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 March 31, 1995 Commission file #0-16111
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(Exact name of registrant as specified in its charter)
Illinois 36-3314827
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . 16
PART II OTHER INFORMATION
Item 3. Defaults on Senior Securities. . . . . . . . . . . 18
Item 5. Other Information. . . . . . . . . . . . . . . . . 19
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 21
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 17,608,089 15,045,385
Interest, rents and other receivables . . . . . . . . . . . . . . . . 1,095,457 1,451,221
Escrow deposits and restricted securities . . . . . . . . . . . . . . 10,502,004 10,972,207
Other restricted securities . . . . . . . . . . . . . . . . . . . . . 4,519,335 3,980,279
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 33,724,885 31,449,092
------------ ------------
Investment properties, at cost:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,052,335 26,487,675
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . 223,489,583 308,349,093
------------ ------------
243,541,918 334,836,768
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . (84,776,438) (104,766,634)
------------ ------------
Total investment properties, net of
accumulated depreciation. . . . . . . . . . . . . . . . . . . 158,765,480 230,070,134
------------ ------------
Investment in unconsolidated ventures,
at equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,644,460 22,432,665
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,437,097 3,852,745
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . 4,571,049 4,902,626
Venture partners' deficits in ventures. . . . . . . . . . . . . . . . . 11,869,590 8,300,712
------------ ------------
$234,012,561 301,007,974
============ ============
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . $129,576,015 179,862,967
Current portion of notes payable. . . . . . . . . . . . . . . . . . . 70,701 70,701
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,162,552 2,494,207
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . 2,234,682 2,186,007
Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . 14,420,550 13,583,612
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . 862,955 486,906
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . 521,652 521,652
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . 149,849,107 199,206,052
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,733 219,733
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 511,689 557,062
Investment in unconsolidated ventures, at equity. . . . . . . . . . . . 24,184,965 22,080,422
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,761,753 2,007,580
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000 330,000
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . 108,698,777 108,528,346
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 285,556,024 332,929,195
Venture partners' subordinated equity in ventures . . . . . . . . . . . 5,559,686 5,439,926
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (18,965,090) (17,335,834)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (908,722) (908,722)
------------ ------------
(19,853,812) (18,224,556)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . . 384,978,681 384,978,681
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (392,221,410) (374,108,664)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (30,006,608) (30,006,608)
------------ ------------
(37,249,337) (19,136,591)
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . (57,103,149) (37,361,147)
------------ ------------
$234,012,561 301,007,974
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------- -----------
<S> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,342,541 11,611,057
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 367,449 286,249
------------- -----------
8,709,990 11,897,306
------------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . . . . . . . . . . 6,171,871 7,824,138
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,541,027 2,705,131
Property operating expenses . . . . . . . . . . . . . . . . . . . . . 3,718,245 5,110,608
Professional services . . . . . . . . . . . . . . . . . . . . . . . . 258,956 262,089
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . 228,121 256,877
General and administrative. . . . . . . . . . . . . . . . . . . . . . 287,640 189,473
Provisions for value impairment . . . . . . . . . . . . . . . . . . . 26,000,000 --
------------- -----------
38,205,860 16,348,316
------------- -----------
Operating earnings (loss). . . . . . . . . . . . . . . . . . . . (29,495,870) (4,451,010)
Partnership's share of loss from operations of
unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . . . (1,589,906) (1,685,265)
Venture partners' share of ventures'
operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,557,910 605,399
------------- -----------
Net operating earnings (loss) . . . . . . . . . . . . . . . . . (25,527,866) (5,530,876)
Gain on sale of interest in unconsolidated venture. . . . . . . . . . . 97,158 605,796
------------- -----------
Net earnings (loss) before extraordinary item
and cumulative effect of an accounting change . . . . . . . . (25,430,708) (4,925,080)
------------- -----------
Extraordinary item - gain on forgiveness of indebtedness. . . . . . . . 27,888,706 --
Cumulative effect of an accounting change (net of venture
partners' share of $7,800,000). . . . . . . . . . . . . . . . . . . . (22,200,000) --
------------- -----------
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . $ (19,742,002) --
============= ===========
Net loss per limited partnership interest:
Net operating earnings (loss) . . . . . . . . . . . . . . . . $ (66.47) (11.97)
Net gain on sale of interests in unconsolidated ventures . . .22 1.35
Extraordinary item. . . . . . . . . . . . . . . . . . . . . . 62.85 --
Cumulative effect of accounting change. . . . . . . . . . . . (50.32) --
------------- -----------
$ (53.72) (10.62)
============= ===========
Cash distributions per limited partnership
interest. . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 8.00
============= ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $(19,742,002) (4,925,080)
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,541,027 2,705,131
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 228,121 256,877
Long-term debt - deferred accrued interest. . . . . . . . . . . . . . . 850,812 821,373
Partnership's share of loss from operations of
unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . . . 1,589,906 1,685,265
Venture partners' share of ventures' operations,
gain on sale of investment property, extraordinary
item and cumulative effect of an accounting change. . . . . . . . . . (3,449,118) (605,399)
Provision for value impairment. . . . . . . . . . . . . . . . . . . . . 26,000,000 --
Gain on sale of interest in unconsolidated ventures . . . . . . . . . . (97,158) (605,796)
Extraordinary item. . . . . . . . . . . . . . . . . . . . . . . . . . . (37,797,498) --
Cumulative effect of an accounting change . . . . . . . . . . . . . . . 30,000,000 --
Changes in:
Interest, rents and other receivables . . . . . . . . . . . . . . . . . 113,483 314,849
Current portion of notes receivable . . . . . . . . . . . . . . . . . . -- 5,906
Escrow deposits and restricted securities . . . . . . . . . . . . . . . 470,203 (784,836)
Other restricted securities . . . . . . . . . . . . . . . . . . . . . . (621,469) (348,000)
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . 189,661 160,767
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . (264,490) 517,594
Amounts due affiliates. . . . . . . . . . . . . . . . . . . . . . . . . 48,675 10,322
Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . . 2,668,988 1,093,717
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . 402,766 722,656
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . (245,827) --
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (20,673) (18,377)
------------ -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . . . . . . . . . . . . . 1,865,407 1,006,969
------------ -----------
Cash flows from investing activities:
Net sales and maturities of short-term investments. . . . . . . . . . . . -- 7,876,473
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (548,018) (44,172)
Partnership's distributions from unconsolidated ventures. . . . . . . . . 1,400,000 81,305
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (41,001) (134,145)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . 810,981 7,779,461
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (113,684) (185,470)
Venture partners' contributions to ventures . . . . . . . . . . . . . . . -- 45,000
Distributions to general partners . . . . . . . . . . . . . . . . . . . . -- (35,855)
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . -- (3,549,636)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . . (113,684) (3,725,961)
------------ -----------
Net increase (decrease) in cash
and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . 2,562,704 5,060,469
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 15,045,385 844,080
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 17,608,089 5,904,549
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ -- 5,909,047
============ ===========
Non-cash investing and financing activities:
Non-cash gain recognized on sale of interests in
unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . . . $ 97,158 605,796
============ ===========
Disposition of investment property:
Balance due on long-term debt canceled. . . . . . . . . . . . . . . . $ 50,853,648 --
Accrued interest expense on accelerated long-term debt. . . . . . . . 1,832,050 --
Reduction of investment property. . . . . . . . . . . . . . . . . . . (14,311,646) --
Reduction of deferred expenses. . . . . . . . . . . . . . . . . . . . (370,442) --
Reduction of other liabilities. . . . . . . . . . . . . . . . . . . . (206,112) --
------------ -----------
Extraordinary item recognized due to lender realizing upon security $ 37,797,498 --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995,
which are included in the Partnership's 1995 Annual Report on Form 10-K as
certain footnote disclosures which would substantially duplicate those
contained in such audited financial statements have been omitted from this
report.
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 these
estimates.
Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.
TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership (or its consolidated ventures) to the General Partners and
their affiliates as of March 31, 1996 and for the three months ended March
31, 1996 and 1995 are as follows:
Unpaid at
March 31,
1996 1995 1996
-------- ------ -------------
Property management and
leasing fees. . . . . . . . $ 67,562 21,221 1,558,806
Reimbursement (at cost) for
out-of-pocket expenses
and salaries and salary-
related expenses. . . . . . 71,959 54,136 152,852
-------- ------- ---------
$139,521 75,357 1,711,658
======== ======= =========
An affiliate of the Corporate General Partner provided management and
leasing services. In December 1994, the affiliate sold substantially all
of its assets and assigned its interest in its management contracts,
including the one for 260 Franklin Street, to an unaffiliated third party.
In connection with such sale, an affiliate of the General Partners
guaranteed payment to the unaffiliated third party of the property
management fees for the 260 Franklin property. As a result of the
affiliate's payment of management fees for 1996 and 1995 to the
unaffiliated third party manager pursuant to the guarantee, the amount of
such management fees is reflected as payable to an affiliate in the
consolidated financial statements. Pursuant to the terms of the loan
modification for 260 Franklin, cash flows from the property in an amount
equal to all management fees and leasing fees have been escrowed by 260
Franklin and are reported as escrow deposits in the accompanying
consolidated financial statements. Such affiliate is entitled to property
management fees of $48,675 in 1996. As of March 31, 1996, $1,558,806 of
management and leasing fees were unpaid.
JMB/900
Occupancy of this building remained at 97% during the quarter. The
midtown Manhattan market remains competitive. Approximately 44,000 square
feet (approximately 9% of the building's leasable square footage) of leased
space expires in 1996 of which 25,900 square feet (approximately 5% of the
building's leasable square footage) was released and 2,045 square feet was
renewed during the quarter. The property's operating cash flow will be
adversely affected by lower rental rates achieved and leasing costs
incurred upon releasing this space and may be adversely affected by
increased vacancy during the releasing period.
Through December 31, 1991, it was necessary for JMB/900 to contribute
approximately $4,364,000 ($2,909,000 of which was contributed by the
Partnership) to pay past due real estate taxes and to pay certain costs,
including litigation settlement costs, which were the responsibility of one
of the Venture Partners under the terms of the joint venture agreement to
the extent such funds were not available from the investment property. In
July 1989, JMB/900 filed a lawsuit in Federal court against the former
manager and one of the Venture Partners to recover the amounts contributed
and to recover for certain other joint venture obligations on which the
Venture Partner has defaulted. This lawsuit was dismissed on
jurisdictional grounds. Subsequently, however, the FDIC filed a complaint,
since amended, in a lawsuit against the Venture Partner, the Partnership,
Carlyle-XIV ("C-XIV") and JMB/900, which has enabled JMB/900 to refile its
previously asserted claims against the Venture Partner as part of that
lawsuit in Federal court. There is no assurance that JMB/900 will recover
the amounts of its claims as a result of the litigation. Due to the
uncertainty, no amounts in addition to the amounts advanced to date, noted
above, have been recorded in the financial statements. Settlement
discussions with one of the Venture Partners and the FDIC continue. In
addition, it appears that the Venture Partners may not have the financial
capabilities to repay amounts advanced on their behalf. Consequently, a
final settlement may involve redirecting to JMB/900 amounts otherwise
payable to the Venture Partners in accordance with the venture agreement.
Under certain circumstances, JMB/900 may consider purchasing one or all of
the Venture Partners' positions in Progress Partners in order to resolve
this and potential future disputes. There are no assurances that a
settlement will be finalized or that JMB/900 will be able to recover any
amounts from the Venture Partners.
Pursuant to the extension on the mortgage loan, net cash flow (as
defined) after debt service and capital and after repayment of
approximately $3,229,000 to JMB/900 representing costs associated with and
deposits made by the joint venture in connection with the loan extension
will be paid into an escrow account controlled by the lender to be used,
including interest earned thereon, by the joint venture for releasing costs
associated with leases which expire in 1999 and 2000 (approximately 240,000
square feet of space). The remaining proceeds in this escrow plus interest
earned thereon, if any, will be released to the joint venture once 90% of
such leased space has been renewed or released. To date, no escrow funds
have been deposited into the account for leasing costs. As of the date of
this report, approximately $1,529,000 of the amounts advanced by the joint
venture have been repaid to the joint venture (of which the Partnership's
share is approximately $1,024,000).
CALIFORNIA PLAZA
Net cash flow continues to be escrowed with the lender (included in
escrowed deposits as restricted securities). The Partnership recorded a
provision for value impairment of $7,200,000 as of January 1, 1996.
SPRINGBROOK SHOPPING CENTER
The Center is currently 69% occupied. A lease for approximately 13%
of the center expires in May 1996 and the tenant has indicated it will not
renew its lease. The center is expected to operate at a deficit in 1996.
Therefore, the Partnership may decide not to commit significant additional
amounts to the property and cease making monthly debt service payments.
This would result in the Partnership no longer having an ownership interest
in the property. As a results, the Partnership recorded a provision for
value impairment of $1,400,000 as of January 1, 1996.
VILLAGES NORTHEAST
In May 1996, the Dunwoody apartment complex was sold for $47,000,000
to the unaffiliated venture partner. The Partnership will recognize in
1996 a gain for financial reporting and Federal income tax purposes.
The property was classified as held for sale or disposition as of
January 1, 1996 and therefore has not been subject to continued
depreciation. The accompanying consolidated financial statements include
$1,827,806 and $1,840,858 of revenues and $836,074 and $1,001,759 of
operating expenses for the three months ended March 31, 1996 and 1995. The
property had a net carrying value as of $35,713,966 and $35,681,989 at
March 31, 1996 and December 31, 1995.
PIPER JAFFRAY TOWER
Occupancy of this building remained at 98% during the quarter.
Under the terms of an August 1992 modification agreement with the
lender, 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 1993,
1994 or 1995. In addition, to the extent the investment property generates
cash flow after payment of the fixed interest on the mortgage, contingent
interest, if any, leasing and capital costs, and 25% of the ground rent,
such amount will be paid to the lender as a reduction of the principal
balance of the mortgage loan. The excess cash flow payments remitted to
the lender for 1993 and 1994 totalled $1,390,910 and $353,251,
respectively. During 1995, excess cash flow generated under this agreement
was $464,178 which was remitted to the lender in April 1996 from cash held
by the venture. On a monthly basis, the venture deposits the property
management fee into an escrow account to be used (including interest earned
thereon) for future leasing costs to the extent cash flow is not sufficient
to cover such items. To date, no escrow funds have been required to be
used for leasing costs. At March 31, 1996, the balance of such escrow
account totalled approximately $3,331,000. 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 March 31, 1996, the manager has deferred approximately $2,666,000
($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.
In addition, upon sale or refinancing, the lender is entitled to a
significant level of proceeds in excess of the then unpaid principal
balance prior to the joint venture's receipt of proceeds. While the
modification provides the joint venture with an opportunity to retain an
ownership position in the property, there must be a significant improvement
in current market and property operating conditions resulting in a
significant increase in the value of the property before the joint venture
can share in sale or refinancing proceeds.
160 SPEAR STREET BUILDING
Title to the property was transferred to the lender in January 1996 in
full satisfaction of the loan secured by the property.
The property was classified as held for sale or disposition as of
January 1, 1996, and therefore, has not been subject to continued
depreciation. The accompanying consolidated financial statements include
$18,200,000 as the cumulative effect of an accounting change to record
value impairment and $23,254,162 of extraordinary gain on extinguishment of
debt upon the lender taking title to the property for the three months
ended March 31, 1996, and $258,038 and $1,502,716 of revenues and $155,927
and $606,791 of operating expenses for the three months ended March 31,
1996 and 1995, respectively. The property had a net carrying value of
$33,088,882 at December 31, 1995.
260 FRANKLIN STREET BUILDING
Occupancy of the property at March 31, 1996 has dropped to 91% from
93% at year-end 1995 and, in 1996, the leases of tenants occupying
approximately 93,000 square feet (approximately 27% of the property) at the
property expire. It is anticipated that there will be significant cost
related to re-leasing this space.
The long-term mortgage loan in the principal amount of approximately
$75,000,000 matured January 1, 1996. 260 Franklin as of such date, began
submitting the net operating cash flow of the property to the lender while
seeking a three year extension or refinancing of the loan. Concurrent with
such lender negotiations, 260 Franklin is also marketing the property for
sale. However, there can be no assurance that the joint venture will be
able to sell the property or to obtain any modification or refinancing. If
260 Franklin is unable to sell the property or to refinance or extend the
mortgage loan, the Partnership may decide not to commit any significant
additional funds. This may result in 260 Franklin and the Partnership no
longer having an ownership interest in the property. In such event, 260
Franklin and the Partnership would recognize a net gain for financial
reporting and Federal income tax purposes with no distributable proceeds.
The Partnership recorded a provision for value impairment of $17,400,000 as
of January 1, 1996.
WELLS FARGO CENTER
The mortgage note secured by the property (with a balance of
$197,410,700 as of March 31, 1996), as well as the promissory note secured
by the Partnership's interest in the joint venture (with a balance of
$22,750,000 and accrued interest of $2,697,500 and $3,152,500 as of
December 31, 1995 and March 31, 1996, respectively) matured December 1,
1994. The Partnership and the joint venture have been in discussions with
the respective lenders regarding an extension of the mortgage note and the
promissory note. Such an extension would likely require a partial paydown
of the mortgage note from venture or Partnership funds. The joint venture
had reached an agreement with the lender of the mortgage note whereby the
lender would refrain from exercising its rights and remedies under the loan
documents through March 1996 while the venture continues to negotiate an
extension or refinancing of the note with the lender. The lender is
currently considering an extension of such agreement. The venture
continues to make interest payments to the lender under the original terms
of the mortgage note and is required to escrow all available cash flow.
The Partnership has ceased making debt service payments on the promissory
note and an extension or refinancing with the lender is likely to be
dependent on the results of negotiations with the lender of the mortgage
note. There is no assurance that the joint venture or the Partnership will
be able to extend or refinance these notes. In the absence of an extension
or refinancing of the notes and due to the uncertainty as to whether IBM
will renew any of its remaining space, , the Partnership may decide not to
commit any significant additional amounts to the property. This would
likely result in the Partnership no longer having an ownership interest in
the property, and in such event would result in a gain for financial
reporting and for Federal income tax purposes with no corresponding
distributable proceeds. The promissory note has been classified as a
current liability in the accompanying consolidated financial statements.
RIVEREDGE PLACE BUILDING
The Partnership ceased making monthly debt service payments effective
July 1, 1992. Since the Partnership ceased making monthly debt service
payments, cash flow generated will likely be remitted to the lender and
therefore these amounts (approximately $4.5 million and $4.0 million at
March 31, 1996 and December 31, 1995, respectively) have been included in
other restricted securities in the accompanying consolidated financial
statements. If the Partnership's attempt for the mortgage note
restructuring is not successful, the Partnership would likely decide, based
upon current market conditions and other considerations relating to the
property and the Partnership's portfolio, not to commit significant
additional amounts to the property. This would result in the Partnership
no longer having an ownership interest in the property and would result in
the recognition of a net gain for financial reporting and Federal income
tax purposes without any corresponding distributable proceeds. As of March
31, 1996, the amount of principal and interest payments in arrears is
approximately $14,944,000. The loan has been classified at March 31, 1996
as a current liability in the accompanying consolidated financial
statements.
21900 BURBANK BUILDING
In March 1996, the lender realized upon its security and took title to
the property in full satisfaction of the loan secured for the property.
The property was classified as held for sale or disposition as of
January 1, 1996, and therefore, has not been subject to continued
depreciation. The accompanying consolidated financial statements include
$4,000,000 as cumulative effect of an accounting change to record value
impairment and $4,634,544 of extraordinary gain on extinguishment of debt
upon the lender taking title to the property for the three months ended
March 31, 1996, and $259,986 and $567,286 of revenues and $102,186 and
$209,155 of operating expenses for the three months ended March 31, 1996
and 1995, respectively. The property had a net carrying value of
$11,215,932 at December 31, 1995.
NEWPARK MALL
As a result of the recent acquisition by Federated Department Stores
of the company which owns the Emporium Capwell store at NewPark Mall,
Federated which also owns the Macy's store at NewPark has approached the
joint venture regarding the possible sale of the Emporium building to the
joint venture. This would be accompanied by the closing of the Emporium
Capwell operations at the mall. In the event that the joint venture
decides to proceed with this transaction, the Partnership would utilize
funds in reserve to pay for its share of the costs of acquiring the
building and re-merchandising the store with a replacement operator.
WOODLAND HILLS APARTMENTS
The Partnership has entered into a non-binding contract for sale of
the property which, if consummated, would result in a gain for financial
reporting and Federal income tax purposes in 1996. However, there can be
no assurance that the transaction will be finalized under the proposal or
any other conditions.
The property was classified as held for sale or disposition as of
January 1, 1996 and therefore has not been subject to continued
depreciation. The accompanying consolidated financial statements include
$508,993 and $474,062 of revenues and $158,525 and $182,921 of operating
expenses for the three months ended March 31, 1996 and 1995. The property
had a net carrying value of approximately $8,375,000 at March 31, 1996 and
December 31, 1995.
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 March 31,
1996 and for the three months ended March 31, 1996 and 1995.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investments.
Although the Partnership expects to distribute sales proceeds from the
disposition of certain of its remaining investment properties, aggregate
distributions of net cash flow and sale and refinancing proceeds received
by the Limited Partners over the entire term of the Partnerships will be
substantially less than half of their original investment. However, in
connection with sales or other disposition (including transfers of title to
lenders) of properties (or interest therein) owned by the Partnership or
its joint ventures, the Limited Partners may be allocated substantial gain
for Federal income tax purposes, regardless of whether any proceeds are
distributable from such sales or other dispositions.
After reviewing the remaining properties and their competitive
marketplace, the General Partners of the Partnership expect to be able to
liquidate the remaining assets as quickly as practicable. Therefore, the
affairs of the Partnership are expected to be wound up no later than 1999
(sooner if the properties are sold or disposed in the nearer term), barring
unforeseen economic developments.
RESULTS OF OPERATIONS
The increase in cash and cash equivalents at March 31, 1996 as
compared to December 31, 1995 is primarily due to distributions received
from unconsolidated ventures.
The decrease in interest, rents and other receivables at March 31,
1996 as compared to December 31, 1995 is primarily due to the timing of
rental payments received at the Dunwoody Apartments and the write off of
accounts receivable at the 160 Spear Street Building and 21900 Burbank
Building upon the lenders obtaining legal title to the properties in 1996.
The decrease in the balance of escrow deposits and restricted
securities at March 31, 1996 as compared to December 31, 1995 is primarily
due to a reduction in the escrowed cash at the Cal Plaza Office Building to
pay mortgage interest and cash remitted to the respective lenders upon
their obtaining legal title to the 160 Spear Street and 21900 Burbank
Buildings partially offset by an increase at the 260 Franklin Street
Building.
The increase in other restricted securities at March 31, 1996 as
compared to December 31, 1995 is due to the continued escrowing of cash to
the lender of the RiverEdge Place.
The decreases in land, buildings and improvements, accumulated
depreciation, deferred expenses, accrued rents receivable, current portion
of long-term debt, accounts payable, and tenant security deposits at March
31, 1996 as compared to December 31, 1995 are primarily due to the
respective lenders obtaining legal title to the 160 Spear Street and 21900
Burbank Buildings in 1996.
The increases in venture partners' deficits in ventures at March 31,
1996 as compared to December 31, 1995 and the increase in venture partners'
share of ventures' operation for the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995 are primarily due to the
provision for value impairment of $17,400,000 ($5,229,000 to the
Partnership) recorded at the 260 Franklin Street Building partially offset
by the lender obtaining legal title to the 160 Spear Street Building in
January 1996.
The increase in the amounts due to affiliates at March 31, 1996 as
compared to December 31, 1995 is due to the payment of property management
fees and lease commissions for the 260 Franklin Street Building by an
affiliate of the General Partners pursuant to a guarantee of payment.
The increase in accrued interest payable at March 31, 1996 as compared
to December 31, 1995 is primarily due to the continued accrual of unpaid
interest on the mortgage loan secured by the RiverEdge Place investment
property and on the promissory note secured by the Partnership's interest
in the South Tower venture partially offset by the lenders obtaining legal
title to the 160 Spear Street and 21900 Burbank Buildings.
The decrease in rental income, mortgage and other interest,
depreciation, property operating expenses, professional services, and
amortization of deferred expenses for the three months ended March 31, 1996
as compared to the three months ended March 31, 1995 are primarily due to
the lenders obtaining legal title to the 160 Spear Street and 21900 Burbank
Buildings in 1996, and the sale of the Partnership's 90% interest in the
Eastridge Mall Venture on June 30, 1995.
The increase in interest income for the three months ended March 31,
1996 as compared to the three months ended March 31, 1995 is primarily due
to a higher cash balance on hand and higher effective yields being earned
on U.S. Government obligations held by the Partnership during 1996.
The increase in general and administrative expenses for the three
months ended March 31, 1996 as compared to the three months ended March 31,
1995 is primarily due to an increase in reimbursable costs to affiliates of
the General Partners in 1996 and the recognition of certain additional
prior year reimbursable costs to such affiliates.
The provisions for value impairment in 1996 relates to reductions in
the carrying values of the Cal Plaza property ($7,200,000), 260 Franklin
Street Building ($17,400,000), and Springbrook Shopping Center
($1,400,000).
The gain on sale of interest in unconsolidated ventures for the three
months March 31, 1996 and three months ended March 31, 1995 relates to the
recognition of gain from the sale of JMB/Owning's interest in the Owings
Mills Limited Partnership.
The extraordinary item - gain on forgiveness of indebtedness
represents the 1996 retirement of the mortgage notes on the 160 Spear
Street and 21900 Burbank Building in full satisfaction of any accrued but
unpaid venture costs.
The cumulative effect of an accounting change represents a provision
in 1996 to record value impairment on the 160 Spear Street and 21900
Burbank Buildings.
PART II. OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The mortgage note secured by the Wells Fargo Center as well as the
promissory note secured by the Partnership's interest in the joint venture
matured December 1, 1994. The lender of the mortgage note agreed to
refrain from exercising its rights and remedies under the loan documents
through March 31, 1996 (the lender is considering an extension of such
agreement). The 160 Spear Street venture ceased making its monthly debt
service payments effective June 1, 1995. Title to the property was
transferred to the lenders in January 1996. In addition, in July, 1992,
the Partnership ceased making debt service payments on the mortgage loan
secured by the RiverEdge Place Building. The Partnership also ceased
making debt service payments commencing with the November 1995 payment on
the 21900 Burbank property. In March 1996, the lender realized upon its
security and took title to the property. Reference is made to the Notes to
Consolidated Financial Statements filed with this quarterly report, which
are hereby incorporated herein by reference. The mortgage loan in the
principle amount of approximately $88,000,000 secured by 260 Franklin
Street matured on January 1, 1996. 260 Franklin, as of such date suspended
debt service on the loan and began submitting the net cash flow of the
property to the lender (Teachers Insurance and Annuity Association of
America) while seeking an extension or refinancing of the loan. As of
March 31, 1996, approximately $1,498,000 of interest on the mortgage loan
was in arrears.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties.
<CAPTION>
1995 1996
-------------------------------------- ------------------------------
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. 900 Third Avenue Building
New York, New York . . . . . 94% 96% 96% 97% 97%
2. Piper Jaffray Tower
Minneapolis, Minnesota . . . 97% 97% 98% 98% 98%
3. RiverEdge Place
Fulton County (Atlanta),
Georgia. . . . . . . . . . . 88% 88% 88% 89% 90%
4. Wells Fargo Center
- IBM Tower
Los Angeles, California. . . 96% 96% 96% 95% 95%
5. Woodland Hills Apartments
DeKalb County (Atlanta),
Georgia. . . . . . . . . . . 99% 99% 99% 100% 97%
6. 160 Spear Street Building
San Francisco, California. . 89% 77% 76% 56% N/A
7. 21900 Burbank Boulevard
Building
Los Angeles (Woodland
Hills), California . . . . . 96% 94% 96% 96% N/A
8. 260 Franklin Street Building
Boston, Massachusetts. . . . 99% 99% 99% 98% 96%
9. California Plaza
Walnut Creek, California . . 95% 94% 93% 90% 91%
10. Dunwoody Crossing
(Phase I, II and III)
Apartments
DeKalb County (Atlanta),
Georgia. . . . . . . . . . . 93% 93% 93% 91% 90%
11. NewPark Mall
Newark (Alameda County),
California . . . . . . . . . 80% 80% 80% 80% 79%
12. Springbrook Shopping Center
Bloomingdale, Illinois . . . 72% 72% 70% 66% 69%
<FN>
- --------------------
An N/A indicates that the property, or the Partnership's interest in
the property was sold or was not owned by the Partnership at the end of the
period.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. Amended and Restated Agreement of Limited Partnership,
is hereby incorporated by reference to Exhibit 3 to the Partnership's Form
10-K (File No. 0-16111) for December 31, 1992 dated March 19, 1993.
4-A. Assignment Agreement set forth as Exhibit B to the
Prospectus is hereby incorporated herein by reference to Exhibit 4-A to the
Partnership's report for December 31, 1992 on Form 10-K (File No. 0-16111)
dated March 19, 1993.
4-B. Documents relating to the modification of the mortgage
loan secured by 260 Franklin Street Building are hereby incorporated herein
by reference to Exhibit 4-B to the Partnership's report for December 31,
1992 on Form 10-K (File No. 0-16111) dated March 19, 1993.
4-C. Documents relating to the modification of the mortgage
loans secured by the 160 Spear Street Building are hereby incorporated
herein by reference to Exhibit 4-C to the Partnership's report for December
31, 1992 on Form 10-K (File No. 0-16111) dated March 19, 1993.
4-D. Documents relating to the refinancing of the mortgage
note secured by the Post Crest Apartments are hereby incorporated herein by
reference to Exhibit 4-D to the Partnership's report for December 31, 1992
on Form 10-K (File No. 0-16111) dated March 19, 1993.
4-E. Forbearance agreement relating to the modification of
the mortgage loan secured by NewPark Mall dated October 1995 is
incorporated herein by reference to the Partnership's Report for September
30, 1995 on Form 10-Q (File No. 0-16111) dated November 9, 1995.
10-A. Escrow Deposit Agreement is hereby incorporated herein
by reference to the Partnership Registration Statement on Form S-11 (File
No. 2-95382) dated January 18, 1985.
10-B. Acquisition documents relating to the purchase by the
Partnership of an interest in the 900 Third Avenue Building in New York,
New York, are hereby incorporated herein by reference to the Partnership's
Registration Statement on Form S-11 (File No. 2-95382) dated January 18,
1985.
10-C. Acquisition documents relating to the purchase by the
Partnership of an interest in the Piper Jaffray Tower in Minneapolis,
Minnesota, are hereby incorporated herein by reference to the Partnership's
Registration Statement on Form S-11 (File No. 2-95382) dated January 18,
1985.
10-D. Acquisition documents relating to the purchase by the
Partnership of the NBG Building in Fulton County, Georgia, are hereby
incorporated herein by reference to the Partnership's Registration
Statement on Amendment No. 2 to Form S-11 (File No. 2-95382) dated July 5,
1985.
10-E. Acquisition documents relating to the purchase by the
Partnership of an interest in the Crocker Center South Tower in Los
Angeles, California, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Amendment No. 2 to Form S-11 (File
No. 2-95382) dated July 5, 1985.
10-F. Acquisition documents relating to the purchase by the
Partnership of an interest in the Eastridge Mall in Casper, Wyoming, are
hereby incorporated herein by reference to the Partnership's Registration
Statement on Post Effective Amendment No. 1 to Form S-11 (File No. 2-95382)
dated September 13, 1985.
10-G. Acquisition documents relating to the purchase by the
Partnership of the Summit Hills Apartments in DeKalb County, Georgia, are
hereby incorporated herein by reference to the Partnership's Registration
Statement on Post Effective Amendment No. 2 to Form S-11 (File No. 2-95382)
dated December 13, 1985.
10-H. Acquisition documents relating to the purchase by the
Partnership of an interest in the 160 Spear Street Building in San
Francisco, California, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 2-95382) dated March 13, 1986.
10-I. Acquisition documents relating to the purchase by the
Partnership of the Arthur D. Little Building in Woodland Hills, California,
are hereby incorporated herein by reference to the Partnership's Registra-
tion Statement on Post-Effective Amendment No. 3 to Form S-11 (File No.
2-95382) dated March 13, 1986.
10-J. Acquisition documents relating to the purchase by the
Partnership of an interest in the Owings Mills Shopping Center in Owings
Mills, Maryland, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 2-95382) dated March 13, 1986.
10-K. Acquisition documents relating to the purchase by the
Partnership of an interest in the 260 Franklin Street Building in Boston,
Massachusetts, are hereby incorporated herein by reference to the Partner-
ship's Registration Statement on Post-Effective Amendment No. 4 to Form
S-11 (File No. 2-95382) dated April 30, 1986.
10-L. Acquisition documents relating to the purchase by the
Partnership of an interest in the California Plaza office building in
Walnut Creek, California are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 5 to
Form S-11 (File No. 2-95382) dated July 31, 1986.
10-M. Acquisition documents relating to the purchase by the
Partnership of the Springbrook Shopping Center in Bloomingdale, Illinois,
are hereby incorporated herein by reference to the Partnership's report for
December 31, 1989 on Form 10-K (File No. 0-16111) dated March 28, 1990.
10-N. Acquisition documents relating to the purchase by the
Partnership of the Erie-McClurg Parking Facility in Chicago, Illinois are
hereby incorporated herein by reference to the Partnership's report for
December 31, 1989 on Form 10-K (File No. 0-16111) dated March 28, 1990.
10-O.* Real Estate Purchase Agreement dated June 30, 1992,
between Erie-McClurg Associates ("Beneficiary") and The Streeterville
Corporation ("Purchaser") for the sale of Erie-McClurg Parking Facility, is
hereby incorporated herein by reference.
10-P.* First Amendment to Real Estate Purchase Agreement
dated August 26, 1992, between Erie-McClurg Associates ("Beneficiary") and
The Streeterville Corporation ("Purchaser") for the sale of Erie-McClurg
Parking Facility, is hereby incorporated herein by reference.
10-Q.* Second Amendment to Real Estate Purchase Agreement
dated September 3, 1992, between Erie-McClurg Associates ("Beneficiary")
and The Streeterville Corporation ("Purchaser") for the sale of Erie-
McClurg Parking Facility, is hereby incorporated herein by reference.
10-R. Documents relating to the modification of the mortgage
loan secured by California Plaza are hereby incorporated herein by
reference to the Partnership's report for December 31, 1993 on Form 10-K
(File No. 0-16111) dated March 28, 1994.
10-S. First Amendment to Loan Documents relating to the
mortgage loan secured by Dunwoody Crossing Apartments (Phases I and III) is
incorporated herein by reference to the Partnership's report for September
30, 1994 on Form 10-Q (File No. 0-16111) dated November 10, 1994.
10-T. Documents relating to the extension of the mortgage
loan secured by the 900 Third Building are incorporated herein by reference
to the Partnership's report for December 31, 1994 on Form 10-K (File No. 0-
16111) dated March 27, 1995.
10-U. Documents relating to the refinancing of the Woodlands
Hills Apartments are incorporated herein by reference to the Partnership's
report for December 31, 1994 on Form 10-K (File No. 0-16111) dated March
27, 1995.
10-V. Lockbox and forbearance agreements related to the
mortgage note secured by the Wells Fargo Building are incorporated herein
by reference to the Partnership's report for December 31, 1994 on Form 10-K
(File No. 0-16111) dated March 27, 1995.
10-W. Modification to Reserve Escrow Agreement relating to
the 260 Franklin Street Building is hereby incorporated by reference to the
Partnership's Report for June 30, 1995 on Form 10-Q (File No. 0-16111)
dated August 9, 1995.
10-X. The Partnership Interest Purchase Agreement related to
the sale of the Partnership's interest in Eastridge Mall is hereby
incorporated herein by reference to the Partnership's report for June 30,
1995 on From 8-K dated July 24, 1995.
27. Financial Data Schedule
---------------
* Previously filed as exhibits 10-U, 10-V and 10-W,
respectively, to the Partnership's report for December 31, 1992 on Form 10-
K of the Securities Exchange Act of 1934 (File No. 0-16111) dated March 19,
1993 and hereby incorporated herein by reference.
(b) No reports on Form 8-K have been filed for the quarter
covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: May 10, 1996
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: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1995
<CASH> 17,608,089
<SECURITIES> 0
<RECEIVABLES> 16,116,796
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,724,885
<PP&E> 243,541,918
<DEPRECIATION> 84,776,438
<TOTAL-ASSETS> 234,012,561
<CURRENT-LIABILITIES> 149,849,107
<BONDS> 108,698,777
<COMMON> 0
0
0
<OTHER-SE> (57,103,149)
<TOTAL-LIABILITY-AND-EQUITY>234,012,561
<SALES> 8,342,541
<TOTAL-REVENUES> 8,709,990
<CGS> 0
<TOTAL-COSTS> 5,487,393
<OTHER-EXPENSES> 546,596
<LOSS-PROVISION> 26,000,000
<INTEREST-EXPENSE> 6,171,871
<INCOME-PRETAX> (29,495,870)
<INCOME-TAX> (25,527,866)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 27,985,869
<CHANGES> (22,200,010)
<NET-INCOME> (19,742,002)
<EPS-PRIMARY> (53.72)
<EPS-DILUTED> (53.72)
</TABLE>
