CARLYLE REAL ESTATE LTD PARTNERSHIP XV, 10-Q, 1999-05-17

CARLYLE REAL ESTATE LTD PARTNERSHIP XV
10-Q, 1999-05-17
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
March 31, 1999 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 . . . . . . . . . . . . . . . 15

PART II OTHER INFORMATION

Item 5. Other Information . . . . . . . . . . . . . . . . . 20

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 21

<PAGE>

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, 1999 AND DECEMBER 31, 1998

(UNAUDITED)

ASSETS
------

MARCH 31, DECEMBER 31,
1999 1998
------------- -----------
Current assets:
Cash and cash equivalents . . . . . . . $ 15,970,717 26,998,190
Interest, rents and other
receivables . . . . . . . . . . . . . 1,474,257 787,105
Current portion of notes
receivable. . . . . . . . . . . . . . 63,741 63,741
Escrow deposits and restricted
securities. . . . . . . . . . . . . . 14,071,906 2,384,098
Prepaid expenses. . . . . . . . . . . . 1,482,553 --
------------ ------------
Total current assets. . . . . . . 33,063,174 30,233,134
------------ ------------
Properties held for sale
or disposition. . . . . . . . . . . 143,164,988 46,193,322
------------ ------------

Investment in unconsolidated
ventures, at equity . . . . . . . . . . 398,908 9,734,036
Deferred expenses . . . . . . . . . . . . 3,074,326 1,116,015
Accrued rents receivable. . . . . . . . . 5,119,915 1,729,398
Long-term portion of note
receivable. . . . . . . . . . . . . . . 171,832 181,628
------------ ------------
$184,993,143 89,187,533
============ ============

<PAGE>

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

CONSOLIDATED BALANCE SHEETS - CONTINUED

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

MARCH 31, DECEMBER 31,
1999 1998
------------- -----------

Current liabilities:
Current portion of long-term debt . . . $ 63,723,440 --
Accounts payable. . . . . . . . . . . . 3,213,919 2,322,676
Accrued interest payable. . . . . . . . 687,684 --
Note payable. . . . . . . . . . . . . . 2,500,000 --
Other current liabilities . . . . . . . 639,554 639,554
------------ ------------
Total current liabilities . . . . 70,764,597 2,962,230

Tenant security deposits. . . . . . . . . 1,304,500 303,287
Investment in unconsolidated
ventures, at equity . . . . . . . . . . 6,168,674 6,108,130
Deferred income . . . . . . . . . . . . . 409,710 532,623
Other liabilities . . . . . . . . . . . . 430,429 430,429
Long-term debt, less current
portion . . . . . . . . . . . . . . . . 143,677,254 118,190,463
------------ ------------
Commitments and contingencies

Total liabilities . . . . . . . . 222,755,164 128,527,162

Venture partner's subordinated equity
in venture. . . . . . . . . . . . . . . 9,569,401 --

Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . 20,000 20,000
Cumulative net earnings (losses). . . (19,691,426) (19,637,903)
Cumulative cash distributions . . . . (1,445,867) (1,445,867)
------------ ------------
(21,117,293) (21,063,770)
------------ ------------
Limited partners:
Capital contributions,
net of offering costs . . . . . . . 384,978,681 384,978,681
Cumulative net earnings (losses). . . (344,573,745) (343,289,185)
Cumulative cash distributions . . . . (66,619,065) (59,965,355)
------------ ------------
(26,214,129) (18,275,859)
------------ ------------
Total partners' capital
accounts (deficits) . . . . . (47,331,422) (39,339,629)
------------ ------------
$184,993,143 89,187,533
============ ============

See accompanying notes to consolidated financial statements.

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)

1999 1998
---------- ----------
Income:
Rental income . . . . . . . . . . . . . . . .$ 8,153,362 2,447,456
Interest income . . . . . . . . . . . . . . . 431,867 323,855
----------- -----------
8,585,229 2,771,311
----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . 5,246,158 3,170,114
Property operating expenses . . . . . . . . . 3,160,796 857,412
Professional services . . . . . . . . . . . . 215,646 165,374
Amortization of deferred expenses . . . . . . 256,848 121,628
General and administrative. . . . . . . . . . 196,747 316,161
----------- -----------
9,076,195 4,630,689
----------- -----------
(490,966) (1,859,378)
Partnership's share of earnings (loss)
from operations of unconsolidated
ventures. . . . . . . . . . . . . . . . . . . 326,846 266,944
Venture partner's share of venture
operations. . . . . . . . . . . . . . . . . . (1,173,963) 414,242
----------- -----------
Earnings (loss) before gains on
sale or disposition of investment
properties. . . . . . . . . . . . . . (1,338,083) (1,178,192)

Gain on sale of interest in unconsolidated
ventures. . . . . . . . . . . . . . . . . . . -- 115,511
Gain on disposition of investment property. . . -- 23,212,184
------------ ----------
Earnings (loss) before
extraordinary items . . . . . . . . . (1,338,083) 22,149,503
------------ -----------
Extraordinary items:
Gain on forgiveness of indebtedness . . . . . -- 17,451,802
------------ -----------
Net earnings (loss) . . . . . . . . . .$ (1,338,083) 39,601,305
============ ===========

Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gains on
sale or disposition of investment
properties . . . . . . . . . . . . .$ (2.90) (2.55)
Gain on sale of interest in
unconsolidated ventures . . . . . . -- .26
Gain on disposition of investment
property. . . . . . . . . . . . . . -- 51.80
Extraordinary items . . . . . . . . . -- 38.95
------------ ----------
$ (2.90) 88.46
============ ==========
Cash distributions per limited
partnership interest. . . . . . . . .$ 15.00 10.04
============ ==========

See accompanying notes to consolidated financial statements.

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)

1999 1998
------------ ----------
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . .$ (1,338,083) 39,601,305
Items not requiring (providing) cash or
cash equivalents:
Cash generated by investment
property prior to acquisition
of venture partner's interest . . . . . (1,320,717) --
Amortization of deferred expenses . . . . 116,936 121,628
Long-term debt - deferred accrued
interest. . . . . . . . . . . . . . . . 2,089,069 2,054,373
Partnership's share of (earnings)
loss from operations of uncon-
solidated ventures. . . . . . . . . . . (326,846) (266,944)
Venture partner's share of ventures'
operations, gain on sale or
disposition of investment
properties and extraordinary items. . . 1,173,963 (414,242)
Gain on sale of interests in
unconsolidated ventures . . . . . . . . -- (115,511)
Total gain on disposition of
investment property . . . . . . . . . . -- (23,212,184)
Extraordinary item, including
venture partner's share . . . . . . . . -- (17,451,802)
Changes in:
Interest, rents and other receivables . . 36,241 25,591
Escrow deposits and restricted
securities. . . . . . . . . . . . . . . (457,006) (370,073)
Prepaid expenses. . . . . . . . . . . . . (159,097) --
Other restricted securities . . . . . . . -- 131,318
Accrued rents receivable. . . . . . . . . 195,248 199,621
Long-term portion of note receivable. . . 9,796 --
Accounts payable. . . . . . . . . . . . . 142,154 (681,529)
Accrued interest payable. . . . . . . . . 7,050 (400,392)
Accrued real estate taxes . . . . . . . . -- 159,131
Deferred income . . . . . . . . . . . . . (122,913) (122,914)
Tenant security deposits. . . . . . . . . -- (82,079)
Other liabilities . . . . . . . . . . . . -- 140,000
------------ -----------
Net cash provided by (used in)
operating activities. . . . . . . . 45,795 (684,703)
------------ -----------
Cash flows from investing activities:
Cash acquired at acquisition of
venture partner's interest in
investment property . . . . . . . . . . . 4,872,012 --
Additions to investment properties,
excluding amounts from escrow
deposits and restricted securities. . . . (40,818) (95,598)
Cash proceeds from sale of investment
property. . . . . . . . . . . . . . . . . -- 200
Partnership's distributions from
unconsolidated venture. . . . . . . . . . -- 1,000,000
Partnership's contributions to
unconsolidated ventures . . . . . . . . . (9,223,900) (28,488)
Payment of deferred expenses. . . . . . . . (26,852) (2,410)
------------ -----------
Net cash provided by (used in)
investing activities. . . . . . . . (4,419,558) 873,704
------------ -----------

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1999 1998
------------ ----------
Cash flows from financing activities:
Distributions to venture partners . . . . . -- (38,797)
Contributions from venture partners . . . . -- 453,039
Distributions to limited partners . . . . . (6,653,710) (4,452,037)
------------ -----------
Net cash provided by (used in)
financing activities. . . . . . . . (6,653,710) (4,037,795)
------------ -----------
Net increase (decrease) in
cash and cash equivalents . . . . . (11,027,473) (3,848,794)

Cash and cash equivalents,
beginning of year . . . . . . . . . 26,998,190 24,992,726
------------ -----------
Cash and cash equivalents,
end of period . . . . . . . . . . .$ 15,970,717 21,143,932
============ ===========

Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other
interest. . . . . . . . . . . . . . . . .$ 3,150,039 1,516,133
============ ===========
Non-cash investing and financing
activities:
Non-cash gain recognized on
sale of interests in uncon-
solidated ventures. . . . . . . . . . .$ -- 115,511
============ ===========
Disposition of investment property:
Purchase price of mortgage
loan. . . . . . . . . . . . . . . . .$ -- 74,891,213
Discharge of mortgage loan. . . . . . . -- (74,891,013)
------------ -----------
Cash proceeds from disposition
of investment property. . . . . .$ -- 200
============ ===========

Acquisition of venture partner's interest:
Addition to basis in investment
property. . . . . . . . . . . . . . . . .$ 34,434,099 --
Note payable. . . . . . . . . . . . . . . . (2,500,000) --
Increase in venture partner's
deficit in venture and
partnership's capital . . . . . . . . . . (18,134,099) --
Affiliated venture partner share
of cash paid. . . . . . . . . . . . . . . (4,599,540) --
------------ ------------
Partnership's contribution
to unconsolidated venture
to acquire venture partner's
interest in venture . . . . . . . .$ 9,200,460 --
============ ============

See accompanying notes to consolidated financial statements.

<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1999 AND 1998

(UNAUDITED)

GENERAL

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1998,
which are included in the Partnership's 1998 Annual Report on Form 10-K
(File No. 0-16111) filed on March 22, 1999, as certain footnote disclosures
which would substantially duplicate those contained in such audited
financial statements have been omitted from this report. Capitalized terms
used but not defined in this quarterly report have the same meanings as in
the Partnership's 1998 Annual Report on Form 10-K.

The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from 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. As of March 31, 1999, the Partnership and its
consolidated ventures have or have previously committed to plans to sell or
dispose of all their remaining investment properties. Accordingly, all
consolidated properties have been classified as held for sale or
disposition in the accompanying consolidated financial statements as of the
respective dates of such plans' adoption. The results of operations, net
of venture partners' share, for these properties and for properties sold or
disposed of in the past two years were $234,522 and $384,680, respectively,
for the three months ended March 31, 1999 and 1998.

In addition, the accompanying consolidated financial statements
include $245,213 and $204,850, respectively, of the Partnership's share of
total property operations of $237,593 and ($43,293) for unconsolidated
properties for the three months ended March 31, 1999 and 1998,
respectively, which are held for sale or disposition or have been sold or
disposed of during the past two years.

No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been, and
will be, required under applicable law to remit directly to the taxing
authorities amounts representing withholding from distributions paid to
partners. Due to this requirement, $130,871 representing such withholding
was remitted in 1999 to the state of Maryland on behalf of the Holders of
Interests.

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

<PAGE>

TRANSACTIONS WITH AFFILIATES

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates, including the reimbursement for salaries and salary-
related expenses of its employees and certain of its officers and 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 March 31, 1999 and for the three months ended
March 31, 1999 and 1998 were as follows:

Unpaid at
March 31,
1999 1998 1999
-------- ------ -------------
Property management and
leasing fees. . . . . . . . . $ -- -- 1,057,092
Advances payable. . . . . . . . -- -- 675,876
Insurance commissions . . . . . 1,706 -- --
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. . . 30,587 21,555 28,829
-------- ------- ---------
$ 32,293 21,555 1,761,797
======== ======= =========

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 $1,732,968 at March 31, 1999 and
December 31, 1998, which consists of management fees and leasing
commissions of $1,057,092 and advances of $675,876 payable to the
affiliated manager (included in the table above). The cumulative deferred
amounts do not bear interest and are expected to be paid in future periods.

An affiliate of the General Partners was entitled to payment of
property management and leasing fees relating to 260 Franklin through
November 1994 and subsequently JMB guaranteed payment to the unaffiliated
third party property manager for the property management and leasing fees.
Pursuant to a loan modification for the property, property management and
leasing fees were required to be escrowed through December 1995. Beginning
in January 1996, the unaffiliated property manager was paid management and
leasing fees by the property. In connection with the sale of the 260
Franklin Street building, the Partnership assumed the liability for its
prorata share of the unpaid fees, which amount was transferred to the
accounts of the Partnership upon the sale of 260 Franklin. As of March 31,
1999, $1,057,092 of management and leasing fees remained payable (as a
result of the escrowing of certain 1995 and prior years' management and
leasing fees payable to an affiliate of the General Partners and JMB's
payment pursuant to its guarantee of the fees to the unaffiliated property
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
March 31, 1999 (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 Sheets as of March 31, 1999 and
December 31, 1998.

<PAGE>

Effective January 1, 1994, certain officers and directors of the
Corporate General Partner acquired interests in a company which, among
other things, had provided management services to Erie McClurg Park
Facility (sold in September 1992). In connection with the sale of Erie
McClurg, a management termination agreement was reached which requires the
Partnership to make monthly payments to such company. Such acquisition had
no effect on the fees payable by the Partnership under any existing
agreements with such company. The amount due under such management
termination agreement for the three months ended March 31, 1999 and 1998
was approximately $15,000 and $19,300, respectively.

JMB/900

Occupancy of this building at the end of the first quarter of 1999 was
100%.

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

The terms of the JMB/900 venture agreement generally provide that
JMB/900's share of Progress Partners' cash flow, sale or refinancing
proceeds and profits or losses will be distributed or allocated to the
Partners in proportion to its 66-2/3% share of capital contributions.

Pursuant to the extension on the mortgage loan, net cash flow (as
defined) is paid into an escrow account controlled by the lender. The
escrow account, including interest earned thereon, will be used by Progress
Partners for payment of property taxes and releasing costs associated with
leases which expire in 1999 and 2000 (approximately 50% of the building
including the Schulte, Roth & Zabel lease discussed above). The remaining
proceeds in this escrow plus interest earned thereon, if any, will be
released to Progress Partners once 90% of such leased space has been
renewed or released. During 1999, approximately $935,000 has been
deposited into escrow from net cash flow from property operations. The
escrow balance at March 31, 1999 was approximately $11,231,000.

In December, 1997, two of the Venture Partners, JRA and PPI, filed for
bankruptcy in order to prevent the foreclosure of their interests by MDIFC.
Since the bankruptcy filing, an affiliate of PPI effected a settlement with
MDIFC by purchasing its claims. JMB/900 pursued certain claims against the
Venture Partners in the bankruptcy forum and sought to either foreclose on
or buy-out the interests of the Venture Partners in the venture, or to
otherwise dispose of those interests pursuant to a bankruptcy plan. The
Venture Partners asserted claims against the venture and JMB/900 including
claims for unpaid Guaranteed Payments in the purported amount of $36
million. JMB/900 denied that such claims were due and owing and contended
that, in any event, such claims were offset by PPI's failure to pay
interest in the aggregate amount of approximately $36 million on a $20
million loan to PPI. To the extent that JMB/900 would have been required
to make contributions to pay for any part of the purported claim for
Guaranteed Payments, a portion of the Guaranteed Payments actually paid may
have been allocated to other unsecured creditors of PPI and JRA and,
therefore, JMB/900 might not have received the full amount of the interest
due on the $20 million loan. However, JMB/900's contributions would have
created a preferred return level payable out of future net cash flow or net
sale or refinancing proceeds. Furthermore, JMB/900 took the position that
to the extent that it did not receive annual distributions equal to the
interest payable on the $20,000,000 loan, JMB/900's preferred return
deficiency would be increased by the amounts not received, but the Venture
Partners disputed this characterization.

<PAGE>

In July 1998, JMB/900 entered into an agreement with the Venture
Partners and a judgment creditor of JRA and PPI (such judgment creditor,
JRA and PPI, are hereinafter collectively referred to as the "Progress
Parties") to resolve outstanding claims. The agreement was subject to
occurrence of various terms and conditions, which failed to occur. In a
further effort to resolve outstanding claims and to place JMB/900 in a
position to control and market the 900 Third Avenue property, JMB/900
entered into a settlement agreement with the Progress Parties effective as
of March 17, 1999 ("Settlement Agreement"). The Settlement Agreement
generally provides for the settlement and release of all claims and causes
of action by and against JMB/900 and the Progress Parties related to or
arising from the joint venture relationship or the property including,
without limitation, any claims by the Venture Partners to Guaranteed
Payments and any claims by Progress Partners for capital contributions from
JMB/900. Under the Settlement Agreement and related transactions, JMB/900
and an affiliate acquired all of the right, title and interest of the
Progress Parties in the property, Progress Partners and PC-900 and resolved
all outstanding litigation in exchange for a total payment of $16.0
million, $13.5 million of which was paid at closing of the Settlement
Agreement with the remaining $2.5 million to be paid upon the earlier of
(i) closing of a sale of the property by Progress Partners or (ii)
January 3, 2000. In a related agreement and for the payment of $300,000
and the release of various claims, the litigation and claims by and between
the FDIC and JMB/900 were resolved and dismissed. As part of the
settlement, the limited partnership interests in PC-900 were assigned to
14-15 Office Associates, L.P. ("Office Associates"), in which JMB/900 owns
a 99% limited partnership interest. P-C 900's interest in Progress
Partners was then transferred to JMB/900 and Office Associates, which are
now the sole remaining partners in Progress Partners. Amendments to the
joint venture agreement of Progress Partners were made to effectuate the
terms of the settlement and the substitution of partners.

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

Prior to the settlement, the equity method had been applied in the
accompanying consolidated financial statements with respect to the
Partnership's interest in JMB/900. Accordingly, the financial statements
did not include the accounts of JMB/900 or Progress Partners. Effective
with the settlement, the Partnership and its affiliated venture partner
(through JMB/900 and Office Associates) own 66.67% and 33.33% of Progress
Partners, respectively. Subsequent to the Partnership's acquisition of a
majority interest in Progress Partners, the accounts of JMB/900 and
Progress Partners are included in the accompanying consolidated financial
statements. The effect of all significant transactions between the
Partnership and the consolidated ventures has been eliminated. The
payments to acquire the venture partners' interest, the excess of the
Partnership's investment balance over the corresponding capital account in
the venture and the venture partners' deficit for financial reporting
purposes aggregated approximately $34,434,000. This difference was
accounted for as additional basis in the investment property for financial
reporting purposes.

CALIFORNIA PLAZA

Occupancy of the building at the end of the first quarter of 1999 was
97%. 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 mortgage note, with a balance of approximately
$63,000,000 matures in January 2000. In 1998, the venture reached a
settlement agreement with a former tenant and accepted a promissory note in
the principal amount of $275,000 with payments of principal and interest
amortized over five years. As of March 31, 1999, the outstanding balance
of the note receivable was $235,573, which is included in the current
portion of notes receivable and the long-term portion of note receivable.

<PAGE>

Effective March 1, 1993, the joint venture ceased making the scheduled
debt service payments on the mortgage loan secured by the property which
was scheduled to mature on January 1, 1997. Subsequently, the Partnership
made partial debt service payments based on net cash flow of the property
through December 1993 when an agreement was reached with the lender to
modify the loan by reducing the pay rate. The loan modification reduced
the monthly payments to $384,505, effective with the March 1, 1993 payment.

The maturity date was extended, as a result of this modification, to
January 1, 2000 when the unpaid balance of principal and interest is due
(including the difference between the accrual rate of 10.375% and pay rate
of 8% per annum). Additionally, the joint venture entered into a cash
management agreement which requires monthly net cash flow to be escrowed
(as defined). The excess of the monthly cash flow paid from March 1993 to
March 1999 above the 8% interest pay rate has been put into escrow for the
payment of insurance premiums, real estate taxes, and to fund a reserve
account to be used to cover future costs, including tenant improvements,
lease commissions, and capital improvements, approved by the lender. A
portion of such funds are reserved for the payment of deferred interest and
principal on the mortgage loan. The escrow balance of approximately
$2,841,000 at March 31, 1999 is reflected in escrow deposits and restricted
securities in the accompanying consolidated financial statements.

On April 1, 1999, the joint venture entered into a non-binding letter
of intent with an unaffiliated third party to purchase the property. The
sale is subject to numerous contingencies, including final documentation
and due diligence review by the prospective purchaser. The joint venture
partner, under the joint venture agreement had a right of first refusal to
purchase the property. The joint venture partner has elected not to
exercise its right of first refusal to purchase the property. There can be
no assurance that a sale to the unaffiliated third party will be completed.

PIPER JAFFRAY TOWER

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

During the third quarter of 1997, Popham informed Piper that effective
in November 1997, it would cease operations as Popham and consolidate with
another law firm, Hinshaw & Culberson ("Hinshaw"). In December 1997, Piper
signed a non-binding letter of intent with Hinshaw to lease 31,920 square
feet of the Popham space for a term of five years, commencing January 1,
1998, at a market rental rate which exceeded Popham's modified rate which
became effective in August 1997. Popham had paid its modified rent through
the end of 1997. Commencing in January 1998, Hinshaw began paying rent in
accordance with the letter of intent. In addition, once a lease was
finalized with Hinshaw in accordance with the letter of intent, Piper had
agreed to terminate Popham's lease (for approximately 47,000 square feet)
effective December 31, 1997 with no further consideration. In May 1998,
Piper executed the lease with Hinshaw.

The property is subject to a mortgage loan in the original principal
amount of $100,000,000, of which approximately $95,741,000 is outstanding
as of March 31, 1999. The lender is essentially entitled to all operating
cash flow. During 1998, no excess cash flow was generated.

In addition, the mortgage loan provides that upon sale or refinancing,
the lender is entitled to prepayment fees as well as a significant level of
proceeds in excess of the then unpaid principal balance prior to
JMB/Piper's receipt of proceeds. While the loan modification provides
JMB/Piper with an opportunity to retain an ownership position in the
property, under the current terms of the modified debt, there must be
significant additional improvement in current market and property operating
conditions resulting in a substantial increase in the value of the property
before JMB/Piper can share in sale or refinancing proceeds. Currently,
Piper generates enough operating cash flow to meet the required debt
service payments. However, Piper may not be able to pay the required debt

<PAGE>

service over the next several years. JMB/Piper will not commit additional
capital to Piper unless, among other things, it believes that upon sale of
the property it will receive a return of such funds and a reasonable rate
of return thereon. If a funding requirement arises and none of the Piper
partners contribute the required capital, the lender would likely take
title to the property. Such disposition of the property would result in
JMB/Piper, and therefore the Partnership, recognizing a significant amount
of gain for financial reporting and Federal income tax purposes with no
corresponding distributable proceeds.

Piper had discussed an early renewal with PJI which occupies 335,684
square feet or approximately 46% of the building's rentable square feet,
with a lease expiration date at March 31, 2000. Piper and PJI were unable
to come to terms and PJI announced that it would be moving to a new
building (to be built in Minneapolis) upon expiration of its existing lease
in 2000.

As a result of a flood in 1997, the property incurred significant
repair costs in 1998. Piper completed such repairs and the balance
(approximately $1,100,000) is expected to be reimbursed by the insurance
carrier in 1999. JMB/Piper made certain advances to Piper for such costs,
and expects to have the advances repaid upon reimbursement from the
insurance carrier.

JMB/Piper, on behalf of Piper had explored refinancing alternatives
with the lender. Although JMB/Piper had intended to pursue further
discussions with the lender concerning possible refinancing and/or loan
modification alternatives, it currently appears unlikely that an agreement
with respect to such a transaction will be made.

260 FRANKLIN STREET BUILDING

On January 2, 1998, 260 Franklin disposed of, through a trust, the
land, building and related improvements of the 260 Franklin Street
Building. 260 Franklin transferred title to the land, building and
improvements, and other assets and liabilities related to the property in
consideration of a discharge of the mortgage loan and receipt of $200 in
cash. 260 Franklin recognized in 1998 gains in the aggregate of
approximately $23,200,000 for financial reporting purposes, in part as a
result of previous impairment losses recognized by the joint venture in
1996 aggregating $17,400,000, and an extraordinary gain on forgiveness of
indebtedness of approximately $17,500,000 for financial reporting purposes,
all of which is included in the consolidated financial statements of the
Partnership. In addition, 260 Franklin recognized a gain of approximately
$24,400,000 for Federal income tax reporting purposes, of which the
Partnership's share was approximately $17,000,000, with no distributable
proceeds in 1998. 260 Franklin and the Partnership have no future
liability for any representations, warranties or covenants to the purchaser
as a result of the disposal of the property.

WELLS FARGO CENTER

The mortgage note secured by the property (with a balance of
approximately $167,593,000 as of March 31, 1999), as extended, matures
September, 2003. All excess cash flow is being escrowed for future tenant
improvements and principal payments. In addition, upon sale or refinancing
of the property subsequent to September 1, 1999, the mortgage loan requires
payment of participation interest (as defined) of any excess proceeds.

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 $16,568,000 at March 31,
1999 is due September 2003. The note accrues interest at 17% per annum.
The loan requires payments of cash flow distributed by the venture from
either property operations or sales proceeds as well as a portion of the
property management fee paid to the venture partner. The loan is secured
solely by the Partnership's interest in the joint venture.

<PAGE>

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

Due to the restructuring of the Partnership's interest in Wells Fargo
Center - South Tower in 1996, the Partnership has ceased loss recognition
relative to its real estate investment and has reversed those previously
recognized losses that the Partnership is no longer obligated to fund. The
Partnership has no future funding obligation for its investment in Wells
Fargo Center - South Tower. Accordingly, the Partnership has discontinued
the application of the equity method of accounting and additional losses
from the investment in Wells Fargo Center - South Tower will not be
recognized.

NEWPARK MALL

Pursuant to a liquidation agreement dated November 13, 1998, the
Partnership, its affiliated venture partner and its unaffiliated venture
partner dissolved NewPark Associates and distributed all of its assets to
the joint venture partners. On November 18, 1998, the Partnership and its
affiliated venture partner sold their interest in the net assets of the
NewPark Mall to the unaffiliated joint venture partner for $16,000,000 (of
which the Partnership's share was $14,400,000) less brokerage commissions
and closing costs of approximately $455,000. As a result of the sale, the
Partnership recognized a gain for financial reporting purposes of
approximately $7,656,000 in 1998, in part as a result of a previous
impairment loss recognized by the Partnership of $3,780,000. The
Partnership recognized a gain on sale of approximately $4,781,000 for
Federal income tax purposes in 1998.

UNCONSOLIDATED VENTURES - SUMMARY INFORMATION

Summary income statement information for JMB/Piper and JMB/Piper II
for the three months ended March 31, 1999 and 1998 are as follows:

1999 1998
----------- ----------
Total income from properties
(unconsolidated). . . . . . . . . . . . $ 4,079,855 4,111,899
=========== ==========
Operating loss of ventures. . . . . . . . $ 520,755 752,186
=========== ==========
Partnership's share of
operating profit (loss) . . . . . . . . $ 260,378 376,093
=========== ==========

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 1998
Annual Report) necessary for a fair presentation have been made to the
accompanying figures as of March 31, 1999 and December 31, 1998 and for the
three months ended March 31, 1999 and 1998.

<PAGE>

PART I. FINANCIAL INFORMATION

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

Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investments.

The board of directors of JMB Realty Corporation ("JMB"), the
Corporate General Partner of the Partnership, has established a special
committee (the "Special Committee") consisting of certain directors of JMB
to deal with all matters relating to tender offers for Interests in the
Partnership, including any and all responses to such tender offers.

In March 1998, an unaffiliated third party made an unsolicited offer
to purchase up to 20,000 Interests at $30 per Interest. Such offer expired
at the end of April 1998. The Special Committee recommended against
acceptance of this offer on the basis that, among other things, the offer
price was inadequate. In September 1998, an unaffiliated third party made
an unsolicited offer to purchase up to 20,000 Interests at $15 per
Interest. Such offer expired in October 1998. As of the date of this
report, the Partnership is aware that 2.05% of the Interests have been
purchased by unaffiliated third parties who have made unsolicited offers
for Interests, either pursuant to such offers or through negotiated
purchases. The Partnership was recently notified that an unaffiliated
third party intends to make an offer for up to approximately 4.7% of the
outstanding Interest at a price of $11.50 per Interest. If such offer is
made, the Special Committee will advise Holders of Interests of the Special
Committee's recommendation, if any, in regard to such offer. There is no
assurance that such offer will be made or, if made, will be on the same
terms described herein. It is possible that other offers for Interests may
be made by unaffiliated third parties in the future, although there is no
assurance that any other third party will commence an offer for Interests,
the terms of any such offer or whether any such offer, if made, will be
consummated, amended or withdrawn.

The Partnership currently expects that the 900 Third Avenue and
California Plaza investment properties will be sold or disposed of during
1999, barring any unforeseen economic developments. The Piper Jaffray
Tower investment property may also be sold or disposed of during 1999. The
Partnership currently expects to retain its interests in Wells Fargo Center
- - South Tower beyond 1999.

At March 31, 1999, the Partnership and its consolidated ventures had
cash and cash equivalents of approximately $16,000,000. 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 future
distributions to partners and working capital requirements. In addition,
the General Partners and their affiliates have previously deferred
management and leasing fees payable to them in an aggregate amount of
approximately $2,653,000 (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 do not bear interest and are expected
to be paid in the future.

As discussed below, in March 1999, JMB/900 settled various claims and
acquired the interests of the FDIC and the unaffiliated venture partners in
Progress Partners, which owns the 900 Third Avenue office building, for
$16,300,000, of which $13,800,000 was paid upon closing of the various
transactions. In connection with these transactions, the Partnership
contributed its proportionate share (approximately $9,200,000) of the
$13,800,000 contributed to JMB/900.

<PAGE>

The Partnership and its consolidated ventures have currently budgeted
in 1999 approximately $1,025,000 for tenant improvements and other capital
expenditures. The Partnership's share of such items and its share of such
similar items for its unconsolidated ventures in 1999 is currently budgeted
to be approximately $1,404,000. Actual amounts expended in 1999 may vary
depending on a number of factors including actual leasing activity, results
of property operations, liquidity considerations and other market
conditions over the course of the year and whether and when properties are
sold.

In February 1999, the Partnership made a distribution totalling
$6,653,710 ($15 per Interest) of sale proceeds (primarily related to the
sale of NewPark Mall). All of the Partnership's investment properties are
restricted as to their use of excess cash flow by escrow agreements
negotiated pursuant to loan modifications. Due to the property specific
concerns discussed below, the Partnership currently considers only the 900
Third Avenue and California Plaza investment properties to be potential
significant sources of future cash generated from sales. Although the
Partnership expects to distribute proceeds from the sale of the 900 Third
Avenue and California Plaza investment properties, aggregate distributions
of sale and refinancing proceeds received by Holders of Interest over the
entire term of the Partnership will be substantially less than one-fourth
of their original investment. However, in connection with sales or other
dispositions (including transfers to lenders) of properties (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. In particular, the Piper Jaffray Tower and Wells Fargo
Center (South Tower) investment properties continue to suffer from the
effects of the high levels of debt secured by each property and provide no
cash flow to the Partnership. While loan and joint venture modifications
have been obtained that enable the Partnership to retain an ownership
interest in these properties, it is currently unlikely under existing
arrangements that the Partnership will receive significant proceeds from
operations or sales of these properties. However, upon disposition, the
Partnership, and therefore, the Holders of Interests will recognize a
significant amount of taxable income with no distributable proceeds. For
certain Holders of Interests, such taxable gain may be offset by their
suspended passive activity losses (if any). Each Holder's tax consequences
will depend on such Holder's own tax situation.

<PAGE>

the FDIC and JMB/900 were resolved and dismissed. As part of the
settlement, the limited partnership interests in PC-900 were assigned to
14-15 Office Associates, L.P. ("Office Associates"), in which JMB/900 owns
a 99% limited partnership interest. P-C 900's interest in Progress
Partners was then transferred to JMB/900 and Office Associates, which are
now the sole remaining partners in Progress Partners. Amendments to the
joint venture agreement of Progress Partners were made to effectuate the
terms of the settlement and the substitution of partners.

The Partnership modified the loan secured by the California Plaza
Office Building on December 22, 1993. As more fully discussed in the
Notes, the loan modification reduced the pay rate of monthly interest only
payments to 8% per annum, effective February 1993, extended the loan
maturity date to January 1, 2000, and requires the net cash flow of the
property to be escrowed (as defined) with a portion to be used to fund a
reserve account. The venture also funded $500,000 into the reserve account
as required by the modification agreement. This reserve account (including
interest earned thereon) is to be used to fund future costs, including
tenant improvements, leasing commissions and capital improvements, approved
by the lender (none used as of March 31, 1999). 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. The mortgage
loan secured by the property matures on January 1, 2000. The Partnership
currently expects that the property will be sold during 1999. In the event
such sale does not occur during 1999, the joint venture that owns the
property expects to seek an extension or refinancing of the loan.

RESULTS OF OPERATIONS

Significant fluctuations in the accompanying consolidated financial
statements are due to the acquisition by JMB/900 of the interests of the
FDIC and the unaffiliated venture partners in Progress Partners in March
1999. As a result of these transactions, the Partnership through JMB/900
owns a majority interest in Progress Partners, thereby, including all
accounts of the venture in the consolidated financial statements at
March 31, 1999.

The decrease in cash and cash equivalents at March 31, 1999 as
compared to December 31, 1998 is primarily due to the distribution in
February 1999 of previously undistributed sale proceeds, and the
acquisition by JMB/900 of the interests of the FDIC and the unaffiliated
venture partners in Progress Partners, partially offset by the inclusion of
cash acquired upon consolidation of Progress Partners as a result of those
acquisitions.

The increase in current portion of long-term debt at March 31, 1999 as
compared to December 31, 1998 is due to the note at the California Plaza
Office Building now being classified as current due to its maturity in
January 2000.

The decrease in deferred income at March 31, 1999 as compared to
December 31, 1998 is due to the amortization of a lease amendment fee which
is being recognized as income over the remaining term of the tenant's
original lease at the California Plaza Office Building.

<PAGE>

The increase in the Partnership's share of operations of
unconsolidated ventures for the three months ended March 31, 1999 as
compared to the same period in 1998 is primarily due to the classification
of the 900 Third Avenue office building as held for sale as of July 1998,
and therefore, not subject to continued depreciation, offset by the sale of
the Partnership's interest in the NewPark Mall in November 1998, and the
cessation of the equity method with respect to the Partnership's interest
(through JMB/900) in Progress Partners after March 17, 1999 when the
Progress Partners' accounts were consolidated with those of the
Partnership.

The increase in venture partner's share of venture operations at
March 31, 1999 as compared to the same period in 1998 is due to the
unaffiliated venture partners' interests in Progress Partners now being
included in the consolidated financial statements.

The gain on sale of interest in unconsolidated ventures for the three
months ended March 31, 1998 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.

The gain on disposition of investment property for the three months
ended March 31, 1998 relates to the recognition of gain from the
disposition of the 260 Franklin Street building in January 1998.

The extraordinary item - gain on forgiveness of indebtedness of
$17,451,802 for the three months ended March 31, 1998 represents interest
waived by the lender pursuant to a loan modification agreement for the debt
secured by the 260 Franklin Street building in January 1998.

YEAR 2000

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

The Partnership uses the telephone, accounting, transfer agent and
other administrative systems, which include both hardware and software,
provided by affiliates of the Corporate General Partner and certain third
party vendors. Except as noted in the following sentence, the Partnership
or its affiliates have received representations to the effect that the
telephone, accounting, transfer agent and other administrative systems are
year 2000 compliant in all material respects. Both the hardware and
software for individual personal computers used in the Partnership's
administrative systems are expected to be tested for their year 2000
compliance during the summer of 1999.

The property manager for 900 Third Avenue and Piper Jaffray Tower has
conducted assessments of various aspects of these properties' respective
operating systems in regard to their year 2000 compliance. In general,
such assessments were performed through written inquiries to third party
vendors and service personnel for these properties and, to some extent,
testing of some of the components at these properties. Based upon the
information received from the property manager, the Partnership believes
that the major operating systems for these properties, including HVAC
controls, elevators and alarm and safety systems, are or will be year 2000

<PAGE>

compliant in all material respects. Certain of the operating systems at
these properties require minor upgrading, which has been undertaken and
completed, or will be undertaken and completed in the near future, without
the incurrence of material expense. The Partnership does not have
information concerning the extent to which the Wells Fargo Center-South
Tower is year 2000 compliant, but will seek to obtain such information in
the near future. However, the Partnership does not believe that it is
obligated for year 2000 compliance for the Wells Fargo Center-South Tower.
In addition, the Partnership has only limited information with respect to
the year 2000 compliance of California Plaza and intends to seek additional
information in this regard.

Given its limited operations, the Partnership believes that its
accounting, transfer agent and most of its other administrative systems
functions could, if necessary, be performed manually (i.e., without
significant information technology) for an extended period of time without
a material increase in costs to the Partnership. However, due to its
limited information concerning the year 2000 compliance of California
Plaza, the Partnership has not yet determined to what extent it may incur
expenses with respect to year 2000 compliance.

The Partnership is relying on the information obtained and
representations made by the property manager, as well as the
representations made by third party vendors and service personnel, for 900
Third Avenue and Piper Jaffray Tower regarding the ability of those
properties to be year 2000 compliant in all material respects. The
Partnership is also relying on the assessments made by the property manager
of the third party vendors and service personnel to be contacted in regard
to those properties' year 2000 compliance. In the event that the
Partnership's investment properties are not year 2000 compliant in all
material respects, the relevant investment property or properties could
experience various operational difficulties, such as possible systems
failures. Such operational difficulties could result in remediation and,
under certain circumstances, possibly other costs and expenses. If such
were to occur, there is no assurance that such costs and expenses would
not, under certain circumstances, have a material adverse effect on the
Partnership or its investment in 900 Third Avenue, Piper Jaffray Tower
and/or California Plaza in the event such properties are not sold during
1999.

<PAGE>

<TABLE>
PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

OCCUPANCY

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

<CAPTION>
1998 1999
-------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. 900 Third Avenue Building
New York, New York . . . . . . 97% 100% 99% 97% 100%
2. Piper Jaffray Tower
Minneapolis, Minnesota . . . . 93% 89% 89% 89% 89%
3. Wells Fargo Center
- IBM Tower
Los Angeles, California. . . . 90% 90% 90% 85% 86%
4. California Plaza
Walnut Creek, California . . . 100% 96% 96% 97% 97%

<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.

10-A. Assignment of Partnership Interest between Federal
Deposit Insurance Corporation and 14-15 Office Associates, L.P., dated
March 10, 1999 is hereby filed herewith.

10-B. Assignment of Partnership Interest between P-C 900
Third Associates and 14-15 Office Associates, L.P. and 900 3rd Avenue
Associates, dated March 22, 1999 is hereby filed herewith.

10-C. Assignment of Partnership Interest between 900 Realty,
LLC and 900 3rd Avenue Associates dated March 22, 1999 is hereby filed
herewith.

10-D. Amendment No. 2 to Amended and Restated Agreement of
General Partnership for Progress Partners dated March 17, 1999 is hereby
filed herewith.

10-E. Amendment No. 3 to Amended and Restated Agreement of
General Partnership for Progress Partners dated March 22, 1999 is hereby
filed herewith.

10-F. Settlement Agreement and Release between Progress
Properties, Inc., J.R.A. Realty Corporation, P-C 900 Third Associates, 900
Realty LLC and 900 3rd Avenue Associates dated March 17, 1999 is hereby
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: May 12, 1999

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

GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: May 12, 1999

EXHIBIT 10-A
- ------------
(Carlyle-XV)

EXHIBIT B
---------

ASSIGNMENT OF PARTNERSHIP INTEREST
----------------------------------

THIS ASSIGNMENT OF PARTNERSHIP INTEREST (the "Assignment"), is made
as of this 10th day of March, 1999 by and between the Federal Deposit
Insurance Corporation in its capacity as Receiver of Central National Bank
(the "Assignor") and 14-15 Office Associates, L.P., a limited partnership
(the "Assignee").

WHEREAS, the Assignor is the holder of a 99% limited partnership
interest (the "Partnership Interest") in P-C 900 Third Associates, a New
York limited partnership (the "Partnership");

WHEREAS, the Partnership is governed by the provisions of an
Agreement of Limited Partnership dated February 26, 1986 (the "Partnership
Agreement");

WHEREAS, Assignor and 900 3rd Avenue Associates ("Associates")
exchanged certain correspondence, dated April 22, 1996, as modified and
amended thereafter, relating to, among other things, the transfer of
Assignor's rights in the Partnership and certain releases to be made by the
parties thereto (the "Letter"); and

WHEREAS, the parties hereto agree that the Letter is of no further
and effect and is merged into this Assignment and the Mutual Release being
executed contemporaneously herewith, by and between Assignor and Assignee.

NOW, THEREFORE, FOR AND IN CONSIDERATION of the payment to the
Assignor of Three Hundred Thousand Dollars ($300,000) and other good and
valuable consideration, the receipt and adequacy of which are acknowledged
by each party, the parties agree as follows:

Section 1. ASSIGNMENT; RELEASE.

The Assignor hereby assigns to the Assignee and the Assignee hereby
accepts from the Assignor, (a) all of the Assignor's right, title and
interest in the Partnership, including without limitation, the Partnership
Interest, and all of Assignor's interest in the Partnership's capital,
profits and distributions and (b) any and all right, title, and interest
which the Assignor has under the provisions of New York limited partnership
law or any other applicable law, the Partnership Agreement, or in and to
any of the Partnership's assets, with respect to the Partnership Interest
or other interests so assigned ('(a)' and '(b)' collectively, the "Assigned
Interests"); and Assignor and Assignee are exchanging releases.

Section 2. REPRESENTATIONS.

2.1 BY ASSIGNOR. To induce the Assignee to accept such delivery of
this Assignment, the Assignor hereby represents and warrants to the
Assignee that, on the date hereof and at the time of such delivery:

(a) Assignor is the legal and equitable owner of the Assigned
Interests, free and clear of all liens, charges, claims, defenses,
encumbrances and security interests of every kind and natures;

(b) the Partnership Agreement heretofore delivered to the
Assignee is a true, correct and complete copy of the Partnership Agreement
in effect on the date hereof;

<PAGE>

(c) the execution, delivery and performance of this Agreement
has been duly authorized by Assignor and the person signing on behalf of
Assignor has been authorized to do so; [proof of authority to be delivered
at time of execution] and

(d) No consent or approval of any third party is necessary
for the validity of the background made hereunder; and

(e) Assignor has not heretofore assigned or transferred or
purported to assign or transfer to any person, firm or corporation or other
entity whomsoever the Assigned Interests or any interest therein.

2.2 BY ASSIGNEE. The Assignee hereby represents and warrants to
the Assignor (a) that the Partnership Interest is being acquired for
investment for the Assignee's own account and not with a view to offering
it for sale or otherwise to distributing it, after or in connection with
such assignment to it, and (b) that the Assignee has read and agrees to be
bound by the Partnership Agreement.

2.3 BY ASSIGNOR AND ASSIGNEE. Neither Assignor nor Assignee is
relying on any representations made by the other or by anyone purporting to
act on behalf of the other as to any matters which might influence or
affect the decision to execute this Assignment, except those
representations and warranties which are specifically set forth herein.

Section 3. INDEMNIFICATION.

3.1 BY ASSIGNOR. The Assignor shall defend, indemnify and hold
harmless the Assignee against and from any and all liability, claim of
liability or expense arising out of any failure of the Assignor's
representation contained in the provisions of Section 2 to be true,
accurate and complete in all material respects.

3.2 BY ASSIGNEE. The Assignee hereby agrees to indemnify the
Assignor against any expense incurred by it in connection with the
Assignee's admission and substitution as a Partner (including, by way of
example rather than of limitation, any such expense incurred in preparing
and filing for record any amendment of the Partnership Agreement or the
Partnership's Certificate of Limited Partnership), and any other
instrument, if necessitated by such admission and substitution. The
Assignee shall defend, indemnify and hold harmless the Assignor against and
from any and all liability, claim of liability or expense arising out of
any failure of the Assignee's representation contained in the provisions of
Section 2 to be true, accurate and complete in all material respects.

Section 4. FURTHER ASSURANCES. The parties hereto agree that they
will cooperate with each other and will execute and deliver, or cause to be
delivered, all such other instruments, and will take all such other
actions, as either party hereto may reasonably request from time to time in
order to effectuate the provisions hereof.

Section 5. MISCELLANEOUS.

5.1 BINDING EFFECT. This Assignment shall be binding upon and
inure to the benefit of Assignor and Assignee and their respective
successors and assigns.

<PAGE>

5.2 EXECUTION IN COUNTERPARTS. This Assignment may be executed in
any number of counterparts and any party hereto or thereto may execute any
counterpart, each of which when executed and delivered will be deemed to be
an original and all of which counterparts of this Assignment, taken
together will be deemed to be but one and the same instrument.

5.3 AMENDMENT. Neither this Assignment nor any provision hereof
may be waived, modified, amended, discharged or terminated except by an
instrument signed by the party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only
to the extent set forth in such instrument.

5.4 GOVERNING LAW. This Assignment shall be governed by, and
construed and enforced in accordance with, the internal laws of the State
of New York.

5.5 INTEGRATION. This Assignment and the Mutual Release being
executed by the parties contemporaneously herewith comprise the complete
and integrated agreement of the parties on the subject matter hereof and
supersede all prior agreements, written or oral, including without
limitation, the Letter Agreement, on the subject matter hereof.

5.6 NO AGENCY, PARTNERSHIP OR JOINT VENTURE. Assignee is not the
agent or representative of Assignor, and Assignor is not the agent or
representative of Assignee. Assignor and Assignee intend and agree that
the relationship created by this Assignment is and shall be solely that of
assignor and assignee.

5.7 JURISDICTION; VENUE. Assignor and Assignee irrevocably and
unconditionally (a) agree that any suit, action or other legal proceeding
arising out of this Assignment may be brought in the courts of record of
the State of New York or the courts of the United States located in the
State of New York; (b) consent to the jurisdiction of each such court in
any such suit, action or proceeding; and (c) waive any objection which it
may have to the laying of venue of any such suit, action or proceeding in
any of such courts. In any action hereunder, Assignor and Assignee each
waive the right to demand a trial by jury.

5.8 SURVIVAL. The representations and warranties of Assignor
contained herein shall survive.

<PAGE>

IN WITNESS WHEREOF, each party hereto has executed and sealed this
Assignment the day and year first above written.

FEDERAL DEPOSIT INSURANCE CORPORATION,
in its capacity as Receiver of Central
National Bank

By:___________________________________(SEAL)

Its:___________________________________

14-15 OFFICE ASSOCIATES, L.P.,
an Illinois limited partnership

By: 900 3rd Avenue Corporation,
its general partner

By:__________________________________
Name:_______________________________
Title:________________________________

EXHIBIT 10-B
- ------------
(Carlyle-XV)

ASSIGNMENT OF PARTNERSHIP INTEREST
-----------------------------------

THIS ASSIGNMENT OF PARTNERSHIP INTEREST (the "Assignment"), is made
as of this 22nd day of March, 1999 by and between P-C 900 Third Associates,
a New York limited partnership (the "Assignor") and 14-15 Office
Associates, L.P., a limited partnership and 900 3rd Avenue Associates, an
Illinois general partnership (collectively, the "Assignee").

WHEREAS, the Assignor is the holder of a partnership interest (the
"Partnership Interest") in Progress Partners, a New York general
partnership (the "Partnership");

WHEREAS, the Partnership is governed by the provisions of an Amended
and Restated Agreement of General Partnership for Progress Partners dated
August 24, 1984, as amended (the "Partnership Agreement");

WHEREAS, the Assignee constitute all of the partners of the Assignor
and the Assignor desires to dissolve and distribute its assets to the
Assignee;

NOW, THEREFORE, FOR AND IN CONSIDERATION of the payment to the
Assignor of Ten Dollars ($10.00) and other good and valuable consideration,
the receipt and adequacy of which are acknowledged by each party, the
parties agree as follows:

Section 1. ASSIGNMENT; RELEASE.

The Assignor hereby assigns to the Assignee (in such shares as herein
set forth) and the Assignee hereby accepts from the Assignor, (a) all of
the Assignor's right, title and interest in the Partnership, including
without limitation, the Partnership Interest, and all of Assignor's
interest in the Partnership's capital, profits and distributions and (b)
any and all right, title, and interest which the Assignor has under the
provisions of New York limited partnership law or any other applicable law,
the Partnership Agreement, or in and to any of the Partnership's assets,
with respect to the Partnership Interest or other interests so assigned
('(a)' and '(b)' collectively, the "Assigned Interests"); and Assignor and
Assignee are exchanging releases. 1% of the Assigned Interests are hereby
assigned and distributed to 900 3rd Avenue Associates and 99% of the
Assigned Interests are hereby assigned and distributed to 14-15 Office
Associates, L.P.

Section 2. FURTHER ASSURANCES. The parties hereto agree that they
will cooperate with each other and will execute and deliver, or cause to be
delivered, all such other instruments, and will take all such other
actions, as either party hereto may reasonably request from time to time in
order to effectuate the provisions hereof.

Section 3. MISCELLANEOUS.

3.1 BINDING EFFECT. This Assignment shall be binding upon and
inure to the benefit of Assignor and Assignee and their respective
successors and assigns.

<PAGE>

3.2 EXECUTION IN COUNTERPARTS. This Assignment may be executed in
any number of counterparts and any party hereto or thereto may execute any
counterpart, each of which when executed and delivered will be deemed to be
an original and all of which counterparts of this Assignment, taken
together will be deemed to be but one and the same instrument.

3.3 AMENDMENT. Neither this Assignment nor any provision hereof
may be waived, modified, amended, discharged or terminated except by an
instrument signed by the party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only
to the extent set forth in such instrument.

3.4 GOVERNING LAW. This Assignment shall be governed by, and
construed and enforced in accordance with, the internal laws of the State
of New York.

<PAGE>

IN WITNESS WHEREOF, each party hereto has executed and sealed this
Assignment the day and year first above written.

P-C 900 THIRD ASSOCIATES

By: 900 3rd Avenue Associates,
General Partner

By: Carlyle Real Estate Limited
Partnership-XIV, a General Partner

By: JMB Realty Corporation, a
General Partner

By:
-------------------------
Its:
-------------------------

14-15 OFFICE ASSOCIATES, L.P.,
an Illinois limited partnership

By: 900 3rd Avenue Corporation,
its general partner

By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------

900 3RD AVENUE ASSOCIATES

By: Carlyle Real Estate Limited
Partnership-XIV, a General Partner

By: JMB Realty Corporation, a
General Partner

By:
-------------------------------
Its:
-------------------------------

EXHIBIT 10-C
- ------------
(Carlyle-XV)

EXHIBIT E
---------

ASSIGNMENT OF PARTNERSHIP INTEREST
----------------------------------

THIS ASSIGNMENT OF PARTNERSHIP INTEREST (the "Assignment"), is made
as of this 22nd day of March, 1999 by and between the 900 Realty, LLC, a
Delaware limited liability company (the "Assignor") and 900 3rd Avenue
Associates, a Illinois general partnership (the "Assignee").

WHEREAS, the Assignor is the holder of all of the partnership
interests in Progress Partners, a New York general partnership (the
"Partnership"), formerly held by Progress Properties, Inc. and J.R.A.
Realty Corporation, together with any other right, title, interest or other
claims of them relating to the Partnership (the "900 Realty Interests");

WHEREAS, the Assignor is the holder of a 1% general partnership
interest (the "P-C Interest") in P-C 900 Third Associates, a New York
limited partnership (the "P-C 900");

WHEREAS, the P-C 900 is governed by the provisions of an Agreement of
Limited Partnership dated February 26, 1986, as amended (the "P-C
Agreement");

WHEREAS, the Assignor has agreed to assign, among other things, the
900 Realty Interests and the P-C Interest on the terms and conditions set
forth in that certain Settlement and Release dated as of March 17, 1999 by
and between, among others, Assignor and Assignee (the "Settlement
Agreement");

NOW, THEREFORE, FOR AND IN CONSIDERATION of the foregoing and the
payment to the Assignor of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and adequacy of which are acknowledged by each
party, the parties agree as follows:

Section 1. ASSIGNMENT.

The Assignor hereby assigns to the Assignee and the Assignee hereby
accepts from the Assignor (a) all of the Assignor's right, title and
interest in and all claims against, the Partnership and P-C 900, including
without limitation, the 900 Realty Interests and the P-C Interest, and all
of Assignor's interest in the Partnership's and P-C 900's capital, profits
and distributions and (b) any and all right, title, and interest which the
Assignor has under the provisions of New York general or limited
partnership law or any other applicable law, the Partnership Agreement, the
P-C Agreement or in and to any of the Partnership's or P-C 900's assets,
with respect to the 900 Realty Interests, the P-C Interest or other
interests so assigned ('(a)' and '(b)' collectively, the "Assigned
Interests").

<PAGE>

Section 3. MISCELLANEOUS.

3.1 BINDING EFFECT. This Assignment shall be binding upon and
inure to the benefit of Assignor and Assignee and their respective
successors and assigns.

3.4 GOVERNING LAW. This Assignment shall be governed by, and
construed and enforced in accordance with, the internal laws of the State
of New York.

3.5 NO AGENCY, PARTNERSHIP OR JOINT VENTURE. Assignee is not the
agent or representative of Assignor, and Assignor is not the agent or
representative of Assignee. Assignor and Assignee intend and agree that
the relationship created by this Assignment is and shall be solely that of
assignor and assignee.

3.6 SURVIVAL. The covenants, agreements, representations and
warranties of Assignor contained in the Settlement Agreement are
incorporated herein by this reference and shall survive the assignment
provided for herein.

IN WITNESS WHEREOF, each party hereto has executed and sealed this
Assignment the day and year first above written.

900 REALTY, LLC

By:
------------------------------
Its:
------------------------------

900 3RD AVENUE ASSOCIATES

By: Carlyle Real Estate Limited
Partnership-XIV, a General Partner

By: JMB Realty Corporation, a
General Partner

By:
------------------------------
Its:
------------------------------

EXHIBIT 10-D
- ------------
(Carlyle-XV)

AMENDMENT NO. 2 TO
AMENDED AND RESTATED
AGREEMENT OF GENERAL PARTNERSHIP
FOR PROGRESS PARTNERS
--------------------------------

AMENDMENT NO. 2 ("Amendment"), dated as of this 17th day of March,
1999, to the Amended and Restated Agreement of General Partnership dated as
of August 20, 1984, as amended pursuant to Amendment No. 1, dated as of
February 26, 1986 ("Partnership Agreement") is made by and among PROGRESS
PROPERTIES, INC. ("PPI"), J.R.A. REALTY CORPORATION ("JRA"), P-C 900 THIRD
ASSOCIATES ("P-C 900," and collectively with PPI and JRA, the "Progress
Group"), 900 REALTY, LLC ("900 Realty" and collectively with PPI, JRA and
P-C 900, the "Progress Parties"), 900 3RD AVENUE ASSOCIATES ("Associates"),
and PROGRESS PARTNERS (the "Partnership").

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

WHEREAS, each of the entities constituting the Progress Group and
Associates are (or were) partners in the Partnership pursuant to, among
other things, that certain Amended and Restated Agreement of General
Partnership for Progress Partners dated as of August 20, 1984, as amended
pursuant to Amendment No. 1, dated as of February 26, 1986 ("Partnership
Agreement");

WHEREAS, the Federal Deposit Insurance Corporation has filed
various claims against, among others, Associates, the Progress Group and
Albert Schwartz, individually, arising from Schwartz's acquisition of
certain interests in the Progress Group, entitled FDIC V. PROGRESS
PROPERTIES, et al., Case No. 91 Civ. 3761 (S.D.N.Y.) and FDIC V. FIRST
MARYLAND, et al., Case No. 96 Civ. 3792 (S.D.N.Y.) both of which are
presently pending in the United States District Court for the Southern
District of New York, and FDIC V. FIRST MARYLAND, et al., presently pending
in Circuit Court of Maryland for Baltimore City, Case No.
96141932/CL212356;

WHEREAS, Associates filed a cross-complaint against, among others,
the Progress Group, arising from its prior management of the Property, in
the action entitled FDIC V. PROGRESS PROPERTIES, et al., Case No. 91 Civ.
3761 (S.D.N.Y.) presently pending in the United States District Court for
the Southern District of New York;

WHEREAS, in or about January, 1996, the Maryland Deposit Insurance
Fund Corporation obtained a judgment against PPI and JRA to foreclose its
lien on the partnership interests in the Partnership and P-C 900 held by
PPI and JRA (collectively, "PPI/JRA Partnership Interests");

WHEREAS, 900 Realty has represented that in or about January, 1998,
MDIF assigned to 900 Realty, for good and valuable consideration, all of
MDIF's right, title and interest in its judgment and the PPI/JRA
Partnership Interests;

WHEREAS, 900 Realty conducted a foreclosure sale of the PPI/JRA
Partnership Interests at which sale 900 Realty was the successful purchaser
and now maintains that is the holder of the PPI/JRA Partnership Interests,
as evidenced by a certificate of sale, dated as of September 14, 1998, a
copy of which has been delivered to Associates;

<PAGE>

WHEREAS, Associates maintains that it holds a lien on (and the
Progress Parties contest that Associates holds a lien on) the PPI/JRA
Partnership Interests as well as the partnership interest of P-C 900 in the
Partnership to secure that certain promissory note, dated as of August 20,
1984 in the original principal amount of $20 million, together with
interest accrued thereon ("Associates' Note") made by PPI and delivered to
Associates, which lien Associates claims (and the Progress Parties contest)
is superior to MDIF's lien;

WHEREAS, PPI, JRA and 900 Realty have asserted various claims against
the Partnership and Associates (and Associates and the Partnership have
contested such claims), including, without limitation, (i) the
mismanagement of the Property by JMB and/or Heitman (ii) claims arising
from Associates' negotiations and agreement with MDIF after MDIF obtained
its judgment, (iii) claims under the Partnership Agreement by the Progress
Group against the Partnership for certain Guaranteed Payments (as defined
therein) and other claims asserted by or on behalf of the Partnership
against Associates for certain capital contributions allegedly due from
Associates to the Partnership and (iv) claims arising from distributions
taken by Associates for the repayment of certain funds loaned to the
Partnership in connection with the refinancing of the Partnership's debt
and other distributions;

WHEREAS, Associates, the Progress Parties and the Partnership have
agreed to settle and compromise some of the various claims between them by
means of this Amendment; and

NOW, THEREFORE, in consideration of the premises aforesaid, the
mutual covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:

1. 900 Realty shall be admitted and substituted as general partner
in lieu of PPI and JRA. 900 Realty agrees to be bound by all of the terms
and provisions of the Partnership Agreement, as amended by this Amendment,
as fully as if 900 Realty were a signatory thereto.

2. Paragraph D of Section 1.7 of the Partnership Agreement is hereby
amended to read in its entirety as follows:

"D. "PROGRESS GROUP" means, individually and
collectively, 900 Realty LLC, a Delaware limited liability company and P-C
900 Third Associates, a New York limited partnership, and their respective
successors and assigns."

3. The Progress Group Relative Shares shall be seventy-five percent
(75%) to 900 Realty and twenty-five percent (25%) to P-C 900.
Notwithstanding anything in Section 1.7N or any other provision of the
Partnership Agreement to the contrary, the Progress Group Relative Shares
cannot be modified without the written consent of Associates.

4. Notwithstanding any contrary term contained in the Partnership
Agreement, that certain Consent Agreement dated as of October 27, 1990 by
and among the PPI and JRA, Associates and First Maryland Savings and Loan
("MDIF Agreement"), or any other written or oral agreement or understanding
between any of the parties hereto, the provisions of this Agreement shall
govern and, with respect to the distribution of or payment of any monies to
any of the partners of the Partnership, this Agreement supersedes all
provisions in the Partnership Agreement or MDIF Agreement relating to such
payments or distributions. Without limitation of the foregoing, Associates
shall have no obligation whatsoever hereafter to make contributions
pursuant to Sections 2.1.B and 2.2 of the Partnership Agreement and the
Progress Group shall have no right whatsoever hereafter to any Guaranteed
Payments pursuant to Article III of the Partnership Agreement or otherwise.

<PAGE>

5. Section 3.2 of the Partnership is hereby amended to read in its
entirety as follows:

"Net Cash Receipts (if any) for such calendar year or portion
of such calendar year shall be distributed seventy percent (70%) to
Associates and thirty percent (30%) to the Progress Group."

6. Paragraph A of Section 3.3 of the Partnership is hereby amended
to read in its entirety as follows:

"A. FIRST LEVEL. There shall be distributed to Associates
such Net Sale Proceeds or Net Financing Proceedings until Associates shall
have received under this subsection A an aggregate of $36,000,000."

7. Paragraph D of Section 3.3 is hereby deleted in its entirety.

8. Paragraph E of Section 3.3 of the Partnership is renumbered as
Paragraph D and is hereby amended to substitute the words "subsections A
through C" in lieu of "subsections A through D".

9. Notwithstanding the provisions of Article IV of the Partnership
Agreement, taxable profits and taxable losses, profits and losses, and gain
or loss, shall be allocated among the partners by applying the rules of
Treas. Reg. Section 1.704-1(b).

10. For any taxable year in which a partner disposes of his entire
interest, in order to avoid an interim closing of the partnership books,
such partner's distributive share of items described in Section 702(a)
shall be estimated and allocated to such partner by estimating the pro rata
part of the items which would have been included if such partner remained a
partner until the end of the partnership year. The proration shall be
determined in a reasonable manner, as provided in Section 1.706-
1(C)(2)(ii), which will allocate income to a partner on a pro rata basis
only for the period in which such partner was a partner (which in the case
of 900 Realty shall be deemed to end on March 22, 1999). A transferee of
such partner's interest shall be allocated his pro rata share of the items
described in Section 702(a) determined by the method used by the transferor
partner.

11. This Agreement shall constitute a written amendment to the
Partnership Agreement, as required by Section 10.2 thereof.

12. The Partnership Agreement shall remain in full force and effect
except as amended hereby.

13. This Amendment may be signed in any number of counterparts with
the same effect as if the signatures thereto were upon the same instrument.

<PAGE>

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

PROGRESS PROPERTIES, INC.

By:
------------------------------
Its:
------------------------------

J.R.A. REALTY CORPORATION

By:
------------------------------
Its:
------------------------------

P-C 900 THIRD ASSOCIATES

By: 900 Realty LLC, General Partner

By:
------------------------------
Its:
------------------------------

PROGRESS PARTNERS

By: Progress Properties, Inc., General
Partner

By:
------------------------------
Its:
------------------------------

By: J.R.A. Realty Corporation, General
Partner

By:
------------------------------
Its:
------------------------------

<PAGE>

By: 900 3rd Avenue Associates,
General Partner

By: Carlyle Real Estate Limited
Partnership-XIV, a General
Partner

By: JMB Realty Corporation, a
General Partner

By:
-------------------------
Its:
-------------------------

900 REALTY, LLC

By:
------------------------------
Its:
------------------------------

900 3RD AVENUE ASSOCIATES

By: Carlyle Real Estate Limited
Partnership-XIV, a General Partner

By: JMB Realty Corporation, a
General Partner

By:
------------------------
Its:
------------------------

EXHIBIT 10-E
- ------------
(Carlyle-XV)

AMENDMENT NO. 3 TO
AMENDED AND RESTATED
AGREEMENT OF GENERAL PARTNERSHIP
FOR PROGRESS PARTNERS
--------------------------------

AMENDMENT NO. 3 ("Amendment"), dated as of this 22nd day of March,
1999, to the Amended and Restated Agreement of General Partnership dated as
of August 20, 1984, as amended pursuant to Amendment No. 1, dated as of
February 26, 1986, and as amended by Amendment No. 2, dated as of March 17,
1999 ("Partnership Agreement") is made by and among P-C 900 THIRD
ASSOCIATES, a New York limited partnership ("P-C 900"), 900 REALTY, LLC, a
Delaware limited liability company ("900 Realty"), 900 3RD AVENUE
ASSOCIATES, an Illinois general partnership ("Associates"), 14-15 Office
Associates, L.P., an Illinois limited partnership ("14-15 Office
Associates") and PROGRESS PARTNERS (the "Partnership").

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

WHEREAS, Associates, 900 Realty and P-C 900 were partners in
the Partnership pursuant to, among other things, that certain Amended and
Restated Agreement of General Partnership for Progress Partners dated as of
August 20, 1984, as amended pursuant to Amendment No. 1, dated as of
February 26, 1986, and as amended pursuant to Amendment No. 2, dated as of
March 17, 1998 (collectively "Partnership Agreement");

WHEREAS, 900 Realty has assigned all of its right, title and
interest in Progress Partners to Associates;

WHEREAS, P-C 900 has assigned all of its right, title and
interest in Progress Partners to Associates and 14-15 Office Associates;
and

1. 900 Realty shall no longer be a general partner in Progress
Partners and Associates shall hold and be entitled to exercise all of
right, title and interest formerly belonging to 900 Realty under the
Partnership Agreement, effective as of the date of this Amendment.

2. 14-15 Office Associates shall be admitted as a general partner of
the Partnership in substitution for P-C 900, and 14-15 Office Associates
shall hold and be entitled to exercise all of right, title and interest
formerly belonging to P-C 900 under the Partnership Agreement, effective as
of the date of this Amendment. 14-15 Office Associates agrees to be bound
by all of the terms and provisions of the Partnership Agreement, as amended
by this Amendment, as fully as if 14-15 Office Associates were a signatory
thereto.

3. Section 3.2 of the Partnership is hereby amended to read in its
entirety as follows:

"Net Cash Receipts (if any) for such calendar year or portion
of such calendar year shall be distributed 92.575% to Associates and 7.425%
to 14-15 Office Associates."

<PAGE>

4. Paragraph D of Section 3.3 of the Partnership is hereby amended
to read in its entirety as follows:

"D. FOURTH LEVEL. The balance of the Net Sales Proceeds and
Net Financing Proceeds remaining after the distributions pursuant to
subsections A through C above shall be distributed 92.575% to Associates
and 7.425% to 14-15 Office Associates."

5. This Agreement shall constitute a written amendment to the
Partnership Agreement, as required by Section 10.2 thereof.

6. The Partnership Agreement shall remain in full force and effect
except as amended hereby.

7. This Amendment may be signed in any number of counterparts with
the same effect as if the signatures thereto were upon the same instrument.

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

P-C 900 THIRD ASSOCIATES

By: 900 Third Avenue Associates,
its general partner

By: Carlyle Real Estate Limited
Partnership-XIV, a General
Partner

By: JMB Realty Corporation, a
General Partner

By:
--------------------
Its:
--------------------

PROGRESS PARTNERS

By: 900 Realty, LLC,
General Partner

By:
------------------------------
Its:
------------------------------

By: 900 3rd Avenue Associates, General
Partner

By: Carlyle Real Estate Limited
Partnership-XIV, a General
Partner

By: JMB Realty Corporation, a
General Partner

By:
--------------------
Its:
--------------------

<PAGE>

900 REALTY, LLC

By:
------------------------------
Its:
------------------------------

900 3RD AVENUE ASSOCIATES

By: Carlyle Real Estate Limited
Partnership-XIV, a General Partner

By: JMB Realty Corporation, a
General Partner

By:
--------------------
Its:
--------------------

14-15 OFFICE ASSOCIATES, L.P.,
an Illinois limited partnership

By: 900 3rd Avenue Corporation,
its general partner

By:
------------------------------
Name:
------------------------------
Title:
------------------------------

EXHIBIT 10-F
- ------------
(Carlyle-XV)

SETTLEMENT AGREEMENT AND RELEASE
--------------------------------

THIS SETTLEMENT AGREEMENT AND RELEASE ("Agreement"), dated as of this
17th day of March, 1999, is made by and among PROGRESS PROPERTIES, INC.
("PPI"), J.R.A. REALTY CORPORATION ("JRA"), P-C 900 THIRD ASSOCIATES ("P-C
900," and collectively with PPI and JRA, the "Progress Group"), 900 REALTY,
LLC ("900 Realty" and collectively with PPI, JRA and P-C 900, the "Progress
Parties"), 900 3RD AVENUE ASSOCIATES ("Associates"), and PROGRESS PARTNERS
(the "Partnership").

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

WHEREAS, the Partnership owns certain land and improvements commonly
known as 900 3rd Avenue, New York, New York (the "Property");

WHEREAS, in 1987, JMB Property Management Company ("JMB") became the
manager of the Property pursuant to that certain Agreement for Operation
and Management of Office Building (the "Management Agreement") dated as of
December 1, 1987;

WHEREAS, in December, 1994, JMB delegated certain of its duties under
the Management Agreement to Heitman Properties of New York, Ltd.
("Heitman") pursuant to that certain Submanagement Agreement;

WHEREAS, the Federal Deposit Insurance Corporation ("FDIC") has filed
various claims against, among others, Associates, the Progress Group and
Albert Schwartz, individually ("Schwartz"), arising from Schwartz's
acquisition of certain interests in the Progress Group, entitled FDIC V.
PROGRESS PROPERTIES, et al., Case No. 91 Civ. 3761 (S.D.N.Y.) and FDIC V.
FIRST MARYLAND, et al., Case No. 96 Civ. 3792 (S.D.N.Y.) both of which are
presently pending in the United States District Court for the Southern
District of New York, and FDIC V. FIRST MARYLAND, et al., presently pending
in Circuit Court of Maryland for Baltimore City, Case No. 96141932/CL212356
(collectively, the "FDIC Cases");

WHEREAS, in or about January, 1996, the Maryland Deposit Insurance
Fund Corporation ("MDIF") obtained a judgment against PPI and JRA to
foreclose its lien on the partnership interests in the Partnership and PC-
900 held by PPI and JRA (collectively "PPI/JRA Partnership Interests");

<PAGE>

WHEREAS, Associates maintains that it holds a lien on (and the
Progress Parties contest that Associates holds a lien on) the PPI/JRA
Partnership Interests as well as the partnership interest of PC-900 in the
Partnership to secure that certain promissory note, dated as of August 20,
1984 in the original principal amount of $20 million ("Associates' Note")
made by PPI and delivered to Associates, together with interest thereon,
which lien Associates claims (and the Progress Parties contest) is superior
to MDIF's lien;

WHEREAS, PPI, JRA and 900 Realty have asserted various claims against
the Partnership and Associates (and Associates and the Partnership have
contested such claims), including, without limitation, (i) the
mismanagement of the Property by JMB and/or Heitman (ii) claims arising
from Associates' negotiations and agreement with MDIF after MDIF obtained
its judgment ("MDIF-related Claims"), (iii) claims under the Partnership
Agreement by the Progress Group against the Partnership for certain
Guaranteed Payments (as defined therein) and other claims asserted by or on
behalf of the Partnership against Associates for certain capital
contributions allegedly due from Associates to the Partnership (the
"Partnership Agreement Claims") and (iv) claims arising from distributions
taken by Associates for the repayment of certain funds loaned to the
Partnership in connection with the refinancing of the Partnership's debt
and other distributions ("Distribution Claims");

WHEREAS, Associates, the Progress Parties and the Partnership desire
to avoid the uncertainties and expense of litigation and to settle and
compromise on the terms set forth below all claims asserted or that could
be asserted by any party that they may have against each other, except as
provided herein; and

1. AUTHORITY. Simultaneously with the execution and delivery of
this Agreement by all of the parties hereto, each party shall provide to
the other evidence of its due authorization to enter into and perform the
transactions contemplated by this Agreement, all in form reasonably
satisfactory to the other parties. Such evidence shall include the
following: (a) certificate of good standing in the state of its formation
or incorporation (except that no such certificate shall be required from
Associates or the Progress Group) and the organizational documents of such
party (e.g. operating agreement, by-laws, etc.); (b) an incumbency
certificate; (c) an organizational certificate or resolution, duly
certified, authorizing such party to enter into this Agreement, consummate
the sale and perform the obligations required of such party hereunder; and
(d) such other evidence reasonably required by any of them.

2. ACQUISITION BY 900 REALTY. Associates and the Progress Group
hereby (a) consent to and agree to waive all defects and objections, if
any, to MDIF's assignment of the MDIF Interests to 900 Realty, (b) consent
to and agree to waive all defects and objections, if any, to 900 Realty's
judicial or foreclosure sale of the PPI/JRA Partnership Interests, (c)
acknowledge, agree and will not contest (i) that 900 Realty is the sole
holder and owner of the PPI/JRA Partnership Interests, formerly held by PPI
and JRA in the Partnership and PC-900, together with all claims held by JRA
or PPI against the Partnership and/or Associates, (ii) that 900 Realty, in
substitution for PPI and JRA, now owns and controls all of the right, title

<PAGE>

and interest formerly held by PPI and JRA in the Partnership and in PC-900
as well as all claims held by them against the Partnership and/or
Associates, and (iii) that 900 Realty has the authority to convey the
Partnership Interests as provided in paragraph 4 hereinafter; provided,
however, that nothing herein shall be construed as a waiver or otherwise
estop or limit in any way Associates' right to enforce or rely on the
representations and warranties made by the Progress Parties in this
Agreement (including the representations and warranties set forth in
Article 10 herein) or any Closing Document, it being understood that the
foregoing acknowledgments and agreements made by Associates in this
Paragraph 2 are based on such representations and warranties. In order to
further support the agreements herein, PPI and JRA do hereby quitclaim,
assign and convey to 900 Realty, without representation or warranty, all of
their right, title and interest in and claims against the Property,
Partnership and/or PC-900, including, without limitation, whatever claims
they may have against the Partnership and/or Associates for Guaranteed
Payments (collectively the "Support Interests"). Subject to the proviso in
Paragraph 28 of this Agreement, the Progress Parties and Associates and the
Partnership acknowledge and agree (x) that in order to secure Associates'
Note, Associates holds a lien on (i) the PPI/JRA Partnership Interests,
(ii) the partnership interest of PC-900 in the Partnership, and (iii) all
of the claims of the Progress Group against the Partnership, including all
claims, if any, for Guaranteed Payments (the "Associates' Lien"), and (y)
that such lien is superior to MDIF's lien and (z) that 900 Realty's
acquisition of all of its right, title and interest in and claims against
the Partnership is subject to such lien.

3. FDIC ACQUISITION. Simultaneously with or prior to the execution
and delivery of this Agreement by all of the parties hereto, 900 Realty
shall deliver (a) original copies of the Agreement and Mutual Release
attached hereto as Exhibit A duly executed by each of the Progress Parties,
Albert Schwartz, Joel Wiener and by PPI on behalf of the Partnership, (b)
an original Partner Consent attached hereto as Exhibit B duly executed by
the Progress Parties and Albert Schwartz, (c) the letter to the FDIC in the
form attached hereto as Exhibit C duly executed by each of the Progress
Parties and Albert Schwartz, and (d) stipulations to dismiss in the form
attached hereto as Exhibit D duly executed by counsel for each of the
Progress Parties and Albert Schwartz.

4. SALE OF PARTNERSHIP INTERESTS. Simultaneously with the
execution and delivery of this Agreement by all of the parties hereto
("Closing Date"), Associates shall acquire from 900 Realty the Partnership
Interests (defined hereafter) in exchange for a total payment by Associates
of Sixteen Million Dollars ($16,000,000) (the "Purchase Price"), which
Purchase Price shall be paid by Associates according to the terms and upon
the conditions hereinafter set forth. As used herein, "Partnership
Interests" shall mean all of the right, title and interest (i) in the
Partnership not owned by Associates as of the Closing Date and (ii) in PC-
900 not owned by the FDIC (or its successor in interest) as of the Closing
Date, including all of the right, title and interest of JRA and PPI in the
Property (if any), Partnership and PC-900 held by them since the inception
of the Partnership (other than Associates' interest in the Partnership), as
well as any claims held by any of them against the Partnership or
Associates, together with the Support Interests transferred to 900 Realty
pursuant to paragraph 2 above.

(a) On the Closing Date, 900 Realty shall, at its expense,
provide Associates with (i) an original of the assignment attached hereto
as Exhibit E duly executed by each of the parties thereto, (ii) results of
a search of the Progress Parties from a reputable search service for the
State of New York (and any other state in which such of the Progress
Parties is incorporated or formed and doing business), dated no earlier
than March 3, 1999, and showing no UCC, tax or judgment liens with respect
to any interest in the Partnership or in PC-900 (other than the Associates'

<PAGE>

Lien), (iii) a policy issued by Commonwealth Title Company (the "Title
Company") in the amount of the Purchase Price, in form reasonably
satisfactory to Associates, insuring Associates' title to the Partnership
Interests free and clear of any liens (other than the Associates' Lien),
encumbrances or defects, as well as the interest of 14-15 Office
Associates, L.P. ("14-15 Office Associates") in the Partnership free and
clear of any liens (other than the Associates' Lien), encumbrances or
defects, and (iv) a certificate and report of title on the Property free
and clear of all liens, claims and encumbrances, other than those approved
by Associates, and a letter from the Title Company agreeing not to raise
certain matters in form reasonably satisfactory Associates. On the Closing
Date, Associates shall pay to 900 Realty, by federal funds wire transfer of
immediately available funds to an account designated by 900 Realty to
Associates in writing, of which 900 Realty hereby represents that it shall
be the beneficial owner, the sum of Thirteen Million Five Hundred Thousand
and no/Dollars ($13,500,000); and

(b) The remaining balance of the Purchase Price, in the
amount of Two Million Five Hundred Thousand and no/Dollars ($2,500,000)
(the "Closing Balance"), shall be paid by Associates in the same manner as
above upon the earlier of (i) a closing of a sale of the Property by the
Partnership, or (ii) January 3, 2000. The Partnership hereby guarantees
Associates' obligation to pay the Closing Balance (together with interest
due thereon, if any) according to the terms and conditions set forth
herein. Associates and the Partnership hereby acknowledge and agree that
Associates: (a) has an irrevocable obligation to pay the Closing Balance
when the same shall become due and payable as provided herein, and (b) if
Associates fails to pay the Closing Balance as provided herein, then, for
each day that such payment is not paid when due, Associates shall pay
interest on the Closing Balance at an annual rate equal to 150 basis points
over the prime rate of Citibank, N.A. in effect from time to time (computed
on an actual/365 day basis), provided that in no event shall such amounts
exceed the maximum rate permitted by law, plus any and all out of pocket
cost incurred by 900 Realty, including, without limitation, reasonable
attorneys' fees, in an effort to collect such amounts from Associates.

5. AMENDMENTS OF PARTNERSHIP AGREEMENTS. Prior to the execution
of this Agreement, Progress Parties, the Partnership and Associates have
executed and delivered an amendment to the Partnership Agreement in the
form attached hereto as Exhibit F. Associates, 14-15 Office Associates,
PPI and 900 Realty have executed and delivered the amendment to the
partnership agreement of PC-900 in the form attached hereto as Exhibit G.
Associates, 900 Realty, P-C 900, and 14-15 Office Associates have executed
and delivered the amendment to the Partnership Agreement in the form
attached hereto as Exhibit H.

6. TRANSFER TAXES. If any property transfer taxes or real estate
transfer taxes are due and payable in connection with (a) the acquisitions
by Associates (and/or by any nominee, affiliate or related party of
Associates, including 14-15 Office Associates) of all of the right, title
and interest in the Partnership and in PC-900, including the Partnership
Interests and the limited partnership interest of the FDIC in P-C 900,
and/or (b) any prior transaction(s) with which such acquisitions may be
aggregated for tax purposes relating to any acquisitions by 900 Realty of
any interest in the Partnership or of the general partnership interest in
P-C 900, 900 Realty unconditionally and irrevocably agrees to pay the same
when due, and to defend, indemnify and hold the Associates Group (as
defined herein) harmless from any liabilities, claims or expenses on
account of such unpaid taxes, including without limitation of any other
rights it may have, interest, penalties, and reasonable attorneys' fees and
other costs related thereto; provided, however, that if the taxes payable
in connection with such acquisitions or transactions include taxes
attributable to the acquisition by Associates (and/or by any nominee,
affiliate or related party of Associates) of the limited partnership
interest in P-C 900 held by the FDIC, then upon demand of 900 Realty,
Associates shall contribute to the payment of the total amount of taxes
due hereunder an amount equal to the tax on the fair market value as of
the date of this Agreement of such limited partnership in P-C 900, such
amount not to exceed twenty-four percent (24%) of the total amount of such
taxes attributable to the acquisitions contemplated under clause (a) of
this paragraph 6 ("Associates Contribution"), together with interest or
penalties, if any, attributable thereto. The foregoing payment by
Associates is subject to 900 Realty's simultaneous payment of the balance
of the total amount of said taxes due hereunder, including interest and
penalties, if any. All rights, if any, to seek payment or reimbursement
from the FDIC (including any right of contribution, indemnity or
subrogation) on account of the taxes paid hereunder by 900 Realty or in
connection with the payment made by Associates of the Associates
Contribution hereunder shall belong solely to Associates. 900 Realty shall
have the right to contest the payment of taxes assessed in connection with
all (but not less than all unless Associates otherwise agrees in writing)
of the acquisitions and transactions referred to in this Section 6 and to
defer payment of such taxes; provided, however, that such right of contest
shall terminate and 900 Realty shall pay such amounts due hereunder upon
the first to occur of (i) a ruling by a State or City or other governmental
agency of New York from which no further appeal may be taken, or (ii) if
such contest in any way hinders or interferes, as reasonably determined by
Associates, with Associates' ability to sell (or close any such sale of)
the Property and provided further that before initiating such contest, and
thereafter within twenty-one (21) days of Associates' request (not to
exceed once in every six months), 900 Realty provides Associates with
Minimum Statements of Net Worth (as provided for and defined in the
Agreement, Guaranty and Mutual Release attached as Exhibit I ("Release"))
from each of the 900 Realty Members (as defined in the Release). If 900
Realty shall fail to provide any of the foregoing Minimum Statements of Net
Worth when due, it shall have no further right of contest and shall
immediately pay the taxes due together with all interest and penalties
thereon and any other costs relating thereto. Subject to the foregoing,
Associates shall reasonably cooperate in such contest and, if 900 Realty
notifies Associates of its intent to contest such taxes prior to initiating
such contest and Associates does not object in writing to such contest
within seven (7) days of delivery of the foregoing notice, Associates shall
pay for twenty-four percent (24%) of the legal expenses and costs incurred
and payable by 900 Realty in contesting the taxes attributable to the
acquisitions contemplated under clause (a) of this paragraph 6, provided
900 Realty simultaneously pays the balance of such expenses and costs due
and payable, and Associates shall have no other liability for interest or
penalties or any other claims, expenses or costs relating to such unpaid
taxes. Wherever used in this Agreement, "Associates Group" means
Associates, the Partnership, 14-15 Office Associates, and PC-900 (after
giving effect to the acquisitions of Associates and/or its affiliates of
the interest therein), together with its partners (other than the Progress
Parties), partners of their partners (including, without limitation, in the
case of Associates, Carlyle Real Estate Limited Partnership-XIV, Carlyle
Real Estate Limited Partnership-XV, JMB Realty Corporation), members, and
each of the foregoing's officers, directors, affiliates of every kind or
nature (including in the case of Associates, JMB Property Management
Company and Heitman Properties of New York, Ltd.), agents, employees, and
attorneys. 900 Realty shall also promptly provide Associates with copies
of all tax notices and all correspondence, petitions, briefs and other
filings made by itself or New York City or State in connection with the
contest of any tax deficiency.

7. INDIVIDUAL RELEASES. Concurrently with the execution and
delivery of this Agreement, the Progress Parties shall deliver to
Associates an original of the Release attached hereto as Exhibit I duly
executed by Albert Schwartz, Joel Wiener, Emil Rausman and Martin Rausman.

8. CONDITION TO EFFECTIVENESS. This Agreement shall be effective
upon the execution and delivery of all parties hereto.

<PAGE>

9. TAX RETURNS AND REPORTING.

(a) Associates shall cause the Partnership to and the Partnership
shall: (i) provide the Progress Parties with a copy of the final United
States federal income tax return of the Partnership (including Schedules K-
1 for the Progress Parties) for the year ended December 31, 1998 (the "1998
Partnership Tax Return") which return shall provide that income
attributable to the Progress Parties does not exceed thirty percent (30%)
of income attributable to the Partnership;

(ii) file with the Internal Revenue Service (the "Service")
and provide to PPI and JRA Schedules K-1 to the 1998 Partnership Tax Return
showing the distributive shares of PPI and JRA of the income or loss of the
Partnership for the period January 1, 1998 to December 31, 1998; and

(iii) file with the Service and provide to 900 Realty a
Schedule K-1 to the Partnership tax return for the year ended December 31,
1999 showing the distributive share of 900 Realty of the income or loss of
the Partnership for the period January 1, 1999 through the date preceding
the date hereof; which return shall provide that income attributable to 900
Realty does not exceed thirty percent (30%) of income of the Partnership
for the year ended December 31, 1999; such income to be calculated based on
900 Realty's share of the Partnership's income for the entire year prorated
for the period January 1, 1999 through March 22, 1999;

(b) If the federal, state or local income tax return of the
Partnership for 1999 or any preceding year is audited by the Service or by
any state or local taxing authority, the Partnership shall provide
reasonable notice of such audit to 900 Realty. The Partnership shall have
the right to settle any such audit without the consent of PPI or any other
Progress Party in the case of any audit for 1998 and preceding years and
900 Realty or any other Progress Party in the case of audits for 1998 and
1999.

(c) State and local income tax returns of the Partnership for the
years ended on December 31, 1998 and December 31, 1999 shall be consistent
with the federal income tax returns of the Partnership in prior years.

(d) The federal, state and local income tax returns filed by the
Progress Parties shall be consistent with, and such parties shall not
contest, the treatment and reporting by the Partnership provided herein.

10. GENERAL REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.

a. BY PROGRESS PARTIES. Each of the Progress Parties (other
than P-C 900) jointly and severally represents and warrants to Associates,
14-15 Office Associates and the Partnership that the following is true and
correct as of the date of this Agreement and shall be true and correct as
of the date of the delivery of the assignment pursuant to Paragraph 4
hereof:

(i) Albert Schwartz is the sole shareholder of
PPI, and PPI is the sole shareholder of JRA. PPI and JRA have full power
and authority to execute and deliver this Agreement, and any other document
required to be delivered by such parties hereunder (including without
limitation the documents delivered pursuant to paragraphs 3, 5 and 7
hereof), and to quitclaim and assign any and all rights, title and
interests they have or may have in, and claims against, the Partnership,
Associates and PC-900 as provided in paragraph 2.

<PAGE>

(ii) The copy delivered by 900 Realty to
Associates of the agreement dated January 13, 1998 between 900 Realty and
MDIF is a true and complete copy of the original, constitutes the entire
agreement between the parties and has not been amended, either orally or in
writing, and 900 Realty owns all of the claims against PPI, JRA the
Partnership or its partners previously held by MDIF (except to the extent
such claims have been partially satisfied or discharged in connection with
the foreclosure sale of the PPI/JRA Partnership Interests).

(iii) Joel Wiener, Schwartz, Emil Rausman and
Martin Rausman are the sole members of 900 Realty, and 900 Realty has not
transferred, assigned, pledged, granted a lien on, or otherwise disposed of
any interest in, or claims against, PPI, JRA, the Partnership or its
partners, including the claims it acquired from MDIF (except to the extent
such claims have been partially satisfied or discharged in connection with
the foreclosure sale in which it acquired the PPI/JRA Partnership
Interests).

(iv) No Progress Party has assigned, transferred,
disposed of, pledged or granted a lien to or in favor of any person with
respect to its interest in the Partnership or its interest in any other
Progress Party (except for the Associates' Lien, the collateral assignment
of their interests under Partnership Agreement to Associates and the
Partnership and the liens granted to MDIF that were assigned to 900 Realty)
or with respect to any claim against or relating to the Partnership or
Associates previously held by it or the Released Claims disposed of by this
Agreement.

(v) There is no lawsuit in which any of the
Progress Parties is a party that is not referred to in the recitals to this
Agreement and there are no claims against or liabilities of the Partnership
caused or incurred by any Progress Party, except the existing first
mortgage loan to Teachers Insurance and Annuity Association of America.

(vi) Each of the Progress Parties is duly
authorized and empowered to enter into this Agreement, and the signatory
designated below for each such party has full authority and power to bind
such party to the representations, warranties, terms and conditions of this
Agreement, and this Agreement is valid and enforceable in accordance with
its terms.

(vii) To the best knowledge of each of the Progress
Parties (a) none of them or Joel Wiener, Albert Schwartz, Emil Rausman or
Martin Rausman or any entity which any of them or the foregoing individuals
control or in which any of them or the foregoing individuals own any
interest holds any interest, direct or indirect, in Associates, its
partners, its partners of partners or their Affiliates (which for purposes
of this Agreement shall have the meaning as defined in Section 6.3 of the
Partnership Agreement), (b) none of them has authorized or consented to or
made any amendments to the Partnership Agreement, except for the amendment
referenced in paragraph 5 herein, and (c) none of them has authorized any
amendments to the Agreement of Limited Partnership of P-C 900 Third
Associates, dated February 26, 1986, by and between PPI and Central
National Bank of New York, except for the amendment referenced in paragraph
5 herein.

(viii) None of the Progress Parties, Joel Wiener,
Albert Schwartz, Emil Rausman or Martin Rausman has engaged, or caused the
Partnership to engage, any broker with respect to the Property or the
transfer of the Partnership Interests hereunder.

(ix) 900 Realty is the sole holder and owner of all the
right, title and interest in the Partnership, PC-900 and the Property (and
in all claims against the Partnership and/or Associates) formerly held by
PPI and JRA.

<PAGE>

(xi) 900 Realty has good and marketable title to the
Partnership Interests transferred to Associates pursuant to the assignment
(the "Assignment") attached hereto as Exhibit D (and full power and
authority to transfer same) free and clear of any defects, liens or
encumbrances, other than any Associates' lien and such interests shall be
transferred to Associates, in each case free and clear of any defects,
liens or encumbrances, other than the Associates' lien, upon delivery of
the Assignment.

(xii) Each of the Closing Documents (defined hereafter)
was duly executed by the person who purported to sign it and said person
was duly authorized and competent to execute such document and each of the
Closing Documents is valid and enforceable in accordance with its terms.

(xiii) P-C 900 has no obligations or liabilities (other
than its obligations and liabilities with respect to claims by Associates
and other than any liabilities which it may have under general partnership
law or by reason of its status as a general partner of the Partnership) and
there are no pending or, to the best knowledge of the Progress Parties,
threatened claims of any kind or nature against P-C 900 (except for claims
asserted in the FDIC Cases), and all of PC-900's right, title and interest
in the Partnership is owned and held by P-C 900 free and clear of any
liens, encumbrances or defects (other than the Associates' Lien or any
claims by Associates).

(xiv) The Partnership Interests conveyed by 900 Realty to
Associates hereunder were acquired by it for fair consideration and for
reasonably equivalent value.

(xv) There are no agreements of any kind or nature between or
among, on the one hand, PC-900 and, on the other hand, any other Progress
Party, Albert Schwartz, Joel Wiener, Emil Rausman or Martin Rausman other
than the Partnership Agreement, this Agreement or any Closing Document.

(xvi) Without limitation of any other provisions hereof, after
the consummation of the transactions contemplated by this Agreement, there
are no interests in the Partnership that are not owned by Associates and P-
C 900 or 14-15 Office Associates, provided the foregoing representation and
warranty does not include any transfers of interest by Associates.

b. BY ASSOCIATES. Associates represents and warrants to the
Progress Parties that the following is true and correct as of the date
hereof:

(i) Except for the collateral assignment under
the Partnership Agreement, Associates has not previously assigned, pledged
or granted a lien on its interest in the Partnership or any claim against
any Progress Party to any other party.

(ii) Associates is duly authorized and empowered
to enter into this Agreement, and the signatory designated below has full
authority and power to bind such party to the representations, warranties,
terms and conditions of this Agreement.

(iii) Except for the interests Associates (or its
nominee, affiliate or related party) intends to acquire in P-C 900, neither
Associates or any Affiliate of Associates holds any interest, direct or
indirect, in any Progress Party, its partners, or affiliates.

(iv) Associates has not authorized or made any
amendments to the Partnership Agreement, except for Exhibit F and H.

<PAGE>

c. INDEMNIFICATION. Each of the Progress Parties
(other than P-C 900) jointly and severally agree to indemnify, defend and
hold harmless the Associates Group from and against any demands or claims
of every kind or nature (including claims of third parties or any person
claiming through or under any of the Progress Parties), damages, costs,
expenses, liability or losses suffered as a result of any inaccuracy or
breach of the representations and warranties or of any covenant or
agreement made by any of the Progress Parties in this Agreement or in any
Closing Document (as defined herein), provided that the Progress Parties
shall only be required to pay the fees and expenses of one law firm (and
local or special counsel, if engaged and any law firms engaged in
substitution for such firm or counsel) to defend the Associates Group,
whether one or more members of the Associates Group have been sued.
Associates agrees to indemnify, defend and hold harmless each of the
Progress Parties from and against any demands or claims of every kind or
nature (including claims of third parties or any person claiming through or
under Associates), damages, costs, expenses, liability or losses suffered
by them as a result of any inaccuracy or breach of the representations and
warranties or of any covenant or undertaking made by Associates in this
Agreement or in any Closing Document, provided that the Associates Group
shall only be required to pay the fees and expenses of one law firm (and
local or special counsel, if engaged, and any law firms engaged in
substitution for such firm or counsel) to defend the Progress Parties,
whether one or more of the Progress Parties have been sued. Wherever used
in this Agreement, "Closing Document" shall mean any document executed and
delivered in connection with this Agreement or any other agreement entered
into in connection with this Agreement, including all Exhibits . The
Partnership agrees to indemnify, defend and hold each of the Progress
Parties harmless from any wrongful act or omission of the Partnership first
occurring after the Closing Date, provided that the Partnership shall only
be required to pay the fees and expenses of one law firm (and local or
special counsel, if engaged, and any law firms engaged in substitution for
such firm counsel) to defend the Progress Parties, whether one or more of
the Progress Parties have been sued.

11. MUTUAL RELEASE. Except for each party's obligations hereunder
and the obligations of the parties under any Closing Document, each of the
parties hereto hereby releases, forgives and discharges each of the other
parties hereto and their respective partners, partners of their partners
(including, in the case of Associates, Carlyle Real Estate Limited
Partnership-XIV, Carlyle Real Estate Limited Partnership-XV, and JMB Realty
Corporation), members, and each of the foregoing's officers, directors,
affiliates of every kind or nature (including in the case of Associates,
JMB and Heitman), agents, employees, and attorneys, and each of them, of
and from all matters, claims, liabilities, demands, causes of action,
debts, obligations, promises, acts, agreements, interests, damages or
interests of whatever kind or nature, and any attorneys fees and expenses
that may be related thereto, whether known or unknown, which such party has
or may hereafter incur or acquire against any of the others by reason of or
relating to any reason, cause or event concerning or arising from the
relationship between or among any of the Progress Parties, the Partnership,
and Associates related to the Partnership or the Property that has
happened, accrued, developed or occurred on or prior to or as of the date
hereof, including without limitation all claims or interests asserted or
that could have been asserted by (i) any of the Progress Parties or
Associates in the Partnership Litigation, (ii) any party pursuant to the
Partnership Agreement, including without limitation claims by the Progress
Group for Guaranteed Payments and by the Partnership for capital
contributions from Associates under Sections 1.7, 2.2 and 3.1 of the
Partnership Agreement and any claim by any party with respect to any
financial obligation under the Partnership Agreement, including, without
limitation, with respect to any distributions by the Partnership, any
refinancing, any capital contribution or otherwise, (iii) any party,
including, without limitation, the MDIF, on account of any MDIF-related
Claim or on account of the MDIF's assignment of the MDIF Interests to 900
Realty, (iv) any party in any of the FDIC Cases, (v) any party arising out

<PAGE>

of or related to the management and leasing of the Property by JMB or
Heitman, and (vi) the Partnership against any party hereto or by any party
against the Partnership, relating to or arising from the Distribution
Claims, and (vii) by any Progress Party who has acquired or may acquire any
interest in any partner of Associates (collectively "Released Claims").

12. DEFENSE AND INJUNCTION. The provisions of this Agreement may
be pleaded as a full and complete defense to, and may be used as the basis
for an injunction against, any action, suit or other proceeding that may be
instituted, prosecuted or attempted in breach of this Agreement.

13. WAIVER AND RELEASE. The parties hereto expressly waive any and
all rights under any applicable statute, doctrine or principle of law
restricting the right of any person to release claims which such person
does not know or suspect to exist at the time of executing the release,
which claims, if known, may have materially affected such person's decision
to give such releases. In connection with such waiver and relinquishment,
the parties hereto acknowledge that they are aware that they may hereafter
discover claims presently unknown or unsuspected, or facts in addition to
or different from those which they now know or believe to be true, with
respect to the matters released herein. Nevertheless, it is the intention
of the parties hereto through this Agreement to fully, finally and forever
settle and release all such matters, and all claims relative thereto, which
now exist, may exist or theretofore have existed between or among any of
the parties hereto as described above. Notwithstanding the foregoing or
any other provision in this Agreement to the contrary, nothing in this
Agreement shall be construed as a waiver or release of any representation,
warranty, covenant, agreement, obligation or liability provided for in this
Agreement or in any Closing Document.

14. FUTURE ACQUISITION. Each Progress Party agrees that it shall
not acquire any interest hereafter, direct or indirect, in Associates,
their partners (or any of their partners or affiliates), and no Progress
Party shall assist any other person in acquiring such interest or in
transferring any interest in the Property or the Partnership, or knowingly
communicate, directly or indirectly, with any person holding such interest
with respect to such interest.

15. AMENDMENT OF AGREEMENT; NO ASSIGNMENTS. This Agreement shall
not be amended except by a writing signed by Associates and 900 Realty. No
party hereto shall be permitted to assign any right or delegate any duty
hereunder without the prior written consent of Associates and 900 Realty.

16. ENTIRE AGREEMENT. This Agreement, including all exhibits and
Closing Documents, constitutes the entire agreement of the parties hereto
as to the subject matter hereof. The undersigned acknowledge that all
prior agreements or understandings within the scope of the subject matter
of the Agreement are, upon the execution and delivery of this Agreement,
superseded, null and void.

17. GOVERNING LAW. This Agreement shall be construed and governed
by the internal laws of the State of New York without regard to its
conflict of law provisions.

18. NO WAIVER. No delay or omission of any party hereto to
exercise any right hereunder shall impair such right or be construed to be
a waiver of any default or an acquiescence therein.

19. HEADINGS, EXHIBITS. Section headings herein are for
convenience of reference only and shall not govern the interpretation of
any of the provisions hereof. Each of the exhibits attached hereto is
hereby by this reference incorporated herein. Any place in this Agreement
or any Closing Document where the word "including" is used shall be deemed
to include "without limitation."

<PAGE>

20. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto were upon
the same instrument. Delivery of this Agreement by fax transmission shall
be effective and binding on all parties hereto and shall be deemed to have
the same effect as delivery of the original counterpart.

21. DRAFTING. Each party hereto has participated in the drafting
of this Agreement and no adverse inference shall be drawn against any party
on account of their responsibility for drafting this Agreement.

22. CONFIDENTIALITY. The terms, conditions and other provisions of
this Agreement shall be kept strictly confidential except to the extent
disclosure is required by law (including such disclosure as is deemed
necessary in connection with any documents or reports filed with the
Securities & Exchange Commission by Associates or its partners) or to the
extent such disclosure is necessary for a valid purpose to any party's
attorneys, accountants or business advisors.

23. SUCCESSOR AND ASSIGNS. Subject to paragraph 15 hereof, this
Agreement shall be binding on the successors and assigns of each party
hereto.

24. NO ADMISSION. Nothing herein shall be construed as an
admission of liability by any party of the Released Claims which are
settled and disposed of herein.

25. FURTHER ASSURANCES. The parties hereto agree to do such
further acts and things, and to execute and deliver such additional
agreements, conveyances, assignments and instruments, as any other party
may at any time reasonably request in connection with the implementation,
administration and enforcement of this Agreement or in connection with the
sale of the Property at any time hereafter. In addition, the parties
hereto agree not to (and to cause their agents, officers, directors,
shareholders, members and affiliates not to) take any action inconsistent
with the terms hereof, including without limitation by acquiring (other
than as referenced herein) any direct or indirect interest in any other
party hereto for any purpose whatsoever without the consent of all other
parties hereto.

26. NO OTHER CONSENTS. Each of the parties to this Agreement
represents and affirms that no other consents by or from any other person,
entity or government authority are necessary to render binding and
enforceable such party's signature hereto and obligations and agreements
hereunder.

27. EXCULPATION. No present or future partner of Associates or of
any partner of any such partner (or any other partners of any tier) shall
have any personal liability of any kind or nature for or by reason of any
matter or thing whatsoever, under or in connection with this Agreement or
any other agreement entered into under or in connection herewith, and the
other parties hereto waive all such personal liability. However, the
foregoing shall not limit the right of any party hereto to enforce its
remedies for breach or default by Associates hereunder against the assets
of Associates (as opposed to the assets of any such partners), which assets
for purposes hereof shall not be deemed to include any negative capital
accounts or commitments to provide additional capital. Until the Closing
Balance is paid in full, before making any distributions to either Carlyle
Real Estate Limited Partnership-XIV or Carlyle Real Estate Limited
Partnership-XV from the proceeds of a refinancing or sale of the Property,
Associates shall segregate and reserve for the exclusive use of paying the
Closing Balance from such proceeds an amount equal to the Closing Balance.

<PAGE>

28. Notwithstanding Sections 11 and 13 or anything else in this
Agreement to the contrary, nothing herein shall limit, waive or release any
right of Associates to collect or foreclose on the Associates' Note (except
for interest accrued thereon through the date of this Agreement, which is
hereby waived) provided that with respect to any action or judgment which
may be obtained or secured or taken by Associates, Associates shall look
solely to the Partnership Interests (including the proceeds therefrom) to
satisfy the Associates' Note, and Associates will not collect or attempt to
collect any such judgment out of any other assets of the Progress Parties.

29. 900 Realty, PPI and JRA hereby waive and release any right of
contribution or indemnity any of them has or may have against PC-900 in
connection with any liabilities hereunder, under Partnership Agreement or
in connection with any Closing Document.

30. SUBMISSION TO JURISDICTION. All disputes arising out of or
relating to this Agreement and all actions to enforce this Agreement may be
adjudicated in the state or federal courts of either the City of New York
or City of Chicago and each of the parties to this Agreement hereby
irrevocably submits to the jurisdiction of such courts in any suit, action,
or proceeding arising out of or relating to this Agreement or in any action
to enforce this Agreement.

31. No person is intended to be a third-party beneficiary of this
Agreement, except for a member of 900 Realty or the Associates Group.

32. NOTICE. All notices and other communications provided for
hereunder shall be in writing and mailed or delivered to the address set
forth below. All such notices and other communications shall, when mailed
or hand delivered be effective upon receipt; provided, however, in the
event that a notice or communication so sent shall be refused,
undeliverable or the intended recipient shall otherwise prevent such
receipt, such notice or other communication shall be deemed to be received
on the date of such rejection, attempted delivery or prevention. All such
notices and other communications shall, when sent by overnight courier, be
effective one business day after the same are deposited with such overnight
courier. All notices and other communications provided for hereunder shall
be addressed as set forth below.

If to:

900 3rd Avenue Associates JMB Realty Corporation
14-15 Office Associates, L.P. 900 N. Michigan, 19th Flr.
P-C 900 Third Associates Chicago, IL 60611
Attn: Lorenzo Bracy

with a copy to: Neal, Gerber & Eisenberg
Two North LaSalle Street
Suite 2100
Chicago, Illinois 60602
Attn: David R. Schenk

If to any of
the Progress Parties: Wiener Realtors
One Penn Plaza
Suite 4000
New York, NY 10119
Attn: Joel Wiener

With a copy to: Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attn: Andrew Levy

or to such other address as each party may designate for itself by notice
given in accordance with this paragraph 32.

<PAGE>

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

PROGRESS PROPERTIES, INC.

By:
------------------------------
Its:
------------------------------

J.R.A. REALTY CORPORATION

By:
------------------------------
Its:
------------------------------

P-C 900 THIRD ASSOCIATES

By: 900 Realty LLC, General Partner

By:
------------------------------
Its:
------------------------------

PROGRESS PARTNERS

By: Progress Properties, Inc., General
Partner

By:
------------------------------
Its:
------------------------------

By: J.R.A. Realty Corporation, General
Partner

By:
------------------------------
Its:
------------------------------

By: 900 3rd Avenue Associates, General Partner

By: Carlyle Real Estate Limited
Partnership-XIV, a General Partner

By: JMB Realty Corporation, a
General Partner

By:
--------------------------
Its:
--------------------------

<PAGE>

900 REALTY, LLC

By:
----------------------------------------
Its:
----------------------------------------

900 3RD AVENUE ASSOCIATES

By: Carlyle Real Estate Limited Partnership-XIV,
a General Partner

By: JMB Realty Corporation, a
General Partner

By:
------------------------------
Its:
------------------------------

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1999 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-31-1999
<PERIOD-END> MAR-31-1999

<CASH> 15,970,717
<SECURITIES> 0
<RECEIVABLES> 17,092,457
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,063,174
<PP&E> 143,164,988
<DEPRECIATION> 0
<TOTAL-ASSETS> 184,993,143
<CURRENT-LIABILITIES> 70,764,597
<BONDS> 143,677,254
<COMMON> 0
0
0
<OTHER-SE> (47,331,422)
<TOTAL-LIABILITY-AND-EQUITY> 184,993,143
<SALES> 8,153,362
<TOTAL-REVENUES> 8,585,229
<CGS> 0
<TOTAL-COSTS> 3,417,644
<OTHER-EXPENSES> 412,393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,246,158
<INCOME-PRETAX> (490,966)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,338,083)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,338,083)
<EPS-PRIMARY> (2.90)
<EPS-DILUTED> (2.90)

</TABLE>