeds received by
Holders of Interests over the entire term of the Partnership will be
substantially less than one-fourth of their original investment. However,
in connection with sales or other dispositions (including transfers to
lenders) of properties (or interests therein) owned by the Partnership or
its joint ventures, Holders of Interests will be allocated 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 of
these investment properties, the Partnership, and therefore the Holders of
Interest will recognize a substantial 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

Significant variances between periods are primarily due to the sale of
the Louis Joliet Mall on July 30, 1999.

The decrease in interest, rents and other receivables at September 30,
1999 as compared to December 31, 1998 is primarily due to the repayment of
certain advances related to the flood damage at the Piper Jaffray Tower and
the sale of the Louis Joliet Mall.

The increase in the investment in unconsolidated ventures, at equity
at September 30, 1999 as compared to December 31, 1998 is primarily due to
contributions made to JMB/900 to purchase the interests of the FDIC and the
unaffiliated venture partners in Progress Partners.

The decrease in interest income for the three and nine months ended
September 30, 1999 as compared to the same period in 1998 is primarily due
to a lower cash balance available for investment due to distributions to
the General Partners and Holders of Interests in 1998. This is partially
offset by the receipt of proceeds from the sale of the Louis Joliet Mall in
July 1999.

The decrease in other income for the nine months ended September 30,
1999 as compared to the same period in 1998 is primarily due to the receipt
of proceeds from the sale in 1998 of stock obtained in the settlement of
claims against a tenant in bankruptcy related to the Partnership's interest
in the Old Orchard venture (sold in August 1993).

The increase in professional services for the nine months ended
September 30, 1999 as compared to the same period in 1998 is primarily due
to the Partnership's share of legal fees for the Yerba Buena litigation.

The decrease in Partnership's share of operations of unconsolidated
ventures for the three and nine months ended September 30, 1999 as compared
to the same periods in 1998 is primarily due to an adjustment made by the
unconsolidated venture to record depreciation expense from certain prior
periods and the commencement of continued depreciation of the Piper Jaffray
Tower as a result of the unconsolidated venture no longer classifying this
property as held for sale or disposition. This amount is partially offset
by the decrease in the assessed value of the Piper Jaffray Tower, which
resulted in lower real estate tax expense being incurred by the property,
and additional income allocated to the Partnership as a result of JMB/900
purchasing the interests of the FDIC and unaffiliated venture partners in
Progress Partners.

<PAGE>

YEAR 2000

The year 2000 problem is the result of computer programs being written
with two digits rather than four to define a year. Consequently, any
computer programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations
including, among other things, an inability to process transactions or
engage in other normal business activities. In addition, other date-
sensitive electronic devices could experience various operational
difficulties as a result of not being year 2000 compliant.

The Partnership uses the telephone, accounting, transfer agent,
individual personal computers, and other administrative systems, which
include both hardware and software, provided by affiliates of the Corporate
General Partner and certain third party vendors. The Partnership or its
affiliates have received representations to the effect that the telephone,
accounting, transfer agent, individual personal computers, and other
administrative systems are year 2000 compliant in all material respects.

The property manager for Piper Jaffray Tower has conducted an
assessment of various aspects of the property respective operating systems
in regard to their year 2000 compliance. In general, such assessment was
performed through written inquiries to third party vendors and service
personnel for the property and, to some extent, testing of some of the
components at the property. Based upon the information received from the
property managers, the Partnership believes that the major operating
systems for this property, including HVAC controls, elevators and alarm and
safety systems, are or will be year 2000 compliant in all material
respects. Certain of the operating systems at the property require
upgrading, which has been undertaken and completed without the incurrence
of material expense to the Partnership. The Partnership does not have
information concerning the extent to which the Wells Fargo Center-South
Tower is year 2000 compliant. The Partnership has requested such
information but has not received a response from the property manager.
However, the Partnership does not believe that it is obligated for year
2000 compliance for the Wells Fargo Center-South Tower. Moreover, since it
has discontinued the equity method of accounting with respect to its
interest in the Wells Fargo Center - South Tower and since it does not
expect to receive any significant distributions with respect to such
interest, the Partnership does not believe that any costs incurred by the
joint venture that owns the property for such year 2000 compliance will
have a material effect on the Partnership's financial condition or results
of operations.

The Partnership has not inquired of the joint ventures that own 237
Park Avenue and 1290 Avenue of the Americas as to the status of their year
2000 compliance. Although the year 2000 problem may or may not present
various risks for such joint ventures, the Partnership does not believe
these risks, to the extent they may exist, present any material additional
risks to the Partnership's business, results of operations or financial
condition. As discussed in the Notes, JMB/NYC has discontinued the equity
method of accounting for its interests in the joint ventures that own these
properties. Moreover, for the reasons discussed elsewhere in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations, JMB/NYC does not expect to receive any significant
distributions in the future from such joint ventures, and the Partnership
does not believe that any year 2000 compliance costs incurred by such joint
ventures have had or will have any material effect on the Partnership's
indirect investment in such joint ventures. The Partnership and JMB/NYC
have no involvement in or authority over the general operations or
management of such joint ventures or the development of their contingency
plans, if any, for the year 2000 problem, and neither Partnership nor
JMB/NYC is obligated to contribute any funds to pay for any year 2000
compliance costs of such joint ventures.

<PAGE>

The Partnership has not developed, and does not intend to develop, any
contingency plans to address the year 2000 problem. Given its limited
operations, the Partnership believes that its accounting, transfer agent
and most of its other administrative systems functions could, if necessary,
be performed manually (i.e., without significant information technology)
for an extended period of time without a material increase in costs to the
Partnership. The Partnership has not incurred and does not expect to incur
any material direct costs for year 2000 compliance.

The Partnership is relying on the information obtained and
representations made by the property managers, as well as the
representations made by third party vendors and service personnel, for 900
Third Avenue and Piper Jaffray Tower regarding the ability of those
properties to be year 2000 compliant in all material respects. The
Partnership is also relying on the assessments made by the property
managers of the third party vendors and service personnel to be contacted
in regard to those properties' year 2000 compliance. In the event that the
Partnership's investment properties are not year 2000 compliant in all
material respects, the relevant investment property or properties could
experience various operational difficulties, such as possible systems
failures. Such operational difficulties could result in remediation and,
under certain circumstances, possibly other costs and expenses. If such
were to occur, there is no assurance that such costs and expenses would
not, under certain circumstances, have a material adverse effect on the
Partnership.

<PAGE>

<TABLE>

PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION
OCCUPANCY

The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties owned during 1999.

<CAPTION>
1998 1999
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. 237 Park Avenue Building
New York, New York . . . . . * * * * * * *
2. 1290 Avenue of the
Americas Building
New York, New York . . . . . * * * * * * *
3. Piper Jaffray Tower
Minneapolis, Minnesota . . . 91% 89% 89% 89% 89% 89% 89%
4. 900 Third Avenue Building
New York, New York . . . . . 97% 100% 99% 97% 100% 100% 98%
5. Wells Fargo Center
South Tower
Los Angeles, California. . . 90% 90% 90% 85% 86% 86% 86%
6. Louis Joliet Mall
Joliet, Illinois . . . . . . 83% 83% 84% 84% 82% 80% N/A

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

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.

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

</TABLE>

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) 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 incorporated herein by reference to the
Partnership's Report for September 30, 1996 on Form 10-Q (File No. 0-15962)
dated November 8, 1996.

10-A. Amended and Restated Purchase Agreement between
Carlyle Real Estate Limited Partnership - XIV and BRE/Louis Joliet L.L.C.
dated June 22, 1999 is hereby incorporated by reference to the
Partnership's Report on Form 8-K (File No. 0-15962) dated August 16, 1999.

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.

(b) On August 16, 1999, the Partnership filed a report on Form 8-
K with respect to the sale of the Louis Joliet Mall on
July 30, 1999. Such report on Form 8-K included a description of the sale.

<PAGE>

SIGNATURES

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV

BY: JMB Realty Corporation
(Corporate General Partner)

By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: November 10, 1999

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

GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: November 10, 1999

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999

<CASH> 19,901,778
<SECURITIES> 0
<RECEIVABLES> 319,036
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,220,814
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 31,211,702
<CURRENT-LIABILITIES> 1,263,340
<BONDS> 32,890,142
<COMMON> 0
0
0
<OTHER-SE> (19,709,420)
<TOTAL-LIABILITY-AND-EQUITY> 31,211,702
<SALES> 4,986,031
<TOTAL-REVENUES> 5,285,849
<CGS> 0
<TOTAL-COSTS> 2,665,967
<OTHER-EXPENSES> 1,219,966
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,026,039
<INCOME-PRETAX> (2,626,123)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,681,945)
<DISCONTINUED> 7,598,499
<EXTRAORDINARY> (111,008)
<CHANGES> 0
<NET-INCOME> 3,805,546
<EPS-BASIC> 9.68
<EPS-DILUTED> 9.68

</TABLE>