CARLYLE REAL ESTATE LTD PARTNERSHIP XV, 10-Q, 1997-08-14

CARLYLE REAL ESTATE LTD PARTNERSHIP XV
10-Q, 1997-08-14
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended June 30, 1997 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

<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. . . . . . . . . . . . . . . . . . . . . . 18

PART II OTHER INFORMATION

Item 3. Defaults Upon Senior Securities . . . . . . . . . . . 20

Item 5. Other Information . . . . . . . . . . . . . . . . . . 21

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . 22

<PAGE>

<TABLE>
PART I. FINANCIAL INFORMATION

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

CONSOLIDATED BALANCE SHEETS

JUNE 30, 1997 AND DECEMBER 31, 1996

(UNAUDITED)

ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . $ 19,619,574 20,664,264
Interest, rents and other receivables. . . . . . . . . . . . . . . . . . 356,981 657,212
Escrow deposits and restricted securities. . . . . . . . . . . . . . . . 3,023,137 5,091,039
Other restricted securities. . . . . . . . . . . . . . . . . . . . . . . 6,291,137 5,285,807
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 29,290,829 31,698,322
------------ ------------
Investment properties, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,501,887 5,501,887
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . 76,648,210 75,941,178
------------ ------------
82,150,097 81,443,065
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . (32,593,960) (31,766,188)
------------ ------------
Total properties held for investment, net of
accumulated depreciation . . . . . . . . . . . . . . . . . . . . 49,556,137 49,676,877

Properties held for sale or disposition. . . . . . . . . . . . . . . . 61,070,096 68,999,370
------------ ------------
Total investment properties. . . . . . . . . . . . . . . . . . . . 110,626,233 118,676,247
------------ ------------

Investment in unconsolidated ventures, at equity . . . . . . . . . . . . . 19,249,820 17,354,958
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,524,866 2,704,645
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . 4,094,687 4,555,121
------------ ------------
$165,786,435 174,989,293
============ ============

<PAGE>

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

CONSOLIDATED BALANCE SHEETS - CONTINUED

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

JUNE 30, DECEMBER 31,
1997 1996
------------- -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . $109,230,716 119,039,939
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,117,828 4,341,771
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . 12,629,234 11,630,227
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . 146,489 773,149
Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . 521,652 521,652
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . 125,645,919 136,306,738

Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . 502,439 457,730
Investment in unconsolidated ventures, at equity . . . . . . . . . . . . . 14,659,271 14,107,122
Deferred income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,270,101 1,515,927
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000 330,000
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . 106,269,564 102,239,000
------------ ------------
Commitments and contingencies

Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 248,677,294 254,956,517
Venture partners' subordinated equity in ventures. . . . . . . . . . . . . -- 608,114

Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net earnings (losses) . . . . . . . . . . . . . . . . . . . (20,271,838) (20,028,625)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . (1,020,769) (1,020,769)
------------ ------------
(21,272,607) (21,029,394)
------------ ------------

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED

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

JUNE 30, DECEMBER 31,
1997 1996
------------- -----------

Limited partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . 384,978,681 384,978,681
Cumulative net earnings (losses) . . . . . . . . . . . . . . . . . . . (404,875,929) (402,819,621)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . (41,721,004) (41,705,004)
------------ ------------
(61,618,252) (59,545,944)
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . (82,890,859) (80,575,338)
------------ ------------
$165,786,435 174,989,293
============ ============

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

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996

(UNAUDITED)

<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . $ 5,671,330 6,519,111 11,301,574 14,997,468
Interest income. . . . . . . . . . . . . . . . . 360,153 414,507 719,312 781,956
----------- ----------- ----------- -----------
6,031,483 6,933,618 12,020,886 15,779,424
----------- ----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . 5,815,266 5,937,819 11,883,748 12,109,690
Depreciation . . . . . . . . . . . . . . . . . . 653,712 1,127,701 1,187,772 2,668,728
Property operating expenses. . . . . . . . . . . 2,580,717 2,812,397 5,027,897 6,651,279
Professional services. . . . . . . . . . . . . . 126,508 144,024 307,320 402,980
Amortization of deferred expenses. . . . . . . . 173,950 213,826 338,434 441,947
General and administrative . . . . . . . . . . . 414,947 463,091 620,464 750,731
Provisions for value impairment. . . . . . . . . -- -- -- 26,000,000
----------- ----------- ----------- -----------
9,765,100 10,698,858 19,365,635 49,025,355
----------- ----------- ----------- -----------
Operating earnings (loss) . . . . . . . . . (3,733,617) (3,765,240) (7,344,749) (33,245,931)

Partnership's share of earnings (loss) from
operations of unconsolidated ventures. . . . . . 331,844 (3,528,485) 4,147 (4,345,155)
Venture partner's share of venture
operations . . . . . . . . . . . . . . . . . . . -- (4,665) -- (124,425)
----------- ----------- ----------- -----------
Net operating earnings (loss). . . . . . . (3,401,773) (7,298,390) (7,340,602) (37,715,511)

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ------------ -----------
Gain on liquidation of investment in venture . . . 269,147 -- 269,147 --
Gain on sale of Partnership's investments
in unconsolidated ventures . . . . . . . . . . . 1,268,276 98,871 1,338,566 196,029
Gain on sale or disposition of investment
properties, net of venture partner's share
of gain of $204,139 and manager's incentive
fee of $1,730,016. . . . . . . . . . . . . . . . -- 12,230,126 -- 12,230,126
------------ ---------- ----------- -----------
Net earnings (loss) before extra-
ordinary items and cumulative
effect of an accounting change . . . . . (1,864,350) 5,030,607 (5,732,889) (25,289,356)
------------ ----------- ----------- -----------
Extraordinary items:
Prepayment penalties and deferred mortgage
expense on retirement of long-term debt,
net of venture partner's share of $175,004 . . -- (557,809) -- (557,809)
Gain on forgiveness of indebtedness. . . . . . . -- -- 3,433,368 35,780,656
Cumulative effect of an accounting change. . . . . -- -- -- (30,000,000)
------------ ----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . . $ (1,864,350) 4,472,798 (2,299,521) (20,066,509)
============ =========== =========== ===========
Net loss per limited partnership
interest:
Net operating earnings (loss). . . . . . $ (7.37) (15.80) (15.89) (81.62)
Gain on liquidation of investment
in venture . . . . . . . . . . . . . . .60 -- .60 --
Gain on sale of Partnership's
investments in unconsolidated
ventures . . . . . . . . . . . . . . . 2.83 .22 2.99 .44
Net gain on sale or disposition of
investment properties. . . . . . . . . -- 27.29 -- 27.29
Extraordinary items. . . . . . . . . . . -- (1.24) 7.66 78.61
Cumulative effect of accounting
change . . . . . . . . . . . . . . . . -- -- -- (64.92)
------------ ---------- ----------- -----------
$ (3.94) 10.47 (4.64) (40.20)
============ ========== =========== ===========

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ------------ -----------
Cash distributions per limited
partnership interest . . . . . . . . . . $ -- 25.00 -- 25.00
============ ========== =========== ===========

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

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 1997 AND 1996

(UNAUDITED)

<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,299,521) (20,066,509)
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,187,772 2,668,728
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . 338,434 441,947
Long-term debt - deferred accrued interest . . . . . . . . . . . . . . . . . 5,153,928 1,709,437
Partnership's share of (earnings) loss from operations of
unconsolidated ventures. . . . . . . . . . . . . . . . . . . . . . . . . . (4,147) 4,345,155
Venture partner's share of ventures' operations, gain on sale
or disposition of investment properties and extraordinary items. . . . . . -- 153,560
Provisions for value impairment. . . . . . . . . . . . . . . . . . . . . . . -- 26,000,000
Gain on liquidation of investment in venture . . . . . . . . . . . . . . . . (269,147) --
Gain on sale of Partnership's investments in unconsolidated ventures . . . . (1,338,566) (196,029)
Total gain on sale or disposition of investment property . . . . . . . . . . -- (12,434,265)
Extraordinary items, including venture partner's share . . . . . . . . . . . (3,433,368) (35,047,843)
Cumulative effect of an accounting change. . . . . . . . . . . . . . . . . . -- 30,000,000
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . . . . . . . . 153,344 313,952
Escrow deposits and restricted securities. . . . . . . . . . . . . . . . . . 1,360,870 434,565
Other restricted securities. . . . . . . . . . . . . . . . . . . . . . . . . (1,005,330) (1,450,605)
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 366,957 255,572
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,144,284) 1,369,511
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . 1,396,736 3,117,196
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 146,489 241,638
Deferred income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (245,826) (245,827)
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 40,492 (121,366)
------------ -----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . . . . . . . . . . . . . . . 404,833 1,488,817
------------ -----------

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1997 1996
------------ -----------
Cash flows from investing activities:
Additions to investment properties, excluding amounts from
escrow deposits and restricted securities. . . . . . . . . . . . . . . . . . (879,605) (975,836)
Cash proceeds from sale of interests in venture. . . . . . . . . . . . . . . . -- 17,695,317
Partnership's distributions from unconsolidated ventures . . . . . . . . . . . -- 1,430,967
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . (214,951) (107,553)
------------ -----------
Net cash provided by (used in) investing activities. . . . . . . . . . . (1,094,556) 18,042,895
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . -- (172,148)
Distributions to venture partners. . . . . . . . . . . . . . . . . . . . . . . (338,967) (236,037)
Distributions to general partners. . . . . . . . . . . . . . . . . . . . . . . -- (112,047)
Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . (16,000) (11,643,671)
------------ -----------
Net cash provided by (used in) financing activities. . . . . . . . . . . (354,967) (12,163,903)
------------ -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . (1,044,690) 7,367,809

Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . 20,664,264 15,045,385
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . $ 19,619,574 22,413,194
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . $ 5,333,084 10,762,788
============ ===========
Non-cash investing and financing activities:
Non-cash gain recognized on sale of Partnership's investments
in unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . . . . $ 1,338,566 196,029
============ ===========
Sales of investment properties:
Total sale proceeds, net of selling expenses . . . . . . . . . . . . . . . $ -- 58,491,798
Prepayment penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (516,683)
Payoff of mortgage loan. . . . . . . . . . . . . . . . . . . . . . . . . . -- (38,549,782)
Incentive fee to manager of investment property. . . . . . . . . . . . . . -- (1,730,016)
------------ -----------
Cash proceeds from sale of interest in venture . . . . . . . . . . . . $ -- 17,695,317
============ ===========

Fixed asset additions from escrow deposits and restricted securities . . . . $ 707,032 $ 7,854
============ ===========

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1997 1996
------------ -----------
Disposition of investment property:
Balance due on long-term debt canceled . . . . . . . . . . . . . . . . . . $ 10,932,588 50,853,648
Accrued interest expense on accelerated long-term debt . . . . . . . . . . 397,729 1,853,284
Reduction of investment property, net. . . . . . . . . . . . . . . . . . . (8,448,879) (16,419,175)
Reduction of other assets and liabilities. . . . . . . . . . . . . . . . . 551,930 (507,101)
------------ -----------
Non-cash gain recognized due to lender
realizing upon security. . . . . . . . . . . . . . . . . . . . . . . . $ 3,433,368 35,780,656
============ ===========

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

<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1997 AND 1996

(UNAUDITED)

GENERAL

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1996,
which are included in the Partnership's 1996 Annual Report on Form 10-K
(File No. 0-16111) dated on March 21, 1997, 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 1996 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 these
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" 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 net results of operations for the six months ended June 30, 1997
and 1996 for consolidated properties classified as held for sale or
disposition or sold or disposed of during the past two years were
$(803,993) and $(11,976,780), respectively.

During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. As the Partnership's
capital structure only has general and limited partnership interests, the
Partnership does not expect any significant impact on its consolidated
financial statements upon adoption of these standards when required at the
end of 1997.

Certain reclassifications have been made to the 1996 consolidated
financial statements to conform with the 1997 presentation.

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 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 June 30, 1997 and for the six months ended June 30,
1997 and 1996 were as follows:

<PAGE>

Unpaid at
June 30,
1997 1996 1997
------- ------ -------------
Property management and
leasing fees . . . . . . . . $ 9,246 82,486 1,510,131
Reimbursement (at cost) for
out-of-pocket salary and
salary-related expenses
related to the on-site
personnel and other costs
for the Partnership and
its investment properties.. . 78,278 105,347 74,374
------- ------- ---------
$87,524 187,833 1,584,505
======= ======= =========

Through November of 1994, certain of the properties owned by the
Partnership's consolidated and unconsolidated ventures were managed by an
affiliate of the Corporate General Partner. Included in accounts payable
are amounts due to affiliates of $2,186,007 at June 30, 1997 and December
31, 1996, which consists of management fees and leasing commissions of
$1,510,131 (included in the table above) and advances of $675,876 payable
to the affiliated manager.

The affiliate also managed Piper Jaffray Tower prior to December 1994,
and pursuant to the terms of a loan modification, agreed to defer receipt
of its property management fees earned of approximately $1,839,000 as of
June 30, 1997 (of which the Partnership's share is approximately $919,500).

The unconsolidated venture's obligation to the affiliate is not reflected
in the Consolidated Balance Sheet for the periods ending June 30, 1997 and
December 31, 1996.

JMB/900

Occupancy of this building at the end of the quarter remained at 98%.

The building's major tenant, Schulte, Roth & Zabel (120,991 square
feet with a lease expiration date of May 31, 2000), has requested, and
JMB/900 has submitted, a proposal for early renewal. As of the date of
this report, no formal response to JMB/900's proposal has been received
from the tenant. There are no assurances that an early renewal of this
tenant will be achieved.

Pursuant to the extension on the mortgage loan, net cash flow (as
defined) is paid into an escrow account controlled by the lender. The
escrow account, including interest earned thereon, will be used by Progress
Partners for releasing costs associated with leases which expire in 1999
and 2000 (approximately 50% of the building). The remaining proceeds in
this escrow plus interest earned thereon, if any, will be released to
Progress Partners once 90% of such leased space has been renewed or
released. During 1997, approximately $4,703,000 has been deposited into
escrow from net cash flow from property operations.

JMB/900 is currently involved in litigation. Current discussions
involve a settlement whereby JMB/900 would purchase all the unaffiliated
venture partner interests in the property. There are no assurances that a
settlement will be finalized on this or any terms. The Partnership will
not commit additional capital to the purchase of the unaffiliated venture
partner interests unless, among other things, it believes that upon sale of
the property, the Partnership will receive a return of such funds and a
reasonable rate of return thereon.

<PAGE>

CALIFORNIA PLAZA

Net cash flow continues to be escrowed with the lender (included in
escrow deposits and restricted securities) pursuant to the December 1993
loan modification. The property was classified as held for sale or
disposition as of December 31, 1996, and therefore, has not been subject to
continued depreciation. The Partnership recorded a provision for value
impairment of $7,200,000 as of January 1, 1996 to reflect the then
estimated fair value of the property based upon an analysis of discounted
cash flows of the property over the expected holding period.

SPRINGBROOK SHOPPING CENTER

As a result of non-payment of debt service, in January 1997, the
lender realized upon its security and took title to the property in full
satisfaction of the loan secured by the property.

The property was classified as held for sale or disposition as of
April 1, 1996, and therefore, has not been subject to continued
depreciation. The Partnership recorded a provision for value impairment of
$1,400,000 as of January 1, 1996 to reflect the then estimated fair value
of the property based upon an analysis of discounted cash flows of the
property over the expected holding period. Due to such provision, the
Partnership did not recognize a significant gain or loss for financial
reporting purposes on the transfer of title. However, the accompanying
consolidated financial statements do include $3,433,368 of extraordinary
gain on extinguishment of debt upon the lender taking title to the property
for the six months ended June 30, 1997. The Partnership expects to record
a loss in 1997 of approximately $5,000,000 on the disposition of the
property for Federal income tax purposes.

PIPER JAFFRAY TOWER

The property is subject to a mortgage loan in the original principal
amount of $100,000,000, of which approximately $96,126,673 is outstanding
as of June 30, 1997. The lender is essentially entitled to all operating
cash flow. Excess cash flow generated during 1996 of $741,627 was remitted
to the lender in April 1997 from cash held by the venture.

In addition, 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. JMB/Piper anticipates exploring refinancing
alternatives during the remainder of 1997. Such refinancing would only be
possible if the underlying lender would accept a discounted payoff and
would also likely require additional capital contributions from the
Partnership and its affiliated partner. There are no assurances that a
refinancing can be achieved. The Partnership will not commit additional
capital to this property unless, among other things, it believes that upon
sale of the property, the Partnership will receive a return of such funds
and a reasonable rate of return thereon.

<PAGE>

On a monthly basis, JMB/Piper deposits the property management fee
into an escrow account to be used (including interest earned thereon) for
future leasing costs to the extent cash flow is not sufficient to cover
such items. To date, no escrow funds have been required to be used for
leasing costs. At June 30, 1997, the balance of such escrow account
totalled approximately $4,332,000. 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, 1997, the manager has deferred approximately $3,553,381
($1,839,000 of which represents deferred fees due to affiliates through
November 1994, of which $919,500 is the Partnership's share) of management
fees.

During the second quarter, JMB/Piper executed an amendment to the
existing lease agreement with Popham Haik ("Popham"). Under the terms of
the agreement, Popham immediately surrendered approximately 57,000 square
feet of leased space leaving approximately 47,000 square feet occupied.
Popham continued to pay rent and all charges in accordance with its
original lease on the remaining and give-back space through July 31, 1997.
Popham's rent on the remaining square footage increased to a market rate
effective on August 1, 1997. There will be no adjustment to the lease
expiration date on the remaining space. The underlying lender has approved
the terms of this agreement. Concurrently with the execution of the
agreement with Popham, JMB/Piper finalized a lease with a law firm to
occupy 12,691 square feet of the Popham give-back space during the third
quarter of 1997.

Piper Jaffray Inc. ("Piper Jaffray") occupying 310,111 square feet or
approximately 43% of the building's rentable square feet, has leased an
additional 22,712 square feet of space currently under lease to another
tenant with a lease expiration date of December 31, 1997. Piper Jaffray's
lease start date will be January 1, 1998 with a lease expiration date
coterminous with the remainder of its space on March 31, 2000. JMB/Piper
continues to work on an early renewal of Piper Jaffray's lease. Such
renewal, if it occurs, will likely require JMB/Piper to commit a
substantial amount of funds in order to rehabilitate Piper Jaffray's space
or otherwise to provide incentive for Piper Jaffray to remain in the
building in lieu of moving to one of several proposed new office building
developments in Minneapolis. Any modification or renewal of this lease
would require the approval of the lender. There are no assurances that an
early renewal of the Piper Jaffray lease will be achieved.

260 FRANKLIN STREET BUILDING

The office market in the Financial District of Boston remains
competitive due to new office building developments and layoffs, cutbacks
and consolidations by financial service companies. The effective rental
rates achieved upon re-leasing have been substantially below the rates
which were received under the previous leases for the same space. The
property is currently expected to operate at a deficit for 1997 and for
several years thereafter.

The long-term mortgage loan in the original 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 an extension or refinancing of the loan. The
joint venture reached agreements with the lender for extensions of the
mortgage loan through January 1, 1997 and again through January 1, 1998.
In addition to substantially the same terms as were in effect prior to such
extensions, the agreement requires that the property submit net operating
cash flow of the property to the lender. In addition, the lender has
indicated that it is unlikely the loan will be extended beyond January 1,
1998. If 260 Franklin is unable, upon ultimate maturity of the loan, to
refinance the loan to the property, 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.

<PAGE>

The Partnership and 260 Franklin venture recorded a provision for
value impairment of $17,400,000 as of January 1, 1996, to reflect the then
estimated fair value of the property based upon the use of an appropriate
capitalization rate applied to the property's net operating income.

WELLS FARGO CENTER

The mortgage note secured by the property (with a balance of
approximately $183,066,000 as of June 30, 1997), 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.

A promissory note secured by the Partnership's interest in the joint
venture, which has an adjusted principal balance of approximately
$40,830,000, and accrued interest of approximately $4,628,000 at June 30,
1997 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 secured
solely by the Partnership's interest in the property.

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 ownership interest in the
property would likely 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.

RIVEREDGE PLACE BUILDING

The Partnership ceased making debt service payments effective July 1,
1992, and had been seeking to modify the mortgage note which matured
January 1, 1996 (with a principal balance of $18,166,294 and accrued
interest of approximately $12,600,000 at June 30, 1997). The property has
generated approximately $6,300,000 and $5,285,000 of cumulative cash flow
as of June 30, 1997 and December 31, 1996, respectively, since the
Partnership ceased making monthly debt service payments. Such cash flow
will likely be remitted to the lender and therefore these amounts are
included in other restricted securities in the consolidated financial
statements. The Partnership has decided, 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 and, based upon the current status of negotiations with the
lender, is currently marketing the property for sale in the lender's
behalf. A sale of the property would result in the Partnership no longer
having an ownership interest in the property and would result in a net gain
for financial reporting and Federal income tax purposes. The mortgage note
has been classified as a current liability in the accompanying consolidated
financial statements at June 30, 1997 and December 31, 1996. The RiverEdge
Place Building was approximately 96% occupied at June 30, 1997. The
property has been classified as held for sale or disposition as of December
31, 1996, and therefore, has not been subject to continued depreciation.

NEWPARK MALL

As a result of the 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 Mall approached the NewPark
joint venture regarding a sale of the Emporium building. Simultaneously
with its negotiations to acquire the Emporium Capwell building, the NewPark
joint venture negotiated to sell the building to a national retail store
owner. The transactions closed on April 22, 1997 and the joint venture
received net proceeds of approximately $2,000,000, of which the
Partnership's share was approximately $900,000, which has been retained by

<PAGE>

the property for possible tenant improvements and leasing costs related to
potential future leases. The Partnership recognized a gain for financial
reporting purposes of approximately $987,600. The Partnership will
recognize a gain for Federal income tax purposes in 1997.

The NewPark joint venture, in accordance with SFAS 121, recorded a
provision for value impairment at June 30, 1996 in the amount of $8,600,000
of which the Partnership's share is $3,870,000. Such provision was
recorded to reduce the venture's carrying value of the investment property
to its then estimated fair market value based upon an analysis of the
discounted estimated future cash flows over the projected holding period.

JMB/125

In November 1994, JMB/125 and certain affiliates of Olympia & York
Developments, Ltd. ("O&Y") reached an agreement to settle their dispute
regarding 125 Broad and its property. Under the terms of the agreement,
JMB/125 assigned its interest in 125 Broad to an affiliate of O&Y and
released its venture partners (the "O&Y partners") from any claims related
to 125 Broad. In return, JMB/125 received an unsecured promissory note in
the principal amount of $5 million bearing simple interest at 4.5% per
annum with all principal and accrued interest due at maturity in October
1999, subject to mandatory prepayments of principal and interest or
acceleration of the maturity date under certain circumstances. In
addition, JMB/125 received a release from any claims of certain O&Y
affiliates and generally was to be indemnified against any liability as a
general partner of 125 Broad. JMB/125 was also relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance. Affiliates of O&Y subsequently filed a pre-arranged
bankruptcy plan for reorganization of 125 Broad under Chapter 11 of the
Bankruptcy Code in order to facilitate 125 Broad's transfer of the office
building to the mortgage lender in satisfaction of the mortgage debt and
other claims. In January 1995, the plan for reorganization was approved by
the bankruptcy court, was consummated, and the bankruptcy was concluded.
In October 1995, the makers of the $5 million promissory note payable to
JMB/125 filed for protection from creditors under Chapter 11 of the
Bankruptcy Code. Pursuant to the bankruptcy reorganization of the makers
of the note, JMB/125, as an unsecured creditor, received limited
partnership interests and a convertible note in a reorganized entity that
has majority or controlling interests in six office buildings in New York,
New York and Boston, Massachusetts. The assigned value, as of the
bankruptcy confirmation date, of the interests and note received by JMB/125
was approximately $400,000. The convertible note was fully reserved due to
the uncertainty of the realizable value of the note. In June 1997, the
convertible note receivable for $297,000 was collected on by JMB/125
resulting in the recognition of gain, of which the Partnership's share is
$174,654.

ADJUSTMENTS

In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments and adjustments to
reflect the treatment given certain transactions in the Partnership's 1996
Annual Report) necessary for a fair presentation have been made to the
accompanying figures as of June 30, 1997 and December 31, 1996 and for the
three and six months ended June 30, 1997 and 1996.

<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 to the accompanying financial
statements for additional information concerning the Partnership's
investments.

After reviewing the remaining properties and the competitive
marketplaces in which they operate, the General Partners of the Partnership
expect to be able to conduct an orderly liquidation of its remaining
investment portfolio as quickly as practicable. 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.

At June 30, 1997, the Partnership and its consolidated ventures had
cash and cash equivalents of approximately $19,600,000. Such funds and
certain escrowed amounts (which are restricted as to their use) are
available for the payment of the Partnership's share of leasing costs and
capital improvements for its investment properties as well as for other
working capital requirements, including the Partnership's share of
potential future deficits, capital improvements, and financing or loan
restructuring costs at certain of the Partnership's investment properties,
and potential future distributions to partners. In addition, the General
Partners and their affiliates have previously deferred management and
leasing fees payable to them in the aggregate amount of approximately
$2,650,000 (approximately $6 per Interest) relating to the Partnership's
investment properties, which amount includes the Partnership's
proportionate share of such fees for its consolidated and unconsolidated
entities, such fees are expected to be paid in the future. Anticipated
deficits for 1997, including those for expected tenant improvement and
other lease inducement costs, at the 260 Franklin office building are
expected to be paid out of the joint venture's restricted reserve account.
The Partnership currently has adequate cash and cash equivalents to
maintain the operations of the Partnership. However, the Partnership has
taken steps to preserve its working capital by suspending operating
distributions (except for certain withholding requirements) to the Holders
of Interests and the General Partners effective as of the first quarter of
1992.

Although the Partnership expects to distribute sales proceeds from the
disposition of certain of the Partnership's remaining assets, 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, the 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.

RESULTS OF OPERATIONS

The decrease in the balance of escrow deposits and restricted
securities at June 30, 1997 as compared to December 31, 1996 is primarily
due to the payment of approximately $2,000,000 for mortgage interest and
tenant improvements at the Cal Plaza and 260 Franklin office buildings from
these accounts.

The increase in other restricted securities at June 30, 1997 as
compared to December 31, 1996 is due to the segregation of cumulative cash
flow from the RiverEdge Place office building. Such restricted amounts are
anticipated to be remitted to the property's lender.

<PAGE>

The decreases in properties held for sale or disposition, current
portion of long-term debt, and accrued real estate taxes at June 30, 1997
as compared to December 31, 1996 are primarily due to the lender obtaining
legal title to the Springbrook Shopping Center in January 1997.

The increase in investment in unconsolidated ventures, at equity at
June 30, 1997 as compared to December 31, 1996 is primarily due to gain
recognized on the sale of the Emporium Capwell building at NewPark Mall.

Reductions in income and expense items for the three and six months
ended June 30, 1997 as compared to the same periods in 1996 are due
primarily to the sale of the Woodland Hills and Dunwoody Crossing apartment
complexes in May 1996 and the lender obtaining title to the Springbrook
Shopping Center in January 1997. The decrease in mortgage interest expense
is substantially offset by the higher interest accrued on the amended and
restated promissory note secured by the Partnership's interest in the Wells
Fargo Center South Tower. In addition to the sales and disposition above,
the reduction in depreciation expense is due to the Cal Plaza and RiverEdge
properties being classified as held for sale or disposition as of December
31, 1996 and therefore no longer being subject to continued depreciation.

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 increase in the Partnership's share of earnings (loss) from
operations of unconsolidated ventures' for the three and six months ended
June 30, 1997 as compared to the same periods in 1996 is primarily due to
Partnership's suspension of loss recognition in 1997 on its restructured
investment in Wells Fargo Center South Tower.

The decrease in venture partner's share of venture operations for the
three and six months ended June 30, 1997 as compared to the same period in
1996 is due to the sale of the Dunwoody Crossing Apartment complex in 1996.

The gain on liquidation of investment in venture for the three and six
months ended June 30, 1997 represents gain recognized after the liquidation
of the Partnership's interest in Villages Northeast Associates.

The gain on sale of Partnership's investments in unconsolidated
ventures for the three and six months ended June 30, 1997 relates to the
recognition of previously deferred gain from the sale of JMB/Owing's
interest in the Owings Mills Limited Partnership in June 1993, gain on the
sale of the Emporium Capwell building at NewPark Mall, and recognition of
previously deferred gain from collection of principal on the note
receivable relating to the investment in 125 Broad. The gain on sale of
Partnership's investments in unconsolidated ventures for the three and six
months ended June 30, 1996 relates to the recognition of previously
deferred gain from the sale of JMB/Owing's interest in the Owings Mills
Limited Partnership.

The extraordinary item - gain on forgiveness of indebtedness of
$3,433,368 for the six months ended June 30, 1997 represents the retirement
of the mortgage note of the Springbrook Shopping Center in full
satisfaction upon transfer of title of the property to the lender in
January 1997. The gain for the six months ended June 30, 1996 represents
the retirement of the mortgage notes of the 160 Spear Street ($31,158,453)
and 21900 Burbank Buildings ($4,622,203) in full satisfaction upon transfer
of title of the properties to the respective lenders in 1996.

The cumulative effect of an accounting change for the six months ended
June 30, 1996 represents provisions in 1996 to record value impairment on
the 160 Spear Street ($26,000,000) and 21900 Burbank Buildings ($4,000,000)
in compliance with SFAS 121.

<PAGE>

PART II. OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

In July, 1992, the Partnership ceased making debt service payments on
the mortgage loan secured by the RiverEdge Place Building (with a principal
balance of $18,166,294 and accrued interest of approximately $12,600,000 at
June 30, 1997).

Reference is also made to the respective Note for the RiverEdge
investment property in the Notes to Consolidated Financial Statements filed
with this quarterly report for further discussion of the default under this
loan, which is hereby incorporated herein by reference.

<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 1997.

<CAPTION>
1996 1997
-------------------------------------- ------------------------------
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. . . . . . 97% 98% 98% 98% 98% 98%
2. Piper Jaffray Tower
Minneapolis, Minnesota. . . . 98% 98% 98% 98% 99% 99%
3. RiverEdge Place
Fulton County (Atlanta),
Georgia . . . . . . . . . . . 90% 91% 90% 96% 97% 96%
4. Wells Fargo Center
- IBM Tower
Los Angeles, California . . . 95% 97% 92% 92% 93% 90%
5. 260 Franklin Street Building
Boston, Massachusetts . . . . 96% 95% 96% 96% 96% 97%
6. California Plaza
Walnut Creek, California. . . 91% 89% 89% 90% 90% 96%
7. NewPark Mall
Newark (Alameda County),
California. . . . . . . . . . 79% 79% 77% 78% 76% 75%
8. Springbrook Shopping Center
Bloomingdale, Illinois. . . . 69% 55% 53% 53% N/A N/A

<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>

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3-A. 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.

3-B. 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. 0-1611)
dated November 8, 1996.

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. 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.

4-D. Documents relating to the modification and extension
of the mortgage loan secured by Wells Fargo-South Tower are incorporated
herein by reference to the Partnership's Report for December 31, 1996 on
Form 10-K (File No. 0-16111) dated March 21, 1997.

4-E. Amended and restated promissory note between Wells
Fargo Bank and the Partnership is incorporated herein by reference to the
Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-16111)
dated March 21, 1997.

4-F. Loan modification agreement of Wells Fargo Bank is
incorporated herein by reference to the Partnership's Report for December
31, 1996 on Form 10-K (File No. 0-16111) dated March 21, 1997.

4-G. Documents relating to the third mortgage modification
and extension agreement secured by the 260 Franklin Street Building dated
December 4, 1996 are incorporated herein by reference to the Partnership's
Report for December 31, 1996 on Form 10-K (File No. 0-16111) dated March
21, 1997.

10-A. 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.

<PAGE>

10-B. 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-C. 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-D. 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-E. 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-F. 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-G. 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-H. 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-I. 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-J. Documents relating to the operating agreement of
Maguire Thomas Partners-South Tower, L.L.C. are incorporated herein by
reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated
March 21, 1997.

10-K. Modification to Reserve Escrow Agreement dated
December 4, 1996 relating to the 260 Franklin Street Building dated
December 4, 1996 is incorporated herein by reference to the Partnership's
Report on Form 10-K (File No. 0-16111) dated March 21, 1997.

<PAGE>

10-L. Modification to Reserve Escrow Agreement relating to
the 260 Franklin Street building dated May 22, 1997 is filed herewith.

27. Financial Data Schedule

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

(b) No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.

<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 - XV

BY: JMB Realty Corporation
(Corporate General Partner)

By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: August 8, 1997

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

GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: August 8, 1997

EXHIBIT 10-L
- ------------
(Carlyle-XV)

PREPARED BY AND UPON
RECORDING RETURN TO:

WILLIAM H. GOEBEL, ESQ.
INVESTMENT LAW DEPARTMENT
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
730 THIRD AVENUE
NEW YORK, NY 10017

FOURTH MORTGAGE MODIFICATION
AND
EXTENSION AGREEMENT

THIS AGREEMENT, executed as of the 22nd day of May, 1997,
but effective as of the 1st day of January, 1997, by and
between NORMAN S. GELLER, THOMAS M. BENNETT, JEFFREY GLUSKIN
and NEIL G. BLUHM, BRIAN K. ELLISON and JULIA C. PARKS, as
Trustees of 260 FRANKLIN STREET ASSOCIATES TRUST under a
Declaration of Trust dated May 16, 1986, duly recorded with
the Suffolk County Registry of Deeds in Book 12510, Page 64
and filed with the Suffolk County Registry District of the
Land Court as Document No. 405198, as amended in accordance
with Certificate of Trustee as to Appointment of Additional
Trustees and First Amendment to Declaration of Trust
establishing 260 Franklin Street Associates Trust, dated
September 12, 1986, duly recorded with Suffolk County Registry
of Deeds as Instrument No. 374 of September 26, 1986, and
filed with the Suffolk County Registry District of the Land
Court as Document No. 411174, and as further amended by
Certificate of Trustee as to removal of certain Trustees and
appointment of additional Trustees dated July 23, 1990, duly
recorded with the Suffolk County Registry of Deeds in Book
16416, Page 342, and Document No. 467674, with appointment of
six Trustees registered as Documents Nos. 467675 through
467680 with the Suffolk County Registry District of the Land
Court, as further amended in accordance with a Certificate of
Trustee as to Removal of Certain Trustees and Appointment of
Additional Trustees, dated May 20, 1992, duly recorded with
the Suffolk County Registry of Deeds as Document No. 487549,
having a mailing address c/o JMB Realty Corporation, 900 North
Michigan Avenue, Chicago, Illinois 60611-1575 ("Mortgagor"),
and TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a
New York corporation having a mailing address of 730 Third
Avenue, New York, New York 10017 ("Mortgagee").

<PAGE>

Appl. #MA-374
Mtge. #000207800

WHEREAS, pursuant to the terms of that certain Second
Mortgage Modification and Consolidation Agreement between the
parties hereto dated as of January 1, 1991, and recorded with
the Suffolk County Registry of Deeds as Instrument No. 308 of
December 31, 1991, in Book 17222, Page 286 and filed with
Suffolk County Registry District of the Land Court as Document
No. 482106, Mortgagor is justly indebted to Mortgagee in the
consolidated principal amount (the "Consolidated Principal
Indebtedness") of SEVENTY - FOUR MILLION EIGHT HUNDRED NINETY
- - ONE THOUSAND TWELVE AND 83/100THS ($74,891,012.83) DOLLARS,
plus interest thereon from date, which Agreement consolidated
the indebtedness evidenced by those two certain Mortgage
Notes, (a) the first being that certain Note payable to the
order of Mortgagee in the original sum principal sum of SIXTY
- - FIVE MILLION AND NO/100THS ($65,000,000.00) DOLLARS dated
December 18, 1985, made originally by 260 Franklin
Incorporated, the repayment obligation for which has been
assumed by Mortgagor by that certain agreement captioned "NOTE
MODIFICATION AGREEMENT WITH RESPECT TO $56,000,000 NOTE DATED
DECEMBER 18, 1985" (collectively, "Note No. 1"); (b) the other
being that certain Note made by Mortgagor payable to the order
of Mortgagee in the original principal sum of TEN MILLION AND
NO/100THS ($10,000,000.00) DOLLARS, dated September 24, 1986
("Note No. 2");

WHEREAS, pursuant to the terms of that certain Third
Mortgage Modification and Extension Agreement between the
parties hereto dated as of December 4, 1996, and recorded with
the Suffolk County Registry of Deeds as Instrument No. 257 on
December 24, 1996, in Book 21097, Page 074 and filed with
Suffolk County Registry District of the Land Court as Document
No. 547285, the parties hereto agreed to extend the term of
said Mortgage to January 1, 1997, and to modify certain terms
of the loan;

WHEREAS, the Consolidated Principal Indebtedness
evidenced by both Notes are secured by that certain Security
Agreement and Mortgage ("the $65,000,000.00 Mortgage") dated
December 18, 1985, and recorded with the Suffolk County
Registry of Deeds in Book 12143, Page 249 and filed with
Suffolk County Registry District of the Land Court as Document
No. 399401 and that certain Security Agreement and Mortgage
Deed ("the $10,000,000.00 Mortgage") dated September 24, 1986,
and recorded with the Suffolk County Registry of Deeds in Book
12902, Page 302 and filed with Suffolk County Registry
District of the Land Court

<PAGE>

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as Document No. 411176; as such Mortgages have been
consolidated and modified by (i) that certain Mortgage
Modification and Consolidation Agreement between Mortgagor and
Mortgagee dated September 24, 1986 and recorded with the
Suffolk County Registry of Deeds in Book 12902, Page 347 and
filed with the Suffolk County Registry District of the Land
County as Document No. 411178, (ii) the aforesaid Second
Mortgage Modification and Consolidation Agreement, and (iii)
the aforesaid Third Mortgage Modification and Extension
Agreement. Both the $65,000,000.00 Mortgage and the
$10,000,000.00 Mortgage as consolidated and modified by the
aforesaid Mortgage Modification and Consolidation Agreement,
Second Mortgage Modification and Consolidation Agreement and
Third Mortgage Modification and Extension Agreement are
collectively called the "Consolidated Mortgage" and both such
mortgages encumber and mortgage, as security for Consolidated
Principal Indebtedness, those certain lots, parcels and pieces
of land with the buildings and improvement erected thereon
situate, lying and being in the City of Boston, County of
Suffolk, Commonwealth of Massachusetts described in the
mortgages and on EXHIBIT A attached hereto and forming a part
hereof (hereinafter called "the Premises");

WHEREAS, the Consolidated Principal Indebtedness is also
secured by, among other things, (a) a certain Assignment of
Lessor's Interest in Lease(s) from 260 Franklin Incorporated
to Mortgagee dated December 18, 1985, and recorded with the
Suffolk County Registry of Deeds on December 19, 1985, as
Instrument No. 503 and filed with the Suffolk County Registry
District of the Land Court as Document No. 399403 as
supplemented by the certain Supplemental Assignment of
Lessor's Interest in Lease(s) from Mortgagor to Mortgagee
dated September 24, 1986, and recorded with the Suffolk County
Registry of Deeds as Instrument No. 379 filed with the Suffolk
County Registry District of the Land Court as Document No.
411179 (hereinafter collectively called the "$65,000,000.00
Assignment of Lessor's Interest in Lease(s)"); (b) that
certain Assignment of Lessor's Interest in Lease(s) from
Mortgagor to Mortgagee dated September 24, 1986, and recorded
with the Suffolk County Registry of Deeds as Instrument No.
377 of September 26, 1986, and filed with the Suffolk County
Registry District of the Land Court as Document No. 411177
(hereinafter called the $10,000,000 Assignment of Lessor's
Interest in Leases"); and (c) that certain Supplemental
Assignment of Lessor's Interest in Leases (the "1991
Supplemental Assignment") dated as of January 1, 1991, and
recorded with the Suffolk County Registry of Deeds as
Instrument No. 309 of December 31, 1991, in

<PAGE>

Appl. #MA-374
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Book 17222, Page 308 and filed with Suffolk County Registry
District of the Land Court as Document No. 482107;

WHEREAS, Mortgagor continues to be the owner of the
Premises and does hereby warrant and represent that the
Consolidated Mortgages continue to be first and superior liens
on the Premises in accordance with their terms (subject to
only those encumbrances set forth in that certain title policy
bearing title insurance No. 616157M bearing effective date
equal to the date on which this Agreement is recorded held by
Mortgagee from Ticor Title Insurance Company) for the
Consolidated Principal Indebtedness of SEVENTY - FOUR MILLION
EIGHT HUNDRED NINETY - ONE THOUSAND TWELVE AND 83/100THS
($74,891,012.83) DOLLARS, plus interest, as evidenced by Note
No. 1 and Note No. 2, as such indebtedness has been
consolidated by the terms of the Second Mortgage Modification
and Consolidation Agreement and modified by the terms of the
Third Mortgage Modification and Extension Agreement; that it
has no defense or offset to its liability thereunder and all
the provisions are unmodified and in full force and effect of
the Consolidated Mortgages, Note No. 1, Note No. 2, the
$65,000,000 Assignment of Lessor's Interest in Lease(s), the
$10,000,000 Assignment of Lessor's Interest in Leases, the
1991 Supplemental Assignment and all other documents held by
Mortgagee in connection with the indebtedness evidenced by
Note No. 1 and Note No. #2;

WHEREAS, Mortgagor has requested that the date on which
the Consolidated Principal Indebtedness is to be paid in full
under the aforesaid Second Mortgage modification and
Consolidation Agreement, as the same was modified and extended
by the aforesaid Third Mortgage Modification and Extension
Agreement be extended to January 1, 1998 (the new "Scheduled
Maturity Date"), subject to Mortgagee having the right to
accelerate such maturity date upon thirty (30) days' prior
written notice to Mortgagor, which request is agreeable to
Mortgagee provided there are certain other modifications as
hereinafter provided;

WHEREAS, the Consolidated Principal Indebtedness is
further secured by that certain Reserve Pledge Agreement dated
January 1, 1991, as modified by that certain Modification to
Reserve Escrow Agreement dated January 1, 1994, as further
modified and restated by that certain Reserve Pledge Agreement
dated December 4, 1996, and as further extended by that
certain

<PAGE>

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Mtge. #000207800

Extension Agreement of even date herewith, which extends the
stated maturity date to January 1, 1998;

NOW, THEREFORE, in consideration of the Premises, the
covenants and conditions herein contained, and the sum of TEN
($10.00) DOLLARS and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
the parties hereto do hereby covenant and agree as follows:

1. The date of January 19, 1997, set forth in the
Second Mortgage Modification and Consolidation Agreement, as
modified and extended by the said Third Mortgage Modification
and Extension Agreement, on which the entire Consolidated
Principal Indebtedness, plus all accrued fixed interest, there
hereinafter defined Yield Maintenance Amount, the hereinafter
defined Residual Interest Amount, and such other sums due
thereon pursuant thereto are to be paid in full, is hereby
extended to January 1, 1998, and the respective liens of the
Consolidated Mortgages are hereby extended thereby to cover
such date of January 1, 1998, subject to such date being
accelerated at Mortgagee's election to an earlier date (the
"Acceleration Date") that Mortgagee may select (Mortgagee's
Election to Accelerate") upon thirty (30) days' prior written
notice sent to Mortgagor in accordance with Paragraph 33 of
the $10,000,000 Mortgagee at Mortgagor's address set forth and
in such event, the entire Consolidated Principal Indebtedness,
plus all accrued fixed interest, the Yield Maintenance Amount,
the Residual Interest Amount, and the other sums owed thereon
pursuant thereto shall immediately become due and payable and
shall be paid by Mortgagor on the Acceleration Date.

2. This Agreement does not create any new, further or
other indebtedness, but secures the same indebtedness
evidenced by Note No. 1 and Note No. 2 as consolidated by the
terms of the Second Mortgage Modification and Consolidation
Agreement and extended and modified by the terms of the Third
Mortgage Modification Agreement, and by this Agreement.

3. IF ANY TERM, COVENANT OR CONDITION OF THIS AGREEMENT
SHALL BE HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY
RESPECT, THIS AGREEMENT SHALL BE CONSTRUED WITHOUT SUCH
PROVISIONS. IN ADDITION, IF THE TRANSACTION EVIDENCED AND
SECURED HEREBY SHALL BE RESCINDED OR OTHERWISE RENDERED
UNENFORCEABLE IN WHOLE OR IN PART ON ACCOUNT OF ANY LAWS

<PAGE>

Appl. #MA-374
Mtge. #000207800

RESPECTING CREDITOR'S RIGHTS OR FOR ANY OTHER REASON, THEN, AT
MORTGAGEE'S OPTION, THE ORIGINAL NOTE NO. 1 AND NOTE NO. 2 (AS
CONSOLIDATED HERETOFORE UNDER THE SECOND MORTGAGE MODIFICATION
AND CONSOLIDATION AGREEMENT AND MODIFIED AND EXTENDED BY THE
THIRD MORTGAGE MODIFICATION AND EXTENSION AGREEMENT) AND
ORIGINAL CONSOLIDATED MORTGAGES SHALL BE UNIMPAIRED, AND THEIR
TERMS AND PROVISIONS SHALL BE UNMODIFIED AND IN FULL FORCE AND
EFFECT AS IF THE MODIFICATIONS CONTAINED IN THIS AGREEMENT HAD
NEVER BEEN EXECUTED.

4. Mortgagor shall promptly cause this Agreement to be
filed, registered or recorded in such manner and in such
places as may be required by any present or future law in
order to publish notice of and fully to protect the liens of
the Consolidated Mortgages upon, and the interest of Mortgagee
in, the Premises. Mortgagor shall pay all filing,
registration and recording fees, all expenses incident to the
preparation, execution and acknowledgment of this Agreement
and all federal, state, county and municipal taxes, duties,
imposts, assessments and charges arising out of or in
connection with the filing, registration, recording, executing
and delivery of this Agreement, and Mortgagor shall hold
harmless and indemnify Mortgagee against any liability
incurred by reason of the imposition of any tax on the
issuance, making, filing, registration or recording of this
Agreement; provided, however, Mortgagor shall not be
responsible for Mortgagee's income, franchise or similar such
taxes.

5. Mortgagor represents, warrants and covenants that
(a) there are no offsets, counterclaims or defenses against
the Consolidated Principal Indebtedness, Note No. 1, Note No.
2, the Consolidated Mortgages, the $65,000,000 Assignment of
Lessor's in Leases, the $10,000,000.00 Assignment of Lessor's
in Leases, or the 1991 Supplemental Assignment and (b)
Mortgagor (and its respective undersigned representatives)
have full power, authority and legal right to execute this
Agreement and to keep and observe all of the terms of this
Agreement on all such parties' part to be observed or
performed, and (c) this Agreement is valid and binding upon
all such parties and enforceable against all such parties in
accordance with its terms.

6. This Agreement shall be binding upon Mortgagor and
Mortgagee and their respective successors and assigns and
shall inure to the benefit of Mortgagor and Mortgagee and
their permitted successors and assigns.

<PAGE>

Appl. #MA-374
Mtge. #000207800

7. This Agreement may be executed in any number of
duplicate originals and each such duplicates original shall be
deemed to constitute but one and the same instrument.

8. MORTGAGOR HEREBY ACKNOWLEDGES THAT THE MORTGAGOR AND
THE BENEFICIARIES OF THE TRUST ARE KNOWLEDGEABLE BORROWERS OF
COMMERCIAL FUNDS AND EXPERIENCED REAL ESTATE DEVELOPERS OR
INVESTORS, (ii) THEY AND THEIR ATTORNEYS FULLY UNDERSTAND THE
EFFECT OF THE ABOVE PROVISIONS, (iii) MORTGAGEE WOULD NOT
MAKE THE LOAN SECURED HEREBY WITHOUT SUCH PROVISIONS AND (iv)
SUCH LOAN IS A COMMERCIAL OR BUSINESS LOAN, NEGOTIATED BY
MORTGAGEE AND MORTGAGOR AND THEIR RESPECTIVE ATTORNEYS AT ARMS
LENGTH. NOTHING CONTAINED IN THIS AGREEMENT SHALL BE
CONSTRUED AS CREATING A JOINT VENTURE OR PARTNERSHIP
RELATIONSHIP BETWEEN THE PARTIES HERETO.

9. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.

10. It is specifically agreed that the time is of the
essence of this Agreement and that the waiver of options or
obligations secured by this Agreement shall not at any time be
held to be abandonment of such rights. Notice of the exercise
of any option granted to Mortgagee herein is not required to
be given unless expressly provided to the contrary herein.

The Trustees of 260 Franklin Street Associates Trust
hereby certify pursuant to Paragraph 6 of said Trust that the
execution and delivery of this Instrument has been duly
authorized and directed by all of the beneficiaries of said
Trust and said Trust is in full force and effect as of the
date hereof. The foregoing authorization has not been
altered, amended or rescinded and is in full force and effect
as of the date hereof.

The party or parties executing this Agreement as
Mortgagor are executing the same as the Trustees and not in
any individual capacity. As such, they are not personally
liable for fulfilling any of their obligations under this
Agreement and Mortgagee shall look to and be entitled to
succeed to the Premises and the other assets of the trust for
a breach by Mortgagor of its obligations under this Agreement.

Without limitation on the foregoing, but in addition
thereto, neither Mortgagor nor any Trustee, advisor or any
other entity shall be personally liable in any manner or to
any extent

<PAGE>

Appl. #MA-374
Mtge. #000207800

under or in connection with this Agreement (including, but
without limitation, the items set forth as exceptions to
Paragraph 36 of the Consolidated Mortgages) or any other
agreement or instrument entered into in connection herewith;
provided, however, that the forgoing shall not affect or
impair the lien of the Consolidated Mortgage, the rights of
Mortgagee to proceed against the Premises, or any obligations
under a certain Indemnity and Payment Agreement dated December
27, 1991, given by Carlyle Real Estate Limited Partnership-XVI
to Mortgagee.

IN WITNESS WHEREOF, the Mortgagor and the
Mortgagee have duly signed, sealed and delivered this
Agreement as a sealed instrument the day and the year
hereinabove first written.

executed signature /S/ BRIAN K. ELLISON
- -------------------- ------------------------------
Witness not personally but solely as
Trustee of 260 Franklin Street
Associates Trust as aforesaid,
for self and co-trustees

TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA

/S/ SUSAN M. DEVER By: /S/ MARK DE PRIMA
- -------------------- --------------------------
Witness Name: Mark De Prima
Title: Associate Director

/S/ DAVID RODRIGUEZ By: /S/ BRIDGET MAC LEAN-LAI
- -------------------- --------------------------
Witness Name: Bridget MacLean-Lai
Title: Assistant Secretary

[ seal ]

<PAGE>

Appl. #MA-374
Mtge. #000207800

ACKNOWLEDGEMENTS
----------------

STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )

On this 22ND day of MAY, 1997, before me appeared BRIAN
K. ELLISON, to me personally known, who, being by me duly
sworn, did say that he/she is a trustee of 260 Franklin Street
Associated Trust, and that said instrument was signed in
behalf of said trust, and said BRIAN K. ELLISON, acknowledged
said instrument to be the free act and deed of the trustees on
behalf of said trust.

/S/ LAURA ANN KLENSKE
------------------------------
Notary Public
My commission expires: 6-11-99

[ official seal ]

STATE OF NEW YORK )
) ss: New York,
COUNTY OF NEW YORK )

Before me, the undersigned authority, a Notary in and for
said State, on this day personally appeared MARK DE PRIMA and
BRIDGET MAC LEAN-LAI, known to me to be the persons whose
names are subscribed to the foregoing instrument and known to
me to be the ASSOCIATE DIRECTOR and ASSISTANT SECRETARY,
respectively, of Teachers Insurance and Annuity Association of
America, a New York corporation, and that the seal affixed to
the foregoing instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in
behalf of said corporation by authority of its Board of
Trustees, and acknowledged that they executed the said
instrument for the uses, purposes and consideration therein
expressed on behalf of said Teachers Insurance and Annuity
Association of America.

Given under my hand and seal of office this 6TH day of
JUNE, 1997.

/S/ JULIE A. HATHAWAY
------------------------------
Notary Public in the State of New
York
My commission expires: April 7, 1999

[ official seal ]

<PAGE>

Appl. #MA-374
Mtge. #000207800

EXHIBIT A
---------

A parcel of land situated in Boston, Suffolk County,
Massachusetts, shown on a plan entitled "Plan of Land, Boston,
Massachusetts" prepared by R.E. Cameron & Associates, Inc.,
dated January 26, 1983, revised February 24, 1983, recorded
with Suffolk Registry of Deeds at the end of Book 10281, and
bounded:

SOUTHWESTERLY by Oliver Street, 165.82 feet;

NORTHWESTERLY by land of Thomas J. White, et al,
Trustees, 96.41 feet;

NORTHEASTERLY by the same land, 15.80 feet;

NORTHWESTERLY by the same land, 10.90 feet;

NORTHEASTERLY by Lot C as shown on said plan, 31.29
feet;

NORTHWESTERLY by said Lot C, 12.41 feet;

NORTHEASTERLY by Jenton Way, formerly Hamilton Alley,
122.43 feet; and

SOUTHEASTERLY by Franklin Street, 95.85 feet.

Included in the above-described parcel is a parcel of
registered land, bounded:

SOUTHWESTERLY by the northeasterly line of Oliver
Street, forty-eight and 42/100 (48.42) feet;

NORTHWESTERLY by lands now or formerly of Daniel M.
Driscoll et al and of Frank Cair Macomber, Jr., the line
running in part through the middle of a sixteen (16) inch
brick wall, one hundred seventeen and 06/100 (117.06) feet;

NORTHEASTERLY by Hamilton Alley, forty-two and 83/100
(42.83) feet; and

SOUTHEASTERLY twenty-five and 73/100 (25.73) feet;

<PAGE>

Appl. #MA-374
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NORTHEASTERLY seven and 51/100 (7.51) feet; and

SOUTHEASTERLY eighty-two and 85/100 (82.85) feet by land
now or formerly of 30/32 Oliver Street Corporation, the line
running through the middle of a sixteen (16) inch brick wall.

All of the bounds of said registered parcel have been
determined by the Land Court to be located as shown on a plan
drawn by George H. Gilboy, Surveyor, dated February 27, 1946,
as modified and approved by the Court, and filed in the Land
Registration Office as plan No. 200064-A, a copy of a portion
of which is filed with Certificate of Title No. 49443.

Also, one undivided half of the parcel of land situated
in said Boston, adjoining the above described parcel, being
shown as Lot C on the Plan first above referred to and
bounded:

SOUTHWESTERLY on a parcel above described, 31.29 feet;

NORTHWESTERLY in part on land now or formerly of Sherry
Biltmore, Inc. and in part on land now or formerly of Dana, et
al, Trustees, by two lines, one measuring 2.44 feet and the
other 19.75 feet, respectively;

NORTHEASTERLY on other land now or formerly of Dana, et
al, Trustees, 35.78 feet; and

SOUTHEASTERLY in part on Jenton Way, formerly Hamilton
Alley, 9.90 feet, and in part on land formerly of Burrage and
formerly of the Pardee Ellenberger Co. Incorporated, being the
parcel above described, 12.41 feet, respectively.

The above property also has the following appurtenant rights:

1. Rights reserved in a deed from Charles W. Mills, et al,
trustee to James F. Dwinnell et al dated November 16, 1868,
recorded in Box 946, Page 130, referred to in deed from said
trustees to Charlotte R. Whitmore et al dated November 16,
1868, recorded in Book 946, Page 132 as corrected by

<PAGE>

Appl. #MA-374
Mtge. #000207800

deed from said Trustees to Charlotte R. Whitmore dated
January 25, 1871 recorded in Book 1041, Page 126 (Benefits Lot
C on Plan in Book 4193, Page 612 and burdens Lot B on said
Plan).

2. Easement for light and air created by grant from James F.
Dwinnell to Alvah A. Burrage dated August 30, 1872, recorded
in Book 1126, Page 117 as modified by agreement dated August
5, 1910, recorded in Book 3475, Page 482 (benefits
northwesterly 23 feet of Lot A on Plan in Book 4193, Page 612
and burdens Lot B on said Plan).

3. Easements for light, air and passage reserved in a deed
from Alvah H. Burrage to James F. Dwinnell et al dated
September 16, 1872, recorded in Book 1126, Page 116 (benefits
Lot A on plan in Book 4193, Page 612 and burdens Lot C and the
four foot strip on the northeasterly side of Lot C on said
plan).

4. Easement for passage and repassage in Jenton Way
(formerly known as Hamilton Alley).

5. Easements for light and air and building maintenance
granted by Grant and Release of Easements between Ferdinand
Colloredo-Mansfield, et al, the Trustees of CC&F-F&O Property
Trust and 2 Oliver Incorporated dated January 27, 1984,
recorded in Book 11100, Page 001.

<PAGE>

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Mtge. #000207800

EXTENSION AGREEMENT
-------------------

THIS EXTENSION AGREEMENT (hereinafter called "this
Agreement", executed as of the 22ND day of MAY, 1997, but
effective as of the 1st day of January, 1997, by and between
NORMAN S. GELLER, THOMAS M. BENNETT, JEFFERY GLUSKIN and NEIL
G. BLUHM, BRIAN K. ELLISON and JULIA C. PARK, as Trustees of
260 FRANKLIN STREET ASSOCIATES TRUST under a Declaration of
Trust dated May 16, 1986, duly recorded with the Suffolk
County Registry of Deeds in Book 12510, Page 64 and filed with
the Suffolk County Registry District of the Land Court as
Document No. 405198, as amended in accordance with the
Certificate of Trustee as to Appointment of Additional
Trustees and First Amendment to Declaration of Trust
establishing 260 Franklin Street Associates Trust, dated
September 12, 1986, duly recorded with Suffolk County Registry
of Deeds as Instrument No. 374 of September 26, 1986, and
filed with the Suffolk County Registry District of the Land
Court as Document No. 411174, and as further amended
Certificate of Trustee as to removal of certain Trustees and
appointment of additional Trustees dated July 23, 1990, duly
recorded with the Suffolk County Registry of Deeds in Book
16416, Page 342, and Documents No. 467674, with appointment of
six Trustees registered as Document Nos. 467675 through 467680
with the Suffolk County Registry District of the Land Court,
as further amended in accordance with a Certificate of Trustee
as to Removal of Certain Trustees and Appointment of
Additional Trustees, dated May 20, 1992, duly recorded with
the Suffolk County Registry of Deeds as Document No. 487549,
having a mailing address c/o JMB Realty Corporation, 900 North
Michigan Avenue, Chicago, Illinois 60611-1575 (hereinafter
called "Borrower"), TEACHERS INSURANCE AND ANNUITY ASSOCIATION
OF AMERICA, a New York corporation having a mailing address of
730 Third Avenue, New York, New York 10017 ("Lender") and THE
BOSTON MORTGAGE CAPITAL CORP., a Massachusetts corporation
having a mailing address of 100 Huntington Avenue, Tower 2,
Fourth Floor, Boston, Massachusetts 02116 (hereinafter called
"Pledge Agent").

W I T N E S E T H:
-----------------

WHEREAS, the parties hereto entered into a certain
Reserve Pledge Agreement dated January 1, 1991, as modified by

<PAGE>

Appl. #MA-374
Mtge. #000207800

that certain Modification to Reserve Escrow Agreement dated
January 1, 1994, as further modified and restated by that
certain Reserve Pledge Agreement dated December 4, 1996, but
effective as of January 1, 1996, pursuant to that certain loan
made by Borrower from Lender of even date therewith
(collectively, the "Reserve Pledge Agreement");

WHEREAS, the borrower has requested an extension of
the maturity date of said loan from January 1, 1997, to
January 1, 1998;

WHEREAS, Lender has agreed to the extension of the
maturity date to January 1, 1998, upon the same terms and
conditions set forth in that certain Fourth Mortgage
Modification and Extension Agreement between the parties
hereto of even date herewith, to be recorded in the
appropriate Records of the County of Suffolk, State of
Massachusetts.

NOW, THEREFORE, the parties hereto agree that the
Reserve Pledge Agreement hereinabove mentioned shall be
extended until January 1, 1998. All other terms of said
Reserve Pledge Agreement shall remain the same and in full
force and effect, except that wherever that date of January 1,
1997, appears in the Reserve Pledge Agreement, the date
"January 1, 1998" shall be substituted. The Tenant Security
Deposit Account, Working Capital Account and the Reserve
Account shall be maintained and terminated as more
particularly provided under the paragraphs captioned "Working
Capital Account," "Duty to Hold Funds," "Tenant Security
Deposit Account," "Termination of Reserve Account" and
"Termination of Tenant Security Deposit Account" of said
Reserve Pledge Agreement, except that no payment shall be made
to JMB Realty Corporation out of the Reserve Account until
January 1, 1998, the new date that was changed as indicated
above.

This Agreement can be executed in one or more
counterparts, each of which shall be an original and all of
which shall constitute one agreement.

The party or parties executing this Agreement for
and on behalf of Borrower are doing so in their capacity of
Trustee and not as individuals. As such, any liability for
breaching any of the Borrower's obligation hereunder shall be
limited to the Premises, trust assets and the monies deposited
in escrow under this Agreement.

<PAGE>

Appl. #MA-374
Mtge. #000207800

Without limitation on the foregoing, but in addition
thereto, neither Borrower nor any Trustee, advisor or any
other entity shall be personally liable in any manner or to
any extent under or in connection with this Agreement or any
other agreement or instrument entered into in connection
herewith; provided, however, that the foregoing shall not
affect or impair any obligations under a certain Indemnity and
Payment Agreement dated December 27, 1991, given by Carlyle
Real Estate Limited Partnership XV and Carlyle Real Estate
Limited Partnership XVI to Lender.

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first written above.

executed signature /S/ BRIAN K. ELLISON
- --------------------------- --------------------------------
Witness not personally but solely as
Trustee of 260 Franklin Street
Associates Trust as aforesaid
for self and co-trustees

TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA

/S/ DAVID RODRIGUEZ BY: /S/ MARK DE PRIMA
- --------------------------- ------------------------------
Witness Name: Mark DePrima
Title: Associate Director
[seal]

THE BOSTON MORTGAGE
CAPITAL CORP.
Attest:

/S/ JACQUELINE W. KELLEY BY: HAROLD C. MC KENNA
- --------------------------- ------------------------------
Name: Jacqueline W. Kelley Name: Harold C. McKenna
Title: Office Manager Title: President
[seal]

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997

<CASH> 19,619,574
<SECURITIES> 0
<RECEIVABLES> 9,671,255
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,290,829
<PP&E> 82,150,097
<DEPRECIATION> 32,593,960
<TOTAL-ASSETS> 165,786,435
<CURRENT-LIABILITIES> 125,645,919
<BONDS> 106,269,564
<COMMON> 0
0
0
<OTHER-SE> (82,890,859)
<TOTAL-LIABILITY-AND-EQUITY> 165,786,435
<SALES> 11,301,574
<TOTAL-REVENUES> 12,020,886
<CGS> 0
<TOTAL-COSTS> 6,554,103
<OTHER-EXPENSES> 927,784
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,883,748
<INCOME-PRETAX> (7,344,749)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,340,602)
<DISCONTINUED> 1,607,713
<EXTRAORDINARY> 3,433,368
<CHANGES> 0
<NET-INCOME> (2,299,521)
<EPS-PRIMARY> (4.64)
<EPS-DILUTED> (4.64)

</TABLE>