CARLYLE REAL ESTATE LTD PARTNERSHIP XV, 10-K405, 2000-03-30

CARLYLE REAL ESTATE LTD PARTNERSHIP XV
10-K405, 2000-03-30
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year
ended December 31, 1999 Commission file no. 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 North Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)

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

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

Name of each exchange on
Title of each Class which registered
- ------------------- -----------------------------

None None

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

LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]

State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.

Documents incorporated by reference: None

<PAGE>

TABLE OF CONTENTS

Page
----
PART I

Item 1. Business. . . . . . . . . . . . . . . . . . . . 1

Item 2. Properties. . . . . . . . . . . . . . . . . . . 7

Item 3. Legal Proceedings . . . . . . . . . . . . . . . 9

Item 4. Submission of Matters to a
Vote of Security Holders. . . . . . . . . . . . 9

PART II

Item 5. Market for the Partnership's Limited
Partnership Interests and Related
Security Holder Matters . . . . . . . . . . . . 9

Item 6. Selected Financial Data . . . . . . . . . . . . 10

Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . 12

Item 7A. Quantitative and Qualitative
Disclosures About Market Risk . . . . . . . . . 20

Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . . . . . 21

Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure. . . . . . . . . . . . 55

PART III

Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . . . . 55

Item 11. Executive Compensation. . . . . . . . . . . . . 57

Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . . . . . 59

Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . 60

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . 60

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 64

<PAGE>

PART I

ITEM 1. BUSINESS

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

The registrant, Carlyle Real Estate Limited Partnership-XV (the
"Partnership"), is a limited partnership formed in August of 1984 and
currently governed by the Revised Uniform Limited Partnership Act of the
State of Illinois to invest in income-producing commercial and residential
real property. On July 5, 1985, the Partnership commenced an offering to
the public of $250,000,000 (subject to increase by up to $250,000,000) in
Limited Partnership Interests and assignee interests therein ("Interests")
pursuant to a Registration Statement on Form S-11 under the Securities Act
of 1933 (No. 2-95382). A total of 443,711.76 Interests were sold to the
public at $1,000 per Interest. The offering closed on July 31, 1986.
Subsequent to admittance to the Partnership, no holder of Interests
(hereinafter, a "Holder" or "Holders of Interests") has made any additional
capital contribution. The Holders of Interests of the Partnership share in
their portion of the benefits of ownership of the Partnership's real
property investments according to the number of Interests held.

The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or through
joint venture partnership interests. The Partnership's real property
investments are located throughout the nation and it has no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding
of the Partnership's business taken as a whole. Pursuant to the
Partnership Agreement, the Partnership is required to terminate no later
than December 31, 2035. The Partnership is self-liquidating in nature. At
sale of a particular property, the net proceeds, if any, are generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties. The Partnership, through certain joint
ventures, sold the 900 Third Avenue and California Plaza investment
properties during 1999. The Partnership currently expects that Piper
Jaffray Tower will not generate sufficient cash flow to pay the required
debt service during 2000. This could result in the lender taking title to
the property.

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

<PAGE>

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1999,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
- ---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. 900 Third Avenue
Building
New York,
New York. . . . . . 517,000 8/20/84 11/2/99 fee ownership of land and
sq.ft. improvements
n.r.a. (through joint venture
partnerships) (c)(d)
2. Piper Jaffray Tower
Minneapolis,
Minnesota . . . . . 723,755 12/27/84 6% fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships) (c)
3. RiverEdge Place
Building
Fulton County
(Atlanta),
Georgia . . . . . . 235,762 6/10/85 12/23/97 fee ownership of land and
sq.ft. improvements (d)
n.r.a.
4. Wells Fargo Center -
South Tower
Los Angeles,
California. . . . . 1,100,000 6/28/85 18% fee ownership of land and
sq.ft. improvements (through a
n.r.a. limited liability company)
(c)
5. Villa Solana
Apartments
Laguna Hills,
California. . . . . 272 units 8/30/85 3/23/94 fee ownership of land and
improvements (through a
joint venture partnership)
6. Eastridge Mall
Casper, Wyoming . . 477,019 9/10/85 6/30/95 fee ownership of land and
sq.ft. improvements (through a
g.l.a. joint venture partnership)

<PAGE>

7. Woodland Hills
Apartments
DeKalb County
(Atlanta),
Georgia . . . . . . 228 units 9/30/85 5/22/96 fee ownership of land and
improvements
8. Park at Countryside
Apartments
Port Orange
(Daytona Beach),
Florida . . . . . . 120 units 11/27/85 5/5/94 fee ownership of land and
improvements (through a
joint venture partnership)
9. 160 Spear Street
Building
San Francisco,
California. . . . . 267,000 11/27/85 1/25/96 fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (through a
joint venture partnership)
10. 21900 Burbank
Boulevard
Building
Los Angeles
(Woodland Hills),
California . . . . 87,000 11/29/85 3/21/96 fee ownership of land and
sq.ft. improvements
n.r.a.
11. 300 East Lombard
Building
Baltimore,
Maryland. . . . . . 232,000 11/29/85 9/30/91 fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (through
joint venture partnerships)
12. Boatmen's Center
Kansas City,
Missouri. . . . . . 285,000 12/16/85 8/31/89 fee ownership of land and
sq.ft. improvements (through a
n.r.a. joint venture partnership)
(c)(e)

<PAGE>

SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1999,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
- ---------------------- ---------- -------- ---------------------- ---------------------
13. 125 Broad Street
Building
New York,
New York. . . . . . 1,336,000 12/31/85 11/15/94 fee ownership of improve-
sq.ft. ments and ground leasehold
n.r.a. interest in land (through
joint venture partnerships)
(c)(f)
14. Owings Mills
Shopping Center
Owings Mills
(Baltimore County),
Maryland. . . . . . 325,000 12/31/85 6/30/93 fee ownership of land and
sq.ft. improvements (through joint
g.l.a. venture partnerships)
(c)(d)
15. 260 Franklin
Street Building
Boston,
Massachusetts . . . 348,901 5/21/86 1/2/98 fee ownership of land and
sq.ft. improvements (through a
n.r.a. joint venture partnership)
(c)(d)
16. 9701 Wilshire
Building
Beverly Hills,
California. . . . . 98,721 6/17/86 10/6/94 fee ownership of land and
sq.ft. improvements
n.r.a.
17. California Plaza
Walnut Creek,
California. . . . . 368,290 6/30/86 12/23/99 fee ownership of land and
sq.ft. improvements (through joint
n.r.a. venture partnerships)
(c)(d)
18. Dunwoody Crossing
Apartments
(Phase I, II,
and III)
DeKalb County
(Atlanta),
Georgia . . . . . . 810 units 9/18/86 5/7/96 fee ownership of land and
improvements (through joint
venture partnerships)
(c)(d)

<PAGE>

19. NewPark Mall
Newark
(Alameda County),
California. . . . . 423,748 12/2/86 11/18/98 fee ownership of land and
sq.ft. improvements (through joint
g.l.a. venture partnerships)
(c)(d)
20. Springbrook Shopping
Center
Bloomingdale
(Chicago),
Illinois. . . . . . 189,651 7/5/89 1/31/97 fee ownership of land and
sq.ft. improvements (g)
g.l.a.
21. Erie-McClurg
Parking Facility
Chicago, Illinois . 1,073 spaces 7/21/89 9/25/92 fee ownership of land and
improvements

<PAGE>

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

(a) The computation of this percentage for properties held at
December 31, 1999 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.

(b) Reference is made to the Notes filed with this annual report for
the current outstanding principal balances and a description of the
long-term mortgage indebtedness secured by the Partnership's real property
investments.

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

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

(e) Reference is made to the Notes for a description of a 1990
settlement reached with the former venture partners.

(f) The Partnership's interest in this property was assigned to an
affiliate of the Partnership's unaffiliated venture partner in November
1994. Reference is made to the Notes for a description of the sale of the
Partnership's interest in this investment property.

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

</TABLE>

<PAGE>

The Partnership's real property investments are subject to competition
from similar types of properties (including in certain areas properties
owned by affiliates of the General Partners or properties owned by venture
partners or their affiliates) in the respective vicinities in which they
are located. Such competition is generally for the retention of existing
tenants. Additionally, the Partnership is in competition for new tenants
in markets where significant vacancies are present. Reference is made to
Item 7 below for a discussion of competitive conditions of the Partnership
and certain of its significant investment properties. Approximate
occupancy levels for the properties are in the table in Item 2 below to
which reference is hereby made. The Partnership maintains the suitability
and competitiveness of its properties in its markets primarily on the basis
of effective rents, tenant allowances and service provided to tenants. In
the opinion of the Corporate General Partner of the Partnership, all of the
investment properties held at December 31, 1999 are adequately insured.
Although there is earthquake insurance coverage for a portion of the value
of the Partnership's investment properties, the Corporate General Partner
does not believe that such coverage for the entire replacement cost of the
investment properties is available on economic terms.

On November 2, 1999, 900 Third Avenue Associates, through Progress
Partners, sold the 900 Third Avenue office building located in New York,
New York for $163,000,000. Reference is made to Item 7 and the Notes for a
further description of such transaction.

On December 23, 1999, the Partnership, through C-C California Plaza
sold the California Plaza office building located in Walnut Creek,
California for $71,500,000. Reference is made to Item 7 and the Notes for
a further description of such transaction.

On January 2, 1998, the Partnership through 260 Franklin disposed of
the 260 Franklin Building located in Boston, Massachusetts. Reference is
made to Item 7 and the Notes for a further description of such transaction.

On November 18, 1998, the Partnership and affiliated venture partner
sold their interest in the NewPark Mall located in Newark, California for
$16,000,000. Reference is made to Item 7 and the Notes for a further
description of such transaction.

In January 1997, the Partnership disposed of the Springbrook Shopping
Center located in Bloomingdale, Illinois. Reference is made to Item 7 and
the Notes for a further description of such transaction.

On December 23, 1997, the Partnership sold the Riveredge Place office
building located in Atlanta, Georgia for $26,600,000. Reference is made to
Item 7 and the Notes for a further description of such transaction.

The Partnership has no employees.

The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.

ITEM 2. PROPERTIES

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

The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1999 and 1998 for the Partnership's investment properties owned
during 1999:

<PAGE>

<TABLE>
<CAPTION>
1998 1999
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 900 Third Avenue Building
New York, New York. . . . Legal Services/
Detective Agency/
Insurance 97% 100% 99% 97% 100% 100% 98% N/A
2. Piper Jaffray Tower
Minneapolis, Minnesota. . Advertising/
Financial Services 93% 89% 89% 89% 89% 89% 89% 91%
3. Wells Fargo Center
- South Tower
Los Angeles,
California. . . . . . . . Business Informa-
tion Systems/
School District/
Legal Services 90% 90% 90% 85% 86% 86% 86% 86%
4. California Plaza
Walnut Creek,
California. . . . . . . . Manufacturing/
Public Utility 100% 96% 96% 97% 97% 97% 89% N/A

<FN>
- --------------------
Reference is made to Item 7 and to the Notes for further information regarding property occupancy, and
competitive conditions at the Partnership's investment properties.

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

</TABLE>

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

The Partnership is not subject to any material pending legal
proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during
fiscal years 1999 and 1998.

PART II

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

As of December 31, 1999, there were 40,289 record Holders of the
443,559.59568 Interests outstanding in the Partnership. There is no public
market for Interests, and it is not anticipated that a public market for
Interests will develop. Upon request, the Corporate General Partner may
provide information relating to a prospective transfer of Interests to an
investor desiring to transfer his Interests. The price to be paid for the
Interests, as well as any other economic aspect of the transaction, will be
subject to negotiation by the investor. There are certain conditions and
restrictions on the transfer of Interests, including, among other things,
the requirement that the substitution of a transferee of Interests as a
Limited Partner of the Partnership be subject to the written consent of the
Corporate General Partner, which may be granted or withheld in its sole and
absolute discretion. The rights of a transferee of Interests who does not
become a substituted Limited Partner will be limited to the rights to
receive his share of profits or losses and cash distributions from the
Partnership, and such transferee will not be entitled to vote such
Interests or have other rights of a Limited Partner. No transfer will be
effective until the first day of the next succeeding calendar quarter after
the requisite transfer form satisfactory to the Corporate General Partner
has been received by the Corporate General Partner. The transferee
consequently will not be entitled to receive any cash distributions or any
allocable share of profits or losses for tax purposes until such next
succeeding calendar quarter. Profits or losses from operations of the
Partnership for a calendar year in which a transfer occurs will be
allocated between the transferor and the transferee based upon the number
of quarterly periods in which each was recognized as the Holder of the
Interests, without regard to the results of the Partnership's operations
during particular quarterly periods and without regard to whether cash
distributions were made to the transferor or transferee. Profits or losses
arising from the sale or other disposition of Partnership properties will
be allocated to the recognized Holder of the Interests as of the last day
of the quarter in which the Partnership recognized such profits or losses.
Cash distributions to a Holder of Interests arising from the sale or other
disposition of Partnership properties will be distributed to the recognized
Holder of the Interests as of the last day of the quarterly period with
respect to which such distribution is made.

Reference is made to the Notes for a discussion of the provisions of
the Partnership Agreement relating to cash distributions. Reference is
made to Item 6 below for a discussion of cash distributions made to the
Holders of Interests. The cash flows generated from operations by the
Piper Jaffray Tower and Wells Fargo Center - South Tower investment
properties are segregated or restricted as to their use generally to the
payment of expenses for those properties pursuant to or as a result of
modifications to the mortgage loans secured by such investment properties
as more fully discussed in the Notes.

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

<PAGE>

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

DECEMBER 31, 1999, 1998, 1997, 1996 AND 1995
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1999 1998 1997 1996 1995
------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . . $ 31,837,942 11,459,393 24,349,848 28,496,327 45,415,094
============ ============ =========== =========== ===========
Earnings (loss) before
gains on sale or dispo-
sition of investment
properties. . . . . . . . $ (7,921,675) (4,060,852) (2,888,815) (49,291,781) (19,930,715)
Gain on liquidation of
investment in venture . . -- -- 269,147 -- --
Gains on sale or disposi-
tion of investment
properties (net of
venture partner's share
of $18,090,923 in 1999,
$204,139 in 1996 and
$823,609 in 1994) and
manager's incentive
fee of $1,730,016
in 1996 . . . . . . . . . 59,322,688 23,212,184 8,631,561 12,230,126 6,785,025
Gains on sale of
interests in uncon-
solidated ventures. . . . -- 10,744,678 568,625 435,060 856,751
------------ ------------ ----------- ----------- -----------
Earnings (loss) before
extraordinary items
and cumulative effect
of an accounting
change. . . . . . . . . . 51,401,013 29,896,010 6,580,518 (36,626,595) (12,288,939)
Extraordinary items. . . . (3,989,364) 17,451,802 5,992,828 35,222,847 --
Cumulative effect of
an accounting change. . . -- -- -- (30,000,000) --
------------ ------------ ----------- ----------- -----------
Net earnings (loss). . . . $ 47,411,649 47,347,812 12,573,346 (31,403,748) (12,288,939)
============ ============ =========== =========== ===========

<PAGE>

1999 1998 1997 1996 1995
------------- ------------- ----------- ------------ ------------
Net earnings (loss)
per Interest:
Earnings (loss) before
gains on sale or dispo-
sition of investment
properties. . . . . . . $ (17.14) (8.79) (6.25) (106.67) (43.12)
Gain on liquidation
of investment in
venture . . . . . . . . -- -- .60 -- --
Net gains on sale
or disposition
of investment
properties. . . . . . . 132.40 51.81 19.26 27.29 17.05
Gains on sale or
disposition of
interests in uncon-
solidated ventures. . . -- 23.98 1.27 .97 --
Extraordinary item . . . (8.90) 38.95 13.37 78.61 --
Cumulative effect of
an accounting change. . -- -- -- (64.92) --
------------ ------------ ----------- ----------- -----------
Net earnings (loss). . . . $ 106.36 105.95 28.25 (64.72) (26.07)
============ ============ =========== =========== ===========

Total assets . . . . . . . $102,036,799 89,187,533 145,738,009 174,989,293 301,007,974
Long-term debt . . . . . . $ 62,608,944 118,190,463 109,972,972 102,089,968 108,528,346
Cash distributions
per Interest (b). . . . . $ 15.00 40.33 .83 26.37 8.09
============ ============ =========== =========== ===========

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

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

(b) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each Partner's taxable income (loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the
cash generated or distributed by the Partnership. Accordingly, cash distributions to the Holders of Interests
since the inception of the Partnership have not resulted in taxable income to such Holders of Interests and have
therefore represented a return of capital.

</TABLE>

<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

Capitalized terms used but not defined herein have the same meanings
as in the Notes. As a result of the public offering of Interests as
described in Item 1, the Partnership had approximately $385,000,000 (after
deducting selling expenses and other offering costs) with which to make
investments in income-producing commercial and residential real property,
to pay legal fees and other costs (including acquisition fees) related to
such investments and to satisfy working capital requirements. A portion of
the proceeds was utilized to acquire the properties described in Item 1
above.

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.

During 1998 and 1999, various third parties made unsolicited tender
offers to purchase less than 5% of Interests in the Partnership at prices
ranging from $11.50 to $30.00 per Interests. All such offers have expired.

The Special Committee recommended against acceptance of these offers on the
basis that, among other things, the offer prices were inadequate. As of
the date of this report, the Partnership is aware that 2.27% 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. 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.

At December 31, 1999, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $98,900,000. Such funds and
certain escrowed amounts (which are restricted as to their use) were
available for future distributions to partners, working capital
requirements and potential liabilities related to the representations and
warranties made upon the sales of the California Plaza office building and
the 900 Third Avenue office building. In February 1999, the Partnership
made a distribution of $6,653,710 ($15 per Interest) of sale proceeds
(primarily related to the sale of NewPark Mall) to the Holders of
Interests. In February 2000, JMB/900 distributed approximately $26,400,000
to Carlyle-XIV (the Partnership's affiliated partner in the JMB/900
venture) representing Carlyle-XIV's share of sales proceeds and cash flow
generated from the operations of the 900 Third Avenue office building. The
Partnership, in February 2000, made a distribution of $39,905,634 ($90 per
Interest) of sale proceeds (primarily related to the sales of the
California Plaza office building and the 900 Third Avenue office building)
to the Holders of Interests. Additionally, in February 2000, the
Partnership made a distribution of $17,735,837 ($40 per Interest) to the
Holders of Interests and $738,993 to the General Partners from Partnership
operational cash flow. The Corporate General Partner also received its
$1,231,655 management fee related to the February 2000 distribution. In
addition, the General Partners and their affiliates have previously
deferred property management, leasing fees and advances 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 subject to
repayment in the future for its consolidated and unconsolidated entities.
In February 2000, the advances were paid to an affiliate of the General
Partner (approximately $676,000). The deferred fees do not bear interest
and are subject to repayment in the future.

<PAGE>

The Partnership's two investment properties are restricted as to their
use of excess cash flow by escrow agreements negotiated pursuant to loan
modifications. In such regard, reference is made to the Partnership's
property specific discussions below. Due to the property specific concerns
discussed below, the Partnership does not consider either of its two
remaining investment properties, Wells Fargo - South Tower and Piper
Jaffray Tower to be potential significant sources of future cash generated
from sales or operations.

The Partnership has currently budgeted in 2000 approximately
$2,848,000 for its share of tenant improvements and other capital
expenditures at the Piper Jaffray Tower. However, there are sufficient
cash reserves for payment of such items held in escrow pursuant to the loan
modification for the Piper Jaffray Tower. Actual amounts expended in 2000
may vary depending on a number of factors including actual leasing
activity, results of property operations, liquidity considerations and
other market conditions over the course of the year. The Partnership has
not budgeted any amounts, and has no funding obligation, for the Wells
Fargo Center - South Tower.

PIPER JAFFRAY TOWER

Occupancy of the building at the end of the fourth quarter of 1999 was
91%.

The property is subject to a mortgage loan in the original principal
amount of $100,000,000, of which approximately $95,619,000 is outstanding
as of December 31, 1999. The lender is essentially entitled to all
operating cash flow. In addition to fixed interest on the mortgage note
secured by the Piper Jaffray Tower, contingent interest is payable in
annual installments on April 1 computed at 50% of gross receipts, as
defined, for each fiscal year in excess of $15,200,000. No such contingent
interest was due for 1997, 1998 or 1999. In addition, to the extent the
investment property generates cash flow after payment of the fixed interest
on the mortgage, contingent interest, if any, leasing and capital costs,
and 25% of the ground rent, such amount will be paid to the lender as a
reduction of the principal balance of the mortgage loan. The excess cash
flow payments remitted to the lender for 1997 totalled $385,523. During
1999 and 1998, no such excess cash flow was generated. However, the lender
disputed certain amounts included in the calculation of cash flow for the
years 1997 and 1998. This resulted in JMB/Piper owing an additional amount
of cash flow (approximately $122,000) for 1997. Additionally, JMB/Piper
incurred excess capital costs of approximately $199,000 in 1998 for which
it was entitled to reimbursement from the escrow account. In settling such
dispute, the lender and JMB/Piper agreed to have the additional cash flow
paid to the Lender directly from the escrow account with the balance paid
to JMB/Piper for the excess capital costs incurred (approximately $77,000),
which JMB/Piper received in the fourth quarter of 1999.

In addition, the mortgage loan provides that upon sale or refinancing,
the lender is entitled to prepayment fees as well as a significant level of
proceeds in excess of the then unpaid principal balance prior to
JMB/Piper's receipt of proceeds. While the loan modification provides
JMB/Piper with an opportunity to retain an ownership position in the
property, under the current terms of the modified debt, there must be
significant additional improvement in current market and property operating
conditions resulting in a substantial increase in the value of the property
before JMB/Piper can share in sale or refinancing proceeds. Currently,
Piper generates enough operating cash flow to meet the required debt
service payments. However, Piper will not be able to pay the required debt
service upon the expiration of PJI's lease in May 2000, as discussed below.

JMB/Piper will not commit additional capital to Piper unless, among other
things, it believes that upon sale of the property it will receive a return

<PAGE>

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. JMB/Piper, on behalf of the joint venture is
currently in discussions with the mortgage lender regarding the resolution
of this issue.

In 1997, JMB/Piper had discussed an early renewal with U.S. Bancorp
Piper Jaffray Inc. ("PJI"), which occupies 335,684 square feet or
approximately 46% of the building's rentable square feet, with a lease
expiration date at May 31, 2000. Piper and PJI were unable to come to
terms and PJI announced that it would be moving to a new building (recently
completed in Minneapolis) upon expiration of its existing lease. PJI has
extended a portion of its current space (approximately 68,000 square feet)
through December 31, 2001. Additionally, JMB/Piper has executed new long-
term leases representing an additional approximately 60,000 square feet.
The property manager is actively pursuing replacement tenants for the
balance of the PJI space; however, given the extremely competitive nature
of the downtown Minneapolis market due to a significant amount of new
office construction, not all of the PJI space can be released quickly
enough to generate enough cash flow to fund the required debt service
payments as of June 1, 2000.

On a monthly basis, Piper deposits the property management fee into an
escrow account to be used (including interest earned thereon) for future
leasing costs to the extent cash flow is not sufficient to cover such
items. In 1999, approximately $260,000 was withdrawn from the escrow
account for certain leasing costs. At December 31, 1999, the balance of
such escrow account totaled approximately $5,724,000. It is expected that
JMB/Piper will repay approximately $50,000 of funds drawn from the escrow
account in excess of expenditures for certain leasing costs incurred in
1999. The manager of the property (which was an affiliate of the Corporate
General Partner through November 1994) has agreed to defer receipt of its
management fee. As of December 31, 1999, the manager has deferred
approximately $5,055,000 ($1,839,000 of which represents deferred fees due
to affiliates through November 1994, of which $919,500 is the Partnership's
share) of management fees.

JMB/Piper's plan to sell or dispose of the Piper Jaffray Tower has
not, to date resulted in a sale or disposition. As a result, JMB/Piper
made an adjustment as of June 30, 1999 to record depreciation that would
have been recognized had the Piper Jaffray Tower not been considered "held
for sale or disposition". Further, JMB/Piper began recording depreciation
expense for the Piper Jaffray Tower commencing July 1, 1999.

As a result of a flood in 1997, the property incurred significant
repair costs in 1998. Piper completed such repairs which totaled
approximately $1,100,000. JMB/Piper made certain advances to Piper for
such costs, and such advances were repaid in 1999 upon reimbursement from
the insurance carrier.

900 THIRD AVENUE BUILDING

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 to
JMB/900 to effect these transactions. The remaining amount was paid at the
sale of the property as discussed below.

<PAGE>

In July 1999, JMB/900, through Progress Partners, entered into a
contract to sell the 900 Third Avenue Building to an unaffiliated third
party. On November 2, 1999, JMB/900 sold the property for approximately
$163,000,000. Upon closing, JMB/900 received cash of approximately
$62,300,000 (net of closing costs but before prorations). The cash
received is also net of the repayment of the mortgage loan secured by the
property of approximately $87,000,000, a prepayment penalty of
approximately $5,800,000 and the final payment to the Progress Parties
pursuant to the Settlement Agreement of approximately $2,500,000. As a
result of this sale, JMB/900 recognized a gain of approximately $54,000,000
and $77,000,000 for financial reporting and Federal Income tax purposes.
The Partnership's share of such items is approximately $35,900,000 and
$51,400,000, respectively. As is customary in such transactions, JMB/900
agreed to certain representations, warranties and covenants with a
stipulated survival periods, which expires on September 15, 2000. Although
it is not expected, JMB/900 may ultimately have some liability under such
representations, warranties and covenants, which are limited to actual
damages and shall in no event exceed $2,000,000. As required by the sale
agreement, JMB/900 has placed this amount into escrow. In connection with
the sale of the property, Progress Partners received the balance
(approximately $16,083,000) in the escrow account that had been controlled
by the lender for the payment of property taxes and releasing costs for the
property. Reference is made to the Notes for a further description of the
transactions.

WELLS FARGO CENTER - SOUTH TOWER

The Wells Fargo Center ("South Tower") operates in the downtown Los
Angeles office market, which has been extremely competitive over the last
several years. The Partnership expects that the competitive market
conditions in downtown Los Angeles will continue to have an adverse affect
on the building through lower effective rental rates achieved on re-leasing
of existing space which expires or is given back over the next several
years. In addition, new leases have required and are expected to require
substantial expenditures for lease commissions and tenant improvements
prior to occupancy. This anticipated decline in rental rates, the
anticipated increase in re-leasing time and the costs upon releasing will
result in a continued decrease in cash flow from operations over the next
several years.

During 1996, the Partnership, the joint venture, and the lenders
reached an agreement to modify the mortgage note and the promissory note
secured by the Partnership's interest in the property. In conjunction with
the note modifications, Maguire/Thomas Partners - South Tower LLC was
converted to a limited liability company with members' interests in the
same ratio as the prior venture ownership interests. The conversion of the
Partnership's interest to a member's interest in a limited liability
company eliminated any potential additional obligation of the Partnership
in the future to provide additional funds under the previous joint venture
agreement. As a result, previously recognized losses of $10,620,944 have
been reversed, the Partnership's share of losses in 1999 of approximately
$3,629,000 were not recognized and the Partnership's 1998 and 1997 shares
of income for financial reporting purposes (approximately $464,000 and
$286,000, respectively) have not been recognized as such income amounts are
not considered realizable. Since the terms of the modified mortgage note
and the amended and restated promissory note make it unlikely that the
Partnership would recover any incremental investment, the Partnership has
decided not to commit any significant additional amounts to the property.
Reference is made to the "Wells Fargo Center - South Tower" in the Notes
for a further description of these events.

<PAGE>

CALIFORNIA PLAZA

Additionally, in connection with the sale of the property, the Venture
received the balance (approximately $3,400,000) in a reserve account that
had been controlled by the mortgage lender for the payment of future costs,
including tenant improvements, leasing commissions and capital improvements
for the property. The terms of the Venture agreement generally provide
that net cash receipts would be distributed to the Partnership until the
Partnership's cumulative preferred return, as defined, had been satisfied.
Under these terms, the Partnership also received the funds refunded from
the reserve account. As is customary in such transactions, the Venture has
agreed to certain representations, warranties and covenants with a
stipulated survival period, which expire on December 25, 2000. Although it
is not expected, the Venture and the Partnership may ultimately have some
liability under such representations, warranties and covenants, which are
limited to actual damages and shall, in no event, exceed $2,000,000. In
addition, the Partnership made certain representations and indemnities to
the purchaser and the title insurance company relating to ownership of the
property. The property had been classified as held for sale or disposition
as of December 31, 1996, and therefore, had not been subject to continued
depreciation. Reference is made to the discussion of California Plaza in
the Notes for a further description of such sale.

JMB/125

In October 1995, the makers of the $5 million promissory note payable
to JMB/125 filed for protection from creditors under Chapter 11 of the
Bankruptcy Code. Pursuant to the bankruptcy reorganization of the makers
of the note, JMB/125, as an unsecured creditor, received limited
partnership interests and a convertible note interest in a reorganized
entity that had majority or controlling interests in six office buildings
in New York, New York and Boston, Massachusetts. The assigned value, as of
the bankruptcy confirmation date, of the interests and note received by
JMB/125 was approximately $400,000. The convertible note was fully
reserved due to the uncertainty of the realizable value of the note. In
June 1997, the convertible note receivable for $297,000 was collected on by
JMB/125 resulting in the recognition of gain for financial reporting
purposes, of which the Partnership's share was $174,654. In December 1998,
the limited partnership interests were sold back to the reorganized entity
for $118,642 resulting in recognition of gain for financial reporting
purposes, of which the Partnership's share was $81,612. Reference is made
to the discussion of JMB/125 in the Notes.

RIVEREDGE PLACE BUILDING

On December 23, 1997, the Partnership sold the land and related
improvements of the RiverEdge Place office building for $26,600,000 (before
selling costs and retirement of indebtedness of approximately $23,000,000).

Reference is made to the discussion of River Edge Place Building in the
Notes for a further description of such transaction.

<PAGE>

NEWPARK ASSOCIATES

Pursuant to a liquidation agreement dated November 13, 1998,
JMB/NewPark and its venture partner dissolved NewPark Associates and
distributed all of its assets to the partners. On November 18, 1998,
JMB/NewPark sold its interest in the net assets of the NewPark Mall to the
joint venture partner for $16,000,000 of which the Partnership's share was
$14,400,000.

SPRINGBROOK SHOPPING CENTER

As a result of the non-payment of debt service, the lender realized
upon its security and took title to the property in January 1997 in full
satisfaction of the loan secured by the property. Reference is made to the
discussion of the Springbrook Shopping Center in the Notes for a further
description of such transaction.

260 FRANKLIN

On January 2, 1998, 260 Franklin through a trust disposed of the land,
building and related improvements of the 260 Franklin Street Building. 260
Franklin transferred title to the land, building and improvements, and all
other assets and liabilities related to the property in consideration of a
discharge of the mortgage loan and receipt of $200 in cash. Reference is
made to the discussion of 260 Franklin in the Notes for a further
description of such transfer.

GENERAL

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

The borrowings of the Partnership and its ventures consist of separate
non-recourse loans secured by the investment properties and individually
are not obligations of the entire investment portfolio and the Partnership
and its ventures are not personally liable for the payment of such loans.
The Partnership currently expects that Piper will not be able to pay the
required debt service for the Piper Jaffray Tower investment property
during 2000. The Partnership does not intend to commit additional funds to
Piper Jaffray Tower unless, among other things, the Partnership will
receive a return of such funds together with a reasonable rate of return
thereon. The Partnership also does not intend to commit additional funds
to Wells Fargo Center - South Tower. This could result in the Partnership
no longer having an ownership interest in these remaining properties and in
such event would result in taxable income to the Partnership for Federal
income tax purposes with no corresponding distributable proceeds.

Aggregate distributions of sale and refinancing proceeds received by
Holders of Interests over the entire term of the Partnership will be
substantially less than one-fourth of their original investment. However,
in connection with sales or other dispositions (including transfers to
lenders) of properties (or interests therein) owned by the Partnership or
its joint ventures, the Holders of Interests will be allocated gain for
Federal income tax purposes, regardless of whether any proceeds are
distributable from such sales or other dispositions. 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

<PAGE>

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 either 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 income may be offset by their suspended passive activity losses (if
any). Each Holder's tax consequences will depend on such Holder's own tax
situation.

RESULTS OF OPERATIONS

Significant fluctuations in the accompanying consolidated financial
statements are primarily due to the acquisition by JMB/900 of the interests
of the FDIC and the unaffiliated venture partners in Progress Partners in
March 1999 (resulting in the consolidation of JMB/900), the sale of the 900
Third Avenue office building in November 1999, the sale of the California
Plaza office building in December 1999, the sale of the 260 Franklin Street
Building in January 1998, the sale of RiverEdge Place office building in
December 1997, and the lender obtaining title to the Springbrook Shopping
Center in 1997.

The escrow deposits and restricted securities at December 31, 1999 are
related to a reserve account securing the maximum potential liability of
Progress Partners for representation, warranties and covenants made in
connection with the 900 Third Avenue sale.

The decrease in investment in unconsolidated ventures, at equity at
December 31, 1999 as compared to December 31, 1998 is primarily 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, owned a majority interest
in Progress Partners, and thereby, included all accounts of the venture in
the consolidated financial statements at December 31, 1999.

The venture partner's equity in venture at December 31, 1999
represents Carlyle-XIV's (the affiliated venture partner in JMB/900) share
of cash and other current assets at JMB/900. Such cash was generated from
operations and the sale of the 900 Third Avenue office building.

The decrease in other income for the year ended December 31, 1999 as
compared to the same period in 1998 is primarily due to a collection of
demand notes related to the 21900 Burbank Boulevard Building in 1998.

The decrease in depreciation expense for the year ended December 31,
1998 as compared to the same period in 1997 is due to all consolidated
properties being classified as held for sale or disposition, and therefore,
no longer being subject to continued depreciation.

The management fees to Corporate General Partner for the year ended
December 31, 1998 are due to the Partnership's payment of a distribution
from operational cash flow in 1998, a portion of which is earned by the
Corporate General Partner as a partnership management fee.

The decrease in the Partnership's share of income (loss) from
operations of unconsolidated ventures at December 31, 1998 as compared to
December 31, 1997 is primarily due to the reversal of a portion of the
accrued contingent interest related to the mortgage loan at the Piper
Jaffray investment property in 1997 due to its expected uncollectibility.

The increase in the venture partner's share of venture operations for
the year ended December 31, 1998 as compared to the same period in 1997 is
primarily due to the venture partner's proportionate share of management
and leasing fees payable by 260 Franklin Street Associates allocated to the
venture partner upon disposition of the property in 1998.

<PAGE>

The gain on liquidation of investment in venture for the year ended
December 31, 1997 represents gain recognized after the liquidation of the
Partnership's interest in Villages Northeast Associates.

The gain on sale for the year ended December 31, 1999 relates to the
recognition of gain from the sale of the California Plaza and 900 Third
Avenue office buildings of $23,089,381 and $31,233,307, respectively, in
1999. The gain on sale or disposition of investment property for the year
ended December 31, 1998 relates to the recognition of gain from the sale of
the 260 Franklin Street Building. The gain on sale or disposition of
investment properties of $8,631,561 for the year ended December 31, 1997
relates to the recognition of gain from the sale of the RiverEdge Place
building in 1997.

The gain on sale of interests in unconsolidated ventures for the year
ended December 31, 1998 relates to the recognition of $7,656,304 gain from
the liquidation of the NewPark joint venture and the sale through
JMB/NewPark of the Partnership's interest in NewPark Mall, recognition of
$3,006,762 of deferred gain from the sale of JMB/Owing's interest in the
Owings Mills Limited Partnership and recognition of $81,612 of gain
relating to the investment in 125 Broad from the sale of limited
partnership interests. The gain on sale of interests in unconsolidated
ventures for the year ended December 31, 1997 relates to the recognition of
$393,971 of deferred gain from the sale of JMB/Owing's interest in the
Owings Mills Limited Partnership in June 1993 and recognition of $174,654
of previously deferred gain from collection of principal on the note
receivable relating to the investment in 125 Broad.

The extraordinary items - prepayment penalties and the write-off of
deferred mortgage expense for the year ended December 31, 1999 results from
the sale of the 900 Third Avenue office building in 1999.

The extraordinary item - gain on forgiveness of indebtedness of
$17,451,802 for the year ended December 31, 1998 represents the interest
waived by the lender pursuant to a loan modification agreement for the debt
secured by the 260 Franklin Street building in January 1998. The
extraordinary item - gain on forgiveness of indebtedness of $5,992,828 for
the year ended December 31, 1997 represents the retirement of the mortgage
note on the Springbrook Shopping Center ($3,433,368) in full satisfaction
upon transfer of title to the respective lender, and the forgiveness of
debt by the lender on the sale of the RiverEdge building ($2,559,460).

INFLATION

Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.

However, to the extent that inflation in future periods would have an
adverse impact on property operating expenses, the effect would generally
be offset by amounts recovered from tenants as many of the long-term leases
at the Partnership's commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes. Therefore, there should be little effect on net
operating earnings if the properties remain substantially occupied.

YEAR 2000

The Partnership has not experienced any material disruption in its
operations or those of its properties in connection with the century change
and does not expect any such disruption in the future. The Partnership has
not needed to implement contingency plans, has not had any material
remediation costs and does not anticipate that its future costs of
remediation will be material. However, there can be no assurance that
disruption may not occur in the future or that the cost of any required
remediation may not be material.

<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership has identified interest rate changes as a potential
market risk. However, as the Partnership's long-term debt bears interest
at fixed rates, the Partnership does not believe that it is exposed to
market risk relating to interest rate changes.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

INDEX

Independent Auditors' Report

Consolidated Balance Sheets, December 31, 1999 and 1998

Consolidated Statements of Operations, years ended December 31,
1999, 1998 and 1997

Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1999, 1998 and 1997

Consolidated Statements of Cash Flows, years ended December 31,
1999, 1998 and 1997

Notes to Consolidated Financial Statements

Schedules not filed:

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

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV:

We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XV (a limited partnership) and consolidated
ventures as listed in the accompanying index. These consolidated financial
statements are the responsibility of the General Partners of the
Partnership. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XV and consolidated ventures at
December 31, 1999 and 1998, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1999, in conformity with generally accepted accounting
principles.

KPMG LLP

Chicago, Illinois
March 24, 2000

<PAGE>

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

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1999 AND 1998

ASSETS
------
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . $ 98,865,495 26,998,190
Interest, rents and other receivables . . . . . . . . . . . . . . . . 394,084 787,105
Current portion of note receivable . . . . . . . . . . . . . . . . . . 48,913 63,741
Escrow deposits and restricted securities. . . . . . . . . . . . . . . 2,000,000 2,384,098
------------ ------------

Total current assets . . . . . . . . . . . . . . . . . . . . . 101,308,492 30,233,134
------------ ------------

Properties held for sale or disposition . . . . . . . . . . . . . . . -- 46,193,322
------------ ------------
Investment in unconsolidated ventures,
at equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534,360 9,734,036
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,751 1,116,015
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . -- 1,729,398
Long-term portion of note receivable . . . . . . . . . . . . . . . . . . 159,196 181,628
------------ ------------

$102,036,799 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)
-----------------------------------------------------

1999 1998
------------ -----------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,972,411 2,322,676
Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . -- 639,554
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . 1,972,411 2,962,230

Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . -- 303,287
Investment in unconsolidated ventures, at equity . . . . . . . . . . . . 8,970,325 6,108,130
Deferred income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 532,623
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 430,429
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . 62,608,944 118,190,463
------------ ------------
Commitments and contingencies

Total liabilities. . . . . . . . . . . . . . . . . . . . . . . 73,551,680 128,527,162

Venture partner's equity in venture. . . . . . . . . . . . . . . . . . . 27,066,809 --

Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . (19,401,437) (19,637,903)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . (1,445,867) (1,445,867)
------------ ------------
(20,827,304) (21,063,770)
------------ ------------

<PAGE>

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

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

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

Limited partners:
Capital contributions, net of offering costs . . . . . . . . . . . 384,978,681 384,978,681
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . (296,114,002) (343,289,185)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . (66,619,065) (59,965,355)
------------ ------------
22,245,614 (18,275,859)
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . 1,418,310 (39,339,629)
------------ ------------
$102,036,799 89,187,533
============ ============

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

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
1999 1998 1997
------------- ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . $ 29,713,546 9,443,662 22,998,137
Interest income. . . . . . . . . . . . . . . . . . . 2,069,396 1,134,194 1,351,711
Other income . . . . . . . . . . . . . . . . . . . . 55,000 881,537 --
------------ ----------- -----------
31,837,942 11,459,393 24,349,848
------------ ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . 20,145,840 12,673,336 23,284,811
Depreciation . . . . . . . . . . . . . . . . . . . . -- -- 1,187,772
Property operating expenses. . . . . . . . . . . . . 12,388,914 3,655,197 10,749,263
Professional services. . . . . . . . . . . . . . . . 364,194 425,684 529,143
Amortization of deferred expenses. . . . . . . . . . 989,815 502,570 673,032
Management fees to corporate general partner . . . . -- 708,497 --
General and administrative . . . . . . . . . . . . . 1,061,170 945,715 806,787
------------ ----------- -----------
34,949,933 18,910,999 37,230,808
------------ ----------- -----------
(3,111,991) (7,451,606) (12,880,960)
Partnership's share of income (loss) from
operations of unconsolidated ventures. . . . . . . . (2,339,353) 2,976,512 9,992,145
Venture partners' share of ventures' operations. . . . (2,470,331) 414,242 --
------------ ----------- -----------
Earnings (loss) before gains on sale
or disposition of investment
properties . . . . . . . . . . . . . . . . (7,921,675) (4,060,852) (2,888,815)

Gain on liquidation of investment in venture . . . . . -- -- 269,147
Gains on sale or disposition of investment
properties, net of venture partner's share
of gain of $18,090,923 in 1999 . . . . . . . . . . . 59,322,688 23,212,184 8,631,561
Gains on sale of interests in unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . -- 10,744,678 568,625
------------ ----------- -----------

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

1999 1998 1997
------------- ------------ ------------
Earnings (loss) before extra-
ordinary items . . . . . . . . . . . . . . 51,401,013 29,896,010 6,580,518

Extraordinary items:
Prepayment penalties and deferred mortgage
expense on retirement of long-term debt,
net of venture partner's share of
$1,994,382 . . . . . . . . . . . . . . . . . . . . (3,989,364) -- --
Gain on forgiveness of indebtedness. . . . . . . . . -- 17,451,802 5,992,828
------------ ----------- -----------
Net earnings (loss). . . . . . . . . . . . . $ 47,411,649 47,347,812 12,573,346
============ =========== ===========

Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gains on sale
or disposition of investment
properties . . . . . . . . . . . . . . $ (17.14) (8.79) (6.25)
Gain on liquidation of investment
in venture . . . . . . . . . . . . . . -- -- .60
Net gains on sale or disposition of
investment properties. . . . . . . . . 132.40 51.81 19.26
Gains on sale or disposition of
interests in unconsolidated
ventures . . . . . . . . . . . . . . . -- 23.98 1.27
Extraordinary items. . . . . . . . . . . (8.90) 38.95 13.37
------------ ----------- -----------
$ 106.36 105.95 28.25
============ =========== ===========

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

<PAGE>

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

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
----------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS,
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
Decem-
ber 31,
1996. . . .$20,000 (20,028,625) (1,020,769) (21,029,394) 384,978,681 (402,819,621) (41,705,004) (59,545,944)

Net earnings
(loss). . . -- 39,069 -- 39,069 -- 12,534,277 -- 12,534,277
Cash distri-
butions
($.83 per
limited
partnership
interest) . -- -- -- -- -- -- (370,023) (370,023)
------- ----------- --------- ----------- ----------- ------------ ------------ -----------

Balance
(deficit)
Decem-
ber 31,
1997. . . . 20,000 (19,989,556) (1,020,769) (20,990,325) 384,978,681 (390,285,344) (42,075,027) (47,381,690)

Net earnings
(loss). . . -- 351,653 -- 351,653 -- 46,996,159 -- 46,996,159
Cash distri-
butions
($40.33 per
limited
partnership
interest) . -- -- (425,098) (425,098) -- -- (17,890,328) (17,890,328)
------- ----------- --------- ----------- ----------- ------------ ------------ -----------

<PAGE>

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

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

GENERAL PARTNERS LIMITED PARTNERS
----------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS,
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ----------- ------------- -----------

Balance
(deficit)
Decem-
ber 31,
1998. . . . 20,000 (19,637,903) (1,445,867) (21,063,770) 384,978,681 (343,289,185) (59,965,355) (18,275,859)

Net earnings
(loss). . . -- 236,466 -- 236,466 -- 47,175,183 -- 47,175,183
Cash distri-
butions
($15.00 per
limited
partnership
interest) . -- -- -- -- -- -- (6,653,710) (6,653,710)
------- ----------- --------- ----------- ----------- ------------ ------------ -----------
Balance
(deficit)
Decem-
ber 31,
1999. . . .$20,000 (19,401,437) (1,445,867) (20,827,304) 384,978,681 (296,114,002) (66,619,065) 22,245,614
======= =========== ========== =========== =========== ============ ============ ===========

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

<PAGE>

<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . $ 47,411,649 47,347,812 12,573,346
Items not requiring (providing) cash or
cash equivalents:
Cash generated by investment property prior
to acquisition of venture partner's interest . . (1,320,717) -- --
Depreciation . . . . . . . . . . . . . . . . . . . -- -- 1,187,772
Amortization of deferred expenses. . . . . . . . . 849,903 502,570 673,032
Long-term debt - deferred accrued interest . . . . 8,489,873 8,217,491 10,129,734
Partnership's share of (income) loss from
operations of unconsolidated ventures. . . . . . 2,339,353 (2,976,512) (9,992,145)
Venture partners' share of ventures'
operations, gain on sale or disposition
of investment properties and
extraordinary items. . . . . . . . . . . . . . . 18,566,872 (414,242) --
Gain on liquidation of investment in venture . . . -- -- (269,147)
Total gain on sale or disposition of
investment properties. . . . . . . . . . . . . . (77,413,611) (23,212,184) (8,631,561)
Total gain on sale of interests in uncon-
solidated ventures . . . . . . . . . . . . . . . -- (10,744,678) (568,625)
Extraordinary items including venture
partner's share. . . . . . . . . . . . . . . . . 161,128 (17,451,802) (5,992,828)
Changes in:
Interest, rents and other receivables. . . . . . . 1,116,433 (320,709) 43,928
Current portion of note receivable . . . . . . . . 14,828 (63,741) --
Prepaid expenses . . . . . . . . . . . . . . . . . 1,323,456 -- --
Escrow deposits and restricted securities. . . . . 11,614,900 (499,772) 744,237
Other restricted securities. . . . . . . . . . . . -- 131,318 5,154,489
Accrued rents receivable, net. . . . . . . . . . . 1,213,533 798,484 526,261
Deferred expenses. . . . . . . . . . . . . . . . . 230,376 -- --
Long-term portion of note receivable . . . . . . . 22,432 (181,628) --
Accounts payable . . . . . . . . . . . . . . . . . (1,099,354) (846,730) (1,092,706)
Accrued interest payable . . . . . . . . . . . . . (680,634) (413,804) (3,173,281)
Other current liabilities. . . . . . . . . . . . . (639,554) -- 47,201
Deferred income. . . . . . . . . . . . . . . . . . (532,623) (491,653) (491,651)
Tenant security deposits . . . . . . . . . . . . . (1,304,500) (82,601) (76,059)
Other liabilities. . . . . . . . . . . . . . . . . (430,429) 140,001 (47,202)
------------ ----------- -----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . 9,933,314 (562,380) 744,795
------------ ----------- -----------

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1999 1998 1997
----------- ----------- -----------
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. . . . . . . . . . . . . (794,369) (558,194) (1,062,024)
Partnership's distributions from
unconsolidated ventures. . . . . . . . . . . . . . -- 21,500,873 2,700,000
Partnership's contributions to
unconsolidated ventures. . . . . . . . . . . . . . (9,223,900) (296,983) --
Cash proceeds from sale or disposition of
investment properties. . . . . . . . . . . . . . . 228,058,000 200 3,120,382
Payment of deferred expenses . . . . . . . . . . . . (735,988) (106,167) (395,000)
Paymeent to venture partner for acquisition
of interest. . . . . . . . . . . . . . . . . . . . (2,500,000) -- --
------------ ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . 219,675,755 20,539,729 4,363,358
------------ ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . (484,131) -- --
Payoff of mortgage loans . . . . . . . . . . . . . . (150,708,423) -- --
Principal payments on notes payable. . . . . . . . . -- (70,701) (70,701)
Venture partners' contributions to venture . . . . . 104,500 453,039 --
Distributions to venture partners. . . . . . . . . . -- (38,797) (338,967)
Distributions to general partners. . . . . . . . . . -- (425,098) --
Distributions to limited partners. . . . . . . . . . (6,653,710) (17,890,328) (370,023)
------------ ----------- -----------
Net cash provided by (used in)
financing activities . . . . . . . . . . . (157,741,764) (17,971,885) (779,691)
------------ ----------- -----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . 71,867,305 2,005,464 4,328,462
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . . 26,998,190 24,992,726 20,664,264
------------ ----------- -----------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . . . $ 98,865,495 26,998,190 24,992,726
============ =========== ===========

<PAGE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1999 1998 1997
----------- ----------- -----------
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest. . . . . . $12,336,601 4,869,649 21,188,582
=========== =========== ===========
Non-cash investing and financing activities:
Non-cash gain recognized on sale of
interests in ventures. . . . . . . . . . . . . . $ -- 10,744,678 568,625
=========== =========== ===========
Sale or disposition of investment properties:
Total sale proceeds, net of selling expenses . . $ -- -- 26,146,900
Purchase price of mortgage loan. . . . . . . . . -- 74,891,213 --
Prepayment penalties . . . . . . . . . . . . . . -- -- --
Payment of mortgages payable and
accrued interest . . . . . . . . . . . . . . . -- -- (23,026,518)
Discharge of mortgage loan . . . . . . . . . . . -- (74,891,013) --
Incentive fee to manager of investment
property . . . . . . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Cash proceeds from sale or disposition
of investment properties, net of
selling expenses . . . . . . . . . . . . . $ -- 200 3,120,382
=========== =========== ===========
Disposition of investment properties:
Balance due on long-term debt cancelled. . . . . $ -- -- 10,932,588
Accrued interest expense on accelerated
long-term debt . . . . . . . . . . . . . . . . -- -- 397,729
Reduction of investment property, net. . . . . . -- -- (8,448,879)
Reduction of other assets and liabilities. . . . -- -- 551,930
----------- ----------- -----------
Non-cash gain recognized due to lenders
realizing upon security . . . . . . . . . . $ -- -- 3,433,368
=========== =========== ===========
Accrued interest forgiven by lender
on sale of property. . . . . . . . . . . . . . . $ -- 17,451,802 2,559,460
=========== =========== ===========

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

<PAGE>

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1999, 1998 AND 1997

OPERATIONS AND BASIS OF ACCOUNTING

GENERAL

The Partnership currently holds (through joint ventures) an equity
investment in two office buildings. Business activities consist of rentals
to a wide variety of commercial and retail companies, and the ultimate sale
or disposition of such real estate.

The accompanying consolidated financial statements include the
accounts of the Partnership and its majority-owned ventures, 260 Franklin
Street Associates ("260 Franklin") (prior to the sale in January 1998); C-C
California Plaza Partnership ("Cal Plaza") (prior to the sale in December
1999); Villages Northeast Associates ("Villages Northeast") and VNE
Partners, Ltd. ("VNE Partners") (sold May 7, 1996) and effective in March
1999, Progress Partners due to JMB/900's purchase of the unaffiliated
venture partners' interests in Progress Partners (then sold in November
1999). The effect of all transactions between the Partnership and the
consolidated ventures has been eliminated.

The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interests in JMB/Piper Jaffray Tower Associates ("JMB/Piper") and JMB/Piper
Jaffray Tower Associates II ("JMB/Piper II"); 900 Third Avenue Associates
("JMB/900") (prior to March 1999 acquisition as mentioned above);
Maguire/Thomas Partners - South Tower LLC (formerly Maguire/Thomas
Partners-South Tower) ("South Tower"); JMB/Owings Mills Associates
("JMB/Owings") (sold June 30, 1993); JMB/NewPark Associates,
("JMB/NewPark") (sold November 18, 1998); and Carlyle-XV Associates, L.P.,
which owned an interest in JMB/125 Broad Building Associates, L.P.
("JMB/125"). In November 1994, the Partnership through its indirect
ownership of JMB/125 assigned its interest in the 125 Broad Street
Building. In December 1998, JMB/125 was terminated.

Due to the restructuring of the Partnership's interest in Wells Fargo
Center - South Tower as discussed below, the Partnership has ceased loss
recognition relative to its real estate investment and has reversed those
previously recognized losses that the Partnership is no longer obligated to
fund, which was reflected as income from restructuring in 1996 in the
Partnership's share of income from operations of unconsolidated ventures.
The Partnership has no future funding 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.

The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to present the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of certain ventures as described
above. Such GAAP and consolidation adjustments are not recorded on the
records of the Partnership. The net effect of these items is summarized as
follows for the years ended December 31, 1999 and 1998:

<PAGE>

1999 1998
---------------------------- ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . $102,036,799 134,337,244 89,187,533 88,019,339

Partners' capital accounts
(deficit):
General partners . . . . . . . . (20,827,304) (6,720,327) (21,063,770) (10,421,992)
Limited partners . . . . . . . . 22,245,614 68,271,070 (18,275,859) 9,021,905

Net earnings (loss):
General partners . . . . . . . . 236,466 3,701,665 351,653 4,625,257
Limited partners . . . . . . . . 47,175,183 66,049,076 46,996,159 16,552,176

Net earnings (loss) per
limited partnership
interest . . . . . . . . . . . . . 106.36 148.91 105.95 37.31
============ ============ =========== ===========
</TABLE>

<PAGE>

The net earnings (loss) per limited partnership interest ("Interest")
is based upon the Interests outstanding at the end of each period. Deficit
capital accounts will result, through the duration of the Partnership, in
the recognition of net gain for financial reporting and Federal income tax
purposes.

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

Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations and other securities at cost
which approximates market. For the purposes of these statements, the
Partnership's policy is to consider all such amounts held with original
maturities of three months or less (approximately $96,000,000 and
$27,000,000 at December 31, 1999 and 1998, respectively) as cash
equivalents, which includes investments in an institutional mutual fund
which holds U.S. Government obligations, with any remaining amounts
(generally with maturities of one year or less) reflected as short-term
investments being held to maturity.

Escrow deposits and restricted securities primarily represent cash and
investments restricted as to their use by the Partnership.

Deferred expenses are comprised principally of deferred financing fees
which are amortized over the related debt term and deferred leasing fees
which are amortized over the related lease term.

Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
prorated rental income for the full period of occupancy on a straight-line
basis.

No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners. Due
to this, approximately $130,000 and $16,000 representing such withholding
was remitted to the state of Maryland on behalf of the Holders of Interest
in 1999 and 1998, respectively.

The Partnership acquired, either directly or through joint ventures,
interests in four apartment complexes, twelve office buildings, four
shopping centers and one parking facility. The Partnership's aggregate
cash investment, excluding certain related acquisition costs, was
$299,637,926. During 1989, the Partnership disposed of its interest in the
investment property owned by CBC Investment Company ("Boatmen's"). During
1991, the Partnership sold 62% of its interest in the 300 E. Lombard
Building and in 1993 sold its remaining 38% interest in the 300 E. Lombard
Building. In September 1992, the Partnership sold the Erie-McClurg Parking
Facility. In June 1993, the Partnership sold (through JMB/Owings) its
interest in Owings Mills Shopping Center. In March 1994, the Partnership,
through Villa Solana Associates, sold the Villa Solana Apartments. In May

<PAGE>

1994, the lender realized upon its security interest in the Park at
Countryside Apartments. In October 1994, the Partnership sold the 9701
Wilshire Office Building. In November 1994, the Partnership through the
JMB/125 venture, assigned its interest in the 125 Broad Street Building to
an affiliate of its unaffiliated venture partner. In June 1995, the
Partnership sold its interest in Eastridge Mall. In January 1996, the
lender realized upon its security interest in the 160 Spear Street
Building. In March 1996, the lender realized upon its security interest in
the 21900 Burbank Boulevard Building. In May 1996, the Partnership sold
the Woodland Hills apartment complex. Also, in May 1996, the Partnership,
through Villages Northeast and VNE Partners, Ltd., sold the Dunwoody
Crossing Phases I, II and III apartment complex. In January 1997, the
lender realized upon its security interest in the Springbrook Shopping
Center. In December 1997, the Partnership sold the RiverEdge Place office
building. In January 1998, the Partnership, through 260 Franklin Street
Associates, disposed of the 260 Franklin Street Building. In November
1998, the Partnership, through the NewPark Associates venture, sold the
NewPark Mall. In November 1999, the Partnership, through JMB/900, sold the
900 Third Avenue office building. In December 1999, the Partnership,
through C-C California Plaza Partnership sold the California Plaza office
building. The two remaining properties owned at December 31, 1999 were
completed and operating.

The cost of the investment properties represents the total cost to the
Partnership or its ventures plus miscellaneous acquisition costs, reduced
for provisions for value impairment where applicable. Depreciation on the
operating properties has been provided over the estimated useful lives of
5-30 years using the straight-line method.

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

The results of operations for consolidated properties classified as
held for sale or disposition as of December 31, 1999 or sold or disposed of
during the past three years were $2,111,898, $75,736 and ($5,805,022),
respectively, for the years ended December 31, 1999, 1998 and 1997. In
addition, the accompanying consolidated financial statements include for
the years ended December 31, 1999, 1998 and 1997 $505,590, $2,864,907 and
$9,745,021, respectively, as the Partnership's share of property operations
of $758,348, $3,579,605 and $18,479,631 of unconsolidated properties held
for sale or disposition as of December 31, 1999, or sold or disposed of in
the past three years.

<PAGE>

The Partnership has adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." The Partnership defines each of
its property investments as an individual operating segment and has
determined such property investments exhibit substantially identical
economic characteristics and meet the other criteria specified by SFAS No.
131, which permits the property investments to be aggregated into one
reportable segment. The Partnership assesses and measures operating
results based on net operating income (rental income less property
operating expenses). With the exception of interest income, professional
services and general and administrative expenses, substantially all other
components of net earnings (loss) of the Partnership relate to property
investments. With the exception of cash and cash equivalents,
substantially all other assets of the Partnership relate to property
investments.

The borrowings of the Partnership and its ventures consist of separate
non-recourse mortgage loans secured by the investment properties and
individually are not obligations of the entire investment portfolio.
However, for any particular investment property that is incurring deficits
or for which the existing financing has matured, the Partnership or its
ventures may seek a modification or refinancing of existing indebtedness
and, in the absence of a satisfactory debt modification or refinancing, may
decide, in light of the then existing and expected future market conditions
for such investment property, not to commit additional funds to such
investment property. This would likely result in the Partnership no longer
having an ownership interest in such property and in such event would
generally result in net gain to the Partnership for financial reporting and
Federal income tax purposes with no corresponding distributable proceeds.

Maintenance and repair expenses are charged to operations as incurred.

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

VENTURE AGREEMENTS - GENERAL

The Partnership (or Carlyle-XV Associates, L.P., in which the
Partnership held a limited partnership interest) had entered into eight
joint venture agreements (JMB/Piper, JMB/Piper II, JMB/900, JMB/Owings,
JMB/125, 260 Franklin, Villages Northeast and JMB/NewPark) with Carlyle
Real Estate Limited Partnership-XIV ("Carlyle-XIV") or Carlyle Real Estate
Limited Partnership-XVI (or Carlyle-XVI Associates, L.P., in which Carlyle
Real Estate Limited Partnership-XVI held a limited partnership interest)
("Carlyle-XVI")), which are partnerships sponsored by the Corporate General
Partner, and eight joint venture agreements with unaffiliated venture
partners. Pursuant to such agreements, the Partnership made initial
capital contributions of approximately $247,300,000 (before legal and other
acquisition costs and its share of operating deficits as discussed below).
The terms of these affiliated partnerships provide, in general, that the
benefits of ownership, including tax effects, net cash receipts and sale
and refinancing proceeds, are allocated between or distributed to, as the
case may be, the Partnership and the affiliated partner in proportion to
their respective capital contributions to the affiliated venture.

There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership. Under certain
circumstances, either pursuant to the venture agreements or due to the
Partnership's obligations as a general partner, the Partnership may be
required to contribute additional amounts to the venture.

<PAGE>

The terms of the Cal Plaza venture can be described as follows:
generally, operating profits and losses are shared in the same ratio as net
cash receipts; however, if there are no net cash receipts, substantially
all profits or losses are allocated to the Partnership. In addition,
generally amounts equal to certain expenses paid from capital contributions
by the Partnership or venture partner are allocated to the contributing
partner or partners.

INVESTMENT PROPERTIES

RIVEREDGE PLACE BUILDING

On December 23, 1997, the Partnership sold the RiverEdge Place Office
Building for $26,600,000 less selling costs of approximately $428,000.
Approximately $3,200,000 (which includes the $500,000 discussed below) of
cash proceeds was received by the Partnership from the sale, net of closing
costs and the payment of $23,026,518 of the outstanding mortgage principal
and accrued interest on the loan secured by the property pursuant to a
previously agreed upon term sheet described below. The remaining
approximately $2,600,000 of accrued interest was forgiven by the lender in
conjunction with the sale. The accompanying financial statements for 1997
include $8,631,561 of gain on disposition of investment property and
$2,559,460 of extraordinary gain of extinguishment of debt. The
Partnership also had a gain of approximately $11,750,000 for Federal income
tax purposes in 1997.

The Partnership ceased making monthly debt service payments effective
July 1, 1992 and continued to seek to restructure the mortgage note. Prior
to the sale, the lender and the Partnership agreed to a non-binding term
sheet which allowed the Partnership to participate in proceeds from a sale
of the property. The term sheet stipulated that after payment of the
remaining outstanding principal balance of approximately $18,166,000, the
Partnership would receive $500,000 with any remaining sale proceeds
allocated 60% to the lender (as a payment of previously accrued interest)
and 40% to the Partnership. Additionally, pursuant to the term sheet, the
Partnership agreed to remit to the lender all cash flow from operations of
the property commencing July 1, 1992 through the date of sale
(approximately $6,350,000) as an additional payment of previously accrued
interest.

SPRINGBROOK SHOPPING CENTER

The Springbrook Shopping Center was approximately 53% occupied at the
end of 1996 and operated at a deficit in 1996. The Partnership decided not
to commit significant additional amounts to the property and ceased making
monthly debt service payments in June 1996. Accordingly, the mortgage loan
with a scheduled maturity of April 1997 and a principal balance of
$10,932,588 had been classified as a current liability at December 31,
1996. The property was classified as held for sale or disposition as of
April 1, 1996, and therefore, the property was no longer subject to
depreciation after such date. Also, commencing in June 1996, all net cash
flow from the property was being escrowed with the lender. Principal and
interest payments in arrears as of December 31, 1996 were approximately
$323,000. As a result of the non-payment of debt service, the lender
realized upon its security and in January 1997 took title to the property
in full satisfaction of the loan secured by the property. The Partnership
recognized a gain for financial reporting purposes of $3,433,368 and a loss
for Federal income tax purposes of $4,923,280 in 1997.

BOATMEN'S

During 1989 the joint venture defaulted on the mortgage loan secured
by the property, and the lender obtained title to the property. As a
result, the Partnership has no further ownership interest in the property.

<PAGE>

During 1990, the Partnership accepted non-interest bearing promissory
notes totalling $2,325,000 as settlement for certain claims against the
joint venture partner. As of December 31, 1997, the Partnership had
received cash payments totalling $1,910,937 and scheduled payments were
delinquent in the amount of $414,063. During 1998, $23,748 was received as
final settlement for one of the promissory notes and the remaining amount
of $224,690 was written off. During 1999, $55,000 was received as a final
settlement on the remaining promissory note and the remaining amount of
$110,625 was written off. The Partnership has recognized revenue on the
settlement to the extent of the cash collected.

CALIFORNIA PLAZA

In December 1993, 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, an
extended the maturity date to January 1, 2000 when the unpaid balance of
principal and interest was 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 required
monthly net cash flow to be escrowed (as defined). A portion of such funds
were reserved for the payment of deferred interest and principal on the
mortgage loan.

On December 23, 1999, the Partnership, through a joint venture, C-C
California Plaza Partnership (the "Venture"), sold the California Plaza
office building. Upon closing, the Venture received cash of $6,754,665
(net of closing costs but before prorations). The cash was also net of the
repayment of the mortgage loan secured by the property of approximately
$64,100,000. The terms of the Venture agreement generally provide that the
unaffiliated venture partner did not participate in any sale proceeds until
(i) the Partnership's cumulative preferred return, as defined, had been
satisfied and (ii) the Partnership received up to an additional $20,000,000
in sale proceeds. Therefore, the Partnership was entitled to and received
all of the proceeds from the sale of the property. Additionally, in
connection with the sale of the property, the Venture received the balance
of cash receipts (approximately $3,400,000) in a reserve account that had
been controlled by the mortgage lender for the payment of future costs,
including tenant improvements, leasing commissions and capital improvements
for the Property. The terms of the Venture agreement generally provide
that net cash receipts would be distributed to the Partnership until the
Partnership's cumulative preferred return, as defined, had been satisfied.
Therefore, the Partnership also received the funds released from the
reserve account.

The property had been classified as held for sale or disposition as of
December 31, 1996, and therefore, had not been subject to continued
depreciation after such date. As a result of this sale, the Venture
recognized a gain of $23,089,381 and $49,334,171 for financial reporting
and Federal income tax purposes, respectively. The Partnership's share of
such items was $23,089,381 and $29,545,904, respectively. As is customary
in such transactions, the Venture has agreed to certain representations,
warranties and covenants with a stipulated survival period, which expires
on December 25, 2000. Although it is not expected, the Venture and the
Partnership may ultimately have some liability under such representations,
warranties and covenants, which are limited to actual damages and shall, in
no event, exceed $2,000,000. In addition, the Partnership made certain
representations and indemnities to the purchaser and the title insurance
company relating to its right to cause a sale of the property.

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. The
Partnership assumed the rights to the note upon the sale of the California
Plaza office building. As of December 31, 1999, the outstanding balance of
the note receivable was $208,109 which is included in current portion of
note receivable and long-term portion of note receivable.

<PAGE>

PIPER JAFFRAY TOWER

In 1984, the Partnership with C-XV acquired, through JMB/Piper, an
interest in a 42-story office building known as the Piper Jaffray Tower in
Minneapolis, Minnesota with the developer and certain limited partners. In
April 1986, JMB/Piper II, a joint venture partnership between the
Partnership and C-XV, acquired the developer's interest in the OB Joint
Venture, which owns a fee interest in the land underlying the office
building. JMB/Piper holds its interest in the property through three
existing joint ventures (OB Joint Venture, OB Joint Venture II and 222
South Ninth Street Limited Partnership, together "Piper"). The terms of
the JMB/Piper and JMB/Piper II venture agreements generally provide that
JMB/Piper's and JMB Piper II's respective shares of Piper's annual cash
flow, sale or refinancing proceeds and profits and losses will be
distributed or allocated to the Partnership in proportion to its 50% share
of capital contributions.

JMB/Piper invested approximately $19,915,000 for its 71% interest in
Piper. JMB/Piper is obligated to loan amounts to Piper to fund operating
deficits (as defined). The loans bear interest at a rate of not more than
14.36% per annum, provide for payments of interest only from net cash flow,
if any, and are repayable from net sale or refinancing proceeds. Such
loans and accrued interest were approximately $147,000,000 and $127,000,000
at December 31, 1999 and 1998, respectively.

The property is subject to a mortgage loan in the principal amount of
$100,000,000 of which approximately $95,619,000 is outstanding as of
December 31, 1999. Under the terms of a modification agreement with the
lender, in addition to fixed interest on the mortgage notes secured by the
Piper Jaffray Tower, contingent interest is payable in annual installments
on April 1 computed at 50% of gross receipts, as defined, for each fiscal
year in excess of $15,200,000. No such contingent interest was due for the
years ended December 31, 1997, 1998 or 1999. In addition, to the extent
the investment property generates cash flow after payment of the fixed
interest on the mortgage, contingent interest, if any, leasing and capital
costs, and 25% of the ground rent, such amount will be paid to the lender
as a reduction of the principal balance of the mortgage loan. The excess
cash flow payments remitted to the lender for 1997 totalled $385,523.
During 1999 and 1998, no such excess cash flow was generated. However, the
lender disputed certain amounts included in the calculation of cash flow
for the years 1997 and 1998. This resulted in JMB/Piper owing an
additional amount of cash flow (approximately $122,000) for 1997.
Additionally, JMB/Piper incurred excess capital costs of approximately
$199,000 in 1998 for which it was entitled to reimbursement from the escrow
account. In settling such dispute, the lender and JMB/Piper agreed to have
the additional cash flow paid directly from the escrow account with the
balance paid to JMB/Piper for excess capital costs incurred (approximately
$77,000), which JMB/Piper received in the fourth quarter of 1999. On a
monthly basis, Piper deposits the property management fee into an escrow
account to be used (including interest earned thereon) for future leasing
costs to the extent cash flow is not sufficient to cover such items. In
1999, approximately $610,000 representing property management fees was
deposited and approximately $260,000 was withdrawn from the escrow account
for certain leasing costs. The escrow balance as of December 31, 1999 was
approximately $5,724,000. It is expected that JMB/Piper will repay
approximately $50,000 of funds drawn from the escrow account in excess of
expenditures for certain leasing costs incurred in 1999. The manager of
the property (which was an affiliate of the Corporate General Partner
through November 1994) has agreed to defer receipt of its management fee.
As of December 31, 1999, the manager has deferred approximately $5,055,000

<PAGE>

($1,839,000 of which represents deferred fees due to affiliates through
November 1994) of management fees. If upon sale or refinancing of the
property or maturity of the loan, there are funds remaining in this escrow
after payment of amounts owed to the lender, such funds will be paid to the
manager to the extent of its deferred and unpaid management fees.
Additionally, pursuant to the terms of the loan modification, effective
January 1992, OB Joint Venture, as majority owner of the underlying land,
began deferring receipt of its share of land rent. These deferrals, which
totaled $8,342,500 as of December 31, 1999, will be payable from net sale
or refinancing proceeds, if any.

Repayment of the mortgage loan is subject to a prepayment fee ranging
from 6% to 1% through the maturity date as well as an amount that will
provide the lender with an internal rate of return from 12.75% to 13.59%
out of proceeds from the sale or refinancing of the property. After the
prepayment fees, the lender participates in any remaining sale or
refinancing proceeds. Based on the Partnership's estimate of the value of
the building at December 31, 1997, it was determined that the lender is not
expected to receive the entire balance of the loan and interest that Piper
had accrued based on the above mentioned internal rate of return,
contingent upon the sale or refinancing of the property. Therefore, in
1997, $18,600,000 of such interest was reversed and charged to operations.
Total indebtedness, including such interest under the mortgage loan, is
approximately $99,262,000 and $99,384,000 at December 31, 1999 and 1998,
respectively. Under the current terms of the modified debt, there must be
a significant improvement in the current market and property operating
conditions resulting in a significant increase in value of the property in
order for JMB/Piper to share in any future net sale or refinancing
proceeds. Given the extremely competitive nature of the downtown
Minneapolis market and PJI's pending vacancy, it is not expected that the
value of the building will increase in the near term to permit JMB/Piper to
share in any future sale or refinancing proceeds.

The Piper venture agreements provide that any net cash flow, as
defined, will be used to pay principal and interest on the operating
deficit loans (as described above) with any excess generally distributable
71% to JMB/Piper and 29% to the venture partners, subject to certain
adjustments (as defined). In general, operating profits or losses are
allocated in relation to the economic interests of the joint venture
partners. Accordingly, operating profits (excluding depreciation and
amortization) were generally allocated 71% to the JMB/Piper and 29% to the
venture partners during 1998, 1997 and 1996.

The Piper venture agreements further provide that, in general, upon
any sale or refinancing of the property, the principal and any accrued
interest outstanding on any operating deficit loans are to be repaid out of
net proceeds. Any remaining proceeds will be distributable 71% to
JMB/Piper and 29% to the joint venture partners, subject to certain
adjustments, as defined.

During the fourth quarter 1991, Larkin, Hoffman, Daly & Lindgren, Ltd.
(23,344 square feet) approached Piper indicating it was experiencing
financial difficulties and desired to give back a portion or all of its
leased space. Larkin's lease was scheduled to expire in January 2005 and
provided for annual rental payments which were significantly higher than
current market rental rates. Larkin was also a limited partner with
partial interests in the building and the land under the building. On
January 15, 1992, Piper agreed to terminate Larkin's lease in return for
its partial interest in the land under the building and a $1,011,798 note
receivable. The note receivable provides for monthly payments of principal
and interest at 8% per annum with full repayment over ten years. Larkin
may prepay all or a portion of the note at any time. As of the date of
this report, all amounts due under the note have been received. The
balance of the note receivable as of December 31, 1999 is $292,152.

<PAGE>

terms and PJI announced that it would be moving to a new building (recently
completed in Minneapolis) upon expiration of its existing lease. PJI has
extended a portion of its current space (approximately 68,000 square feet)
through December 31, 2001. Additionally, JMB/Piper has executed new long-
term leases representing an additional approximately 60,000 square feet.
The property manager is actively pursuing replacement tenants for the
balance of the PJI space; however, given the extremely competitive nature
of the downtown Minneapolis market due to a significant amount of new
office construction, not all of the PJI space can be released quickly
enough to generate enough cash flow to fund the required debt service
payments as of June 1, 2000.

JMB/900

In 1984, the Partnership with C-XV acquired, through JMB/900, an
interest in an existing joint venture ("Progress Partners") which owns a
36-story office building known as the 900 Third Avenue Building in New
York, New York. The partners of Progress Partners were the developer of
the property ("PPI") and an original affiliate of PPI ("JRA") and JMB/900.
In 1986, PPI transferred a portion of its interest to another partnership
("PC-900") in which it and a major tenant of the building (Central National
Bank) were partners. In 1987 the bank failed and the Federal Deposit
Insurance Corporation ("FDIC") assumed its position as a limited partner in
PC-900. Prior to the sale of their interests, the partners of Progress
Partners were PPI, JRA and PC-900 (together "Venture Partners") and
JMB/900.

The terms of the JMB/900 venture agreement generally provide that
JMB/900's share of Progress Partners' cash flow, sale or refinancing
proceeds and profits and losses will be distributed or allocated to the
Partnership in proportion to its 33-1/3% share of capital contributions.

Pursuant to the extension of the mortgage loan, prior to the sale of
the property in November 1999, net cash flow (as defined) was paid into an
escrow account controlled by the lender. The escrow account, including
interest earned thereon, was to be used by Progress Partners for payment of
property taxes and releasing costs associated with leases which expire in
1999 and 2000 (approximately 50% of the building including the Schulte,
Roth & Zabel lease). The remaining proceeds in this escrow plus interest
earned thereon, if any, were to be released to Progress Partners once 90%
of such space had been renewed or released. During 1999, prior to the sale
of the property, approximately $7,934,000 had been deposited into escrow
from net cash flow from property operations. The escrow balance at closing
of the property sale was approximately $16,083,000. Such escrow was
released to Progress Partners upon the sale of the property discussed
below.

In December, 1997, two of the Venture Partners, JRA and PPI, filed for
bankruptcy in order to prevent the foreclosure of their interests by State
of Maryland Deposit Insurance Fund Corporation ("MDIFC"). Since the
bankruptcy filing, an affiliate of PPI effected a settlement with MDIFC by
purchasing its claims. JMB/900 pursued certain claims against the Venture
Partners in the bankruptcy forum and sought to either foreclose on or buy-
out the interests of the Venture Partners in Progress Partners, or to
otherwise dispose of those interests pursuant to a bankruptcy plan. The
Venture Partners asserted claims against Progress Partners and JMB/900
including claims for unpaid Guaranteed Payments in the purported amount of
$36 million. JMB/900 denied that such claims were due and owing.

<PAGE>

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

In July 1999, JMB/900, through Progress Partners, entered into a
contract to sell the 900 Third Avenue Building to an unaffiliated third
party. On November 2, 1999, JMB/900 sold the property for approximately
$163,000,000. Upon closing, JMB/900 received cash from the sale of
approximately $62,300,000 (net of closing costs but before prorations).
The cash received is also net of the repayment of the mortgage loan secured
by the property of approximately $87,000,000, a prepayment penalty of
approximately $5,800,000 and the final payment to the Progress Parties
pursuant to the Settlement Agreement of approximately $2,500,000. As a
result of this sale, JMB/900 recognized a gain of approximately $54,000,000
and $77,000,000 for financial reporting and Federal income tax purposes,
respectively. The Partnership's share of such items was approximately
$35,900,000 and $51,400,000, respectively. As is customary in such
transactions, JMB/900 agreed to certain representations, warranties and
covenants with a stipulated survival period, which expires on September 15,
2000. Although it is not expected, JMB/900 may ultimately have some
liability under such representations, warranties and covenants, which are
limited to actual damages and shall in no event exceed $2,000,000. As
required by the sale agreement, JMB/900 has placed this amount into an
escrow account.

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

WELLS FARGO CENTER - SOUTH TOWER

In June 1985, the Partnership acquired an interest in a joint venture
partnership ("South Tower") which owns a 44-story office building in Los
Angeles, California. The joint venture partners of the Partnership
included Carlyle-XIV ("Affiliated Partner"), one of the sellers of the
interests in South Tower, and another unaffiliated venture partner.

<PAGE>

The Partnership and the Affiliated Partner purchased their interests
for $61,592,000. In addition, the Partnership and the Affiliated Partner
made capital contributions to South Tower totaling $48,400,000 for general
working capital requirements and certain other obligations of South Tower.
The Partnership's share of the purchase price, capital contributions (net
of additional financing) and interest thereon totaled $53,179,000.

The terms of the original South Tower agreement generally provided
that the Partnership and Affiliated Partner's aggregate share of the South
Tower's annual cash flow, net sale or refinancing proceeds, and profits and
losses be distributed or allocated to the Partnership and the Affiliated
Partner in proportion to their aggregate capital contributions.

Annual cash flow was to be distributed 80% to the Partnership and
Affiliated Partner and 20% to another partner until the Partnership and the
Affiliated Partner received, in the aggregate, a cumulative preferred
return of $8,050,000 per annum. The remaining cash flow was to be
distributable 49.99% to the Partnership and the Affiliated Partner, and the
balance to the other joint venture partners. Additional contributions to
South Tower were contributed 49.99% by the Partnership and the Affiliated
Partner until all partners had contributed $10,000,000 in aggregate.

Operating profits and losses, in general, were to be allocated 49.99%
to the Partnership and the Affiliated Partner and the balance to the other
joint venture partners. Substantially all depreciation and certain
expenses paid from the Partnership's and Affiliated Partner's capital
contributions were to be allocated to the Partnership and Affiliated
Partner. In addition, operating profits, up to the amount of any annual
cash flow distribution, were allocated to all partners in proportion to
such distributions of annual cash flow.

In general, upon sale or refinancing of the property, net sale or
refinancing proceeds were to be distributed 80% to the Partnership and the
Affiliated Partner and 20% to another partner until the Partnership and the
Affiliated Partner received the amount of any deficiency in their preferred
return described above plus an amount equal to their "Disposition
Preference" (which, in general, began at $120,000,000 and increased
annually by $8,000,000 to a maximum of $200,000,000). Any remaining net
sale or refinancing proceeds were to be distributed 49.99% to the
Partnership and the Affiliated Partner and the remainder to the other
partners.

The office building is being managed by an affiliate of one of the
venture partners under a long-term agreement pursuant to which the
affiliate is entitled to receive a monthly management fee of 2-1/2% of
gross project income, a tenant improvement fee of 10% of the cost of tenant
improvements, and commissions on new leases.

The mortgage note secured by the property (with a balance of
approximately $175,243,000 and accrued interest of approximately $1,509,000
as of December 31, 1999), matured December 1, 1994. The Partnership and
the joint venture had been in discussions with the lender regarding an
extension of the mortgage note. The venture continued to make interest
payments to the lender under the original terms of the mortgage note and
was required to escrow all available cash flow. In the fourth quarter of
1996, the joint venture and the lender reached an agreement to modify the
mortgage note. The agreement provides that the mortgage note be extended
to September 2003 at an interest rate of 10% with all excess cash flow
being escrowed for future tenant improvements and principal payments. In
addition, upon sale or refinancing of the property subsequent to
September 1, 1999, the mortgage loan requires payment of participation
interest (as defined) of any excess proceeds.

<PAGE>

Concurrently, in the fourth quarter of 1996, the Partnership reached
an agreement with the lender to modify the promissory note (with a
principal balance of $22,750,000 and accrued interest of approximately
$5,800,000 prior to modification). The Partnership's amended and restated
promissory note has an adjusted principal balance of approximately
$40,830,000 consisting of the original principal loan balance, unpaid
accrued interest, the Partnership's share of the mortgage loan extension
fee and a restructuring fee of approximately $11,600,000. The promissory
note is due September 2003 and accrues interest at 17% per annum. The loan
requires payments of cash flow distributed by the venture from either
property operations or sales proceeds as well as a portion of the property
management fee paid to the venture partner. The loan is secured solely by
the Partnership's interest in the property and is non-recourse to the
Partnership.

In conjunction with the note modifications, the South Tower was
converted to a limited liability company with members' interests in the
same ratio as the prior venture ownership interests. The conversion of the
Partnership's interest to a member's interest in a limited liability
company eliminated any potential additional obligation of the Partnership
in the future to provide additional funds under the previous joint venture
agreement. As a result, previously recognized losses of $10,620,944 have
been reversed, the Partnership's share of losses in 1999 of approximately
$3,629,000 were not recognized and the Partnership's share of income for
financial reporting purposes (approximately $286,000 in 1997 and $464,000
in 1998) has not been recognized as such income amounts are not considered
realizable.

At maturity of the loans, it is not anticipated that further
modifications or extensions can be obtained. This would likely result in
a lender taking title to the property or the Partnership's interest in the
limited liability company. In such event, the Partnership would no longer
have an ownership interest in the property, which would result in income to
the Partnership for Federal income tax purposes with no corresponding
distributable proceeds. Since the terms of the modified mortgage note and
the amended and restated promissory note make it unlikely that the
Partnership would recover any incremental investment, the Partnership has
decided not to commit any significant additional amounts to the property.

JMB/125

In December 1985, the Partnership, through the JMB/125 joint venture
partnership, acquired an interest in an existing joint venture partnership
("125 Broad") which owned a 40-story office building, together with a
leasehold interest in the underlying land, located at 125 Broad Street in
New York, New York. In addition to JMB/125, the other partners (the "O&Y
partners") of 125 Broad included O&Y 25 Realty Company L.P., Olympia & York
Broad Street Holding Company L.P. (USA) and certain other affiliates of
Olympia & York Development, Ltd. ("O&Y").

In November 1994, the Partnership through its indirect ownership of
JMB/125 assigned its interest in the 125 Broad Street Building to the
venture partners.

Due to the O&Y partners' previous failure to advance necessary funds
to 125 Broad as required under the joint venture agreement, 125 Broad in
June 1992 defaulted on certain mortgage obligations. On November 15, 1994,
effective as of October 31, 1994, JMB/125 and certain affiliates of O&Y
reached an agreement to settle their disputes regarding 125 Broad and its
property. Under the terms of the agreement, JMB/125 assigned its interest
in 125 Broad to an affiliate of O&Y and released the O&Y partners from any
claims related to 125 Broad. In return, JMB/125 received an unsecured
promissory note in the principal amount of $5 million bearing simple
interest at 4.5% per annum with all principal and accrued interest due at
maturity in October 1999, subject to mandatory prepayments of principal and

<PAGE>

interest or acceleration of the maturity date under certain circumstances.
As of December 31, 1994, the note had been fully reserved for by JMB/125.
In addition, JMB/125 received a release from any claims of certain O&Y
affiliates and generally was to be indemnified against any liability as a
general partner of 125 Broad. JMB/125 was also relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance. Affiliates of O&Y subsequently filed a prearranged
bankruptcy plan for reorganization of 125 Broad under Chapter 11 of the
Bankruptcy Code in order to facilitate 125 Broad's transfer of the office
building to the mortgage lender in satisfaction of the mortgage debt and
other claims. In January 1995, the plan for reorganization was approved by
the bankruptcy court, was consummated, and the bankruptcy case was
concluded. As a result of the assignment of its interest, JMB/125 no
longer has an ownership interest in the office building.

In October 1995, the makers of the $5 million promissory note payable
to JMB/125 filed for protection from creditors under Chapter 11 of the
Bankruptcy Code. Pursuant to the bankruptcy reorganization of the makers
of the note, JMB/125, as an unsecured creditor, received limited
partnership interests and a convertible note receivable in a reorganized
entity that had majority or controlling interests in six office buildings
in New York, New York and Boston, Massachusetts. The assigned value, as of
the bankruptcy confirmation date, of the interests and note received by
JMB/125 was approximately $400,000. The convertible note was fully
reserved due to the uncertainty of the realizable value of the note. In
June 1997, the convertible note receivable for $297,000 was collected on by
JMB/125 resulting in the recognition of gain, of which the Partnership's
share was $174,654. In December 1998, the limited partnership interests
were sold back to the reorganized entity for $118,642 resulting in
recognition of gain, of which the Partnership's share was $81,612, and
JMB/125 was terminated.

JMB/NEWPARK

In December 1986, the Partnership, through the JMB/NewPark joint
venture partnership, acquired an interest in an existing joint venture
partnership ("NewPark Associates") with the developer which owns an
interest in an existing enclosed regional shopping center in Newark,
California known as NewPark Mall. JMB/NewPark invested $32,500,000 for its
50% interest in NewPark Associates. In December 1995, the developer
transferred its interest in NewPark Associates to a new venturer affiliated
with the developer.

The NewPark Mall secured a mortgage note payable in the principal
amount of $60,000,000, due on December 31, 2000. The loan provided for
monthly interest-only payments of $357,500. Interest on the non-recourse
loan accrued at 7.15% per annum.

The NewPark Associates partnership agreement provided that JMB/NewPark
and the joint venture partner were each entitled to receive 50% of profits
and losses, net cash flow and net sale or refinancing proceeds of NewPark
Associates and were each obligated to advance 50% of any additional funds
required under the terms of the NewPark Associates partnership agreement.

As a result of the acquisition by Federated Department Stores of the
company which owned the Emporium Capwell store at NewPark, Federated, which
also owns the Macy's store at NewPark, approached NewPark Associates
regarding a sale of the Emporium building. Simultaneously with its
negotiations to acquire the Emporium Capwell building, NewPark Associates
negotiated to sell the building to a national retail store owner. The
transactions closed on April 22, 1997 and the joint venture received a
lease termination fee of approximately $2,187,000, of which the
Partnership's share was approximately $984,000.

<PAGE>

The portion of the shopping center owned by NewPark Associates was
managed under a long-term agreement pursuant to which the manager was paid
a management fee equal to 4% of the fixed and percentage rent. An
amendment to the management agreement provided that the new manager would
pay to an affiliate of the General Partners of the Partnership an annual
consulting fee in the amount of $100,000 in consideration for assisting
NewPark Associates and the venture partner in the evaluation of property
budgets and leasing and long-term strategies for NewPark Mall. Such
consulting fee was paid out of the management fee noted above.

Pursuant to a liquidation agreement dated November 13, 1998, JMB/New
Park and the venture partner dissolved NewPark Associates and distributed
all of its assets to the joint venture partners. On November 18, 1998,
JMB/NewPark sold its interest in the net assets of the NewPark Mall to the
venture partner for $16,000,000 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.

260 FRANKLIN

In May 1986, the Partnership, through the 260 Franklin joint venture
partnership, acquired an interest in an office building in Boston,
Massachusetts known as the 260 Franklin Street Building.

The property was subject to a first mortgage loan in the original
principal amount of approximately $75,000,000. 260 Franklin's original
cash investment (exclusive of acquisition costs) was approximately
$35,000,000 of which the Partnership's share was approximately $24,500,000.

An affiliate of the General Partner managed the property until
December 1994 for a fee computed at 3% of the property's gross receipts.
Beginning January 1, 1992, 260 Franklin Street escrowed the payment of
property management fees and leasing commissions to the affiliate pursuant
to the terms of the debt modification described below. In December 1994,
the affiliated property manager sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. The property was then managed by the purchaser of the affiliate's
assets on the same terms provided in the property management agreement,
with the payment of the management fees guaranteed by JMB in 1995.
Beginning in January 1996, the unaffiliated property manager was paid
management fees by the property.

The mortgage note, as modified in December 1991, provided for monthly
payments of interest only based upon the then outstanding balance at a rate
of 8% per annum. Upon maturity, 260 Franklin was obligated to pay an
amount sufficient to provide the lender with an 11% per annum yield on the
mortgage note from January 1, 1991. In addition, upon maturity, 260
Franklin was obligated to pay to the lender a residual interest amount
equal to 60% of the highest amount, if any, of (i) net sales proceeds, (ii)
net refinancing proceeds, or (iii) net appraisal value, as defined. 260
Franklin was required to (a) escrow excess cash flow from operations
(computed without a deduction for property management fees and leasing
commissions), beginning in 1991, to cover future cash flow deficits, (b)
make an initial contribution to the escrow account of $250,000, of which
the Partnership's share was $175,000, and (c) make annual escrow
contributions, through January 1995, of $150,000, of which the
Partnership's share was $105,000. The escrow account ($202,378 at
December 31, 1997 including accrued interest) was to be used to cover the
cost of capital and tenant improvements and lease inducements
(approximately $5,045,000 used as of December 31, 1997) as defined. The
balance of the escrowed funds remaining at December 31, 1997 was used for
the payment of interest due to the lender as described above.

<PAGE>

The mortgage loan matured January 1, 1996. 260 Franklin, as of such
date, began submitting the net operating cash flow of the property to the
lender while seeking an extension or refinancing of the loan. The joint
venture reached an agreement with the lender for an extension of the
mortgage loan through January 1, 1997 and again through January 1, 1998.
In addition to substantially the same terms as were in effect prior to such
extensions, the agreement required that 260 Franklin submit net operating
cash flow of the property to the lender. In addition, the lender had
indicated that it would not extend the loan beyond January 1, 1998. 260
Franklin and the Partnership believed that the value of the office building
was less than the mortgage loan, and the Partnership did not intend to
expend any additional funds of its own on the property. Accordingly, 260
Franklin entered into negotiations with the lender and an unaffiliated
third party regarding the disposition of the property to the unaffiliated
third party. Effective January 1, 1998, the joint venture entered into a
loan modification agreement with the lender in which the lender waived
accrued unpaid interest owed for the period prior to January 1, 1998, which
was approximately $17,200,000.

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.

Due to the lender negotiations described above, the property had been
classified as held for sale or disposition as of July 1, 1997, and
therefore, was not subject to continued depreciation after such date.

VILLAGES NORTHEAST

On May 7, 1996, the Partnership sold (through the Villages Northeast
venture) the Dunwoody apartment complex to the unaffiliated venture
partner, pursuant to such venture partner's right of first refusal, for
$47,000,000 less brokerage commissions, transfer taxes and legal fees of
approximately $470,000. In 1997, the Partnership recognized a gain of
approximately $269,000 for financial reporting purposes resulting from the
liquidation of Villages Northeast.

OWINGS MILLS

In December 1985, the Partnership, through the JMB/Owings joint
venture partnership, acquired an interest in an existing joint venture
partnership ("Owings Mills") which owned an interest in an enclosed
regional shopping center. JMB/Owings's original cash investment was
$7,000,000, of which the Partnership's share was $3,500,000. On June 30,
1993, JMB/Owings sold its partnership interest in Owings Mills to an
affiliate of JMB/Owing's joint venture partners.

<PAGE>

The sale price of the interest was $9,416,000, all of which was
received in the form of a promissory note. In addition, JMB/Owings was
relieved of its allocated portion of the debt secured by the property. The
promissory note (which was secured by a guaranty from an affiliate of the
purchaser and a joint venture partner) bore interest at a rate of 7% per
annum subject to increase to 8% per annum for the remainder of the term of
the note. The promissory note required principal and interest payments of
approximately $109,000 per month with the remaining principal balance of
approximately $5,500,000 due and payable on June 30, 1998. The monthly
installment of principal and interest would be adjusted for the increase in
the interest rate if applicable. Early prepayment of the promissory note
may have been required under certain circumstances, including the sale or
further encumbrance of Owings Mills Mall. On June 30, 1998, JMB/Ownings
collected the remaining principal balance of the purchase price note of
approximately $5,598,000, of which the Partnership's share was
approximately of $2,800,000 and JMB/Ownings was subsequently terminated.

The net cash proceeds and gain from sale of the interest were
allocated 50% to the Partnership and 50% to Carlyle-XVI in accordance with
the JMB/Owings partnership agreement. For financial reporting purposes,
JMB/Owings recognized, on the date of sale, gain of $5,254,855, of which
the Partnership's share was $2,627,427, attributable to JMB/Owings being
relieved of its obligations under the Owings Mills partnership agreement
pursuant to the terms of the sale agreement. JMB/Owings had adopted the
cost recovery method until such time as the purchaser's initial investment
was sufficient in order to recognize additional gain under Statement of
Financial Accounting Standards No. 66 ("SFAS #66"). JMB/Owings recognized
$6,048,733 and $787,942 of deferred gain and $202,547 and $494,172 of
interest income for the years ended December 31, 1998 and 1997,
respectively, of which the Partnership's share of deferred gain was
$3,028,163 and $393,971 and the Partnership's share of interest income was
$101,273 and $247,086, respectively.

LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1999 and
1998:
1999 1998
------------ -----------
17.0% promissory note; secured by the
Partnership's interest in the Wells
Fargo Center South Tower office building
in Los Angeles, California; principal
and accrued interest due September 2003 . . $62,608,944 55,667,069

10.375% mortgage note; secured by the
California Plaza Building; modified in
December 1993 to require interest
only payments of $384,505 (8.00%)
due monthly effective February 1993
through January 1, 2000; interest
accrued at 10.375% through January 1,
2000 when the unpaid principal and
interest was due (retired upon sale
in December 1999) . . . . . . . . . . . . . -- 62,523,394
----------- ------------
Total debt. . . . . . . . . . . . . . . 62,608,944 118,190,463
Less current portion
of long-term debt . . . . . . . . . . -- --
----------- ------------
Total long-term debt. . . . . . . . . . $62,608,944 118,190,463
=========== ============

Included in the above total long-term debt is $21,774,386 and
$21,792,401 for 1999 and 1998, respectively, which represents interest
accrued but not currently payable pursuant to the terms of the notes.

<PAGE>

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

2000 . . . . . . . $ --
2001 . . . . . . . --
2002 . . . . . . . --
2003 . . . . . . . 62,608,944
2004 . . . . . . . --

PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Holders
of Interests and 4% to the General Partners. Profits from the sale or
other dispositions of investment properties will be allocated first to the
General Partners in an amount equal to the greater of the General Partners'
share of cash distributions from the proceeds of any such sale or other
dispositions (as described below) or 1% of the total profits from any such
sales or other dispositions, plus an amount which will reduce deficits (if
any) in the General Partners' capital accounts to a level consistent with
the gain anticipated to be realized from the sale of investment properties.

Losses from the sale or other disposition of investment properties will be
allocated 1% to the General Partners. The remaining sale or other
disposition profits and losses will be allocated to the Holders of
Interests.

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

The Partnership Agreement provides that subject to certain conditions,
the General Partners shall receive as a distribution of the proceeds (net
after expenses and liabilities and retained working capital) from the sale
or refinancing of an investment property by the Partnership of up to 3% of
the selling price for any property sold, and that the remaining proceeds be
distributed 85% to the Holders of Interests and 15% to the General
Partners. However, prior to such distribution being made, the Holders of
Interests are entitled to receive 99% and the General Partners l% of net
sale or refinancing proceeds until the Holders of Interests (i) have
received cash distributions of "sale proceeds" or "refinancing proceeds" in
an amount equal to the Holders' aggregate initial capital investment in the
Partnership and (ii) have received cumulative cash distributions from the
Partnership's operations which, when combined with "sale proceeds" or
"refinancing proceeds" previously distributed, equal a 6% annual return on
the Holders' average capital investment for each year (their initial
capital investment as reduced by "sale proceeds" or "refinancing proceeds"
previously distributed) commencing with the third fiscal quarter of 1986.
The Holders of Interests have not yet received and are not expected to
receive cash distributions of net sale or refinancing proceeds in an amount
equal to their initial capital investment in the Partnership. If upon the
completion of the liquidation of the Partnership and the distribution of
all Partnership funds, the Holders of Interests have not received the
amounts in (i) and (ii) above, the General Partners will be required to
return all or a portion of the 1% distribution of net sale or refinancing
proceeds described above up to an amount equal to such deficiency in
payments to the Holders of Interests pursuant to (i) and (ii) above. As of
the date of this report, the General Partners have received net sale or
refinancing proceeds aggregating $170,311 which will be refunded upon
liquidation of the Partnership.

<PAGE>

MANAGEMENT AGREEMENTS

Certain of the Partnership's properties are managed by affiliates of
the General Partners or their assignees for fees computed as a percentage
of certain rents received by the properties. In December 1994, one of the
affiliated property managers sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. In addition, certain of the management personnel of the property
manager became management personnel of the purchaser and its affiliates.
The successor to the affiliated property manager has acted as property
manager of the 260 Franklin Street Building (through its sale in January
1998) and the RiverEdge Place Building (through its sale in December 1997)
on the same terms that existed prior to the assignment of the management
contracts. In connection with such transaction, an affiliate of the
Corporate General Partner previously guaranteed the payments to the
successor manager of certain property management fees. As a result, such
affiliate paid property management fees for the 260 Franklin Street
Building for 1995 to the successor manager pursuant to the guarantee. In
addition, the affiliated property manager had entered into a sub-management
agreement with the successor for management of the 900 Third Avenue
Building.

NOTES RECEIVABLE

In 1987 and 1988, the Partnership advanced funds to pay for certain
deficits at the 21900 Burbank Boulevard Building which were the obligation
of an affiliate of the seller. Such advances, including unpaid interest,
were approximately $2,313,000. The Partnership received demand notes from
the seller, which were personally guaranteed by certain of its principals.
The seller had been paying interest on the note at a rate equal to 3% over
the prime rate. In February 1991, the seller ceased paying monthly
interest required under terms of the note. The Partnership put the seller
in default and effective October 31, 1991, the notes began accruing
interest at the default rate. During 1994, two of the principals which
guaranteed the notes became subject to Chapter 7 bankruptcy proceedings.
Subsequently, these individuals' obligations, including their obligations
under the notes, were discharged. Previously, it appeared that the
principals guaranteeing the notes had little or no assets which the
Partnership could pursue for collection and it appeared unlikely that any
further amounts would be collected. As a matter of prudent accounting
policy, a reserve for uncollectibility for the entire amount recorded for
financial reporting purposes ($1,466,051) had been reflected in the
consolidated financial statements at December 31, 1997. In July 1998, the
Partnership received final collection, from bankruptcy proceeds, toward the
notes in the amount of $785,998. Therefore, such amount was recognized in
income as of December 31, 1998.

TRANSACTIONS WITH AFFILIATES

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of December 31, 1999, 1998 and 1997 are as follows:

<PAGE>

UNPAID AT
DECEMBER 31,
1999 1998 1997 1999
-------- ------- -------- ------------
Property management
and leasing fees. . . . . . $ -- -- 9,246 1,057,092
Management fees to
corporate general
partner . . . . . . . . . . -- 708,497 -- --
Advances payable . . . . . . -- -- -- 675,876
Insurance commissions. . . . 2,739 1,706 15,019 --
Reimbursement (at cost)
for accounting services . . 2,759 15,520 18,963 66
Reimbursement (at cost)
for portfolio manage-
ment services . . . . . . . 110,540 74,307 52,248 34,084
Reimbursement (at cost)
for legal services. . . . . 22,027 15,368 15,008 7,538
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses. . . -- 17,153 77 --
-------- ------- --------- ---------
$138,065 832,551 110,561 1,774,656
======== ======= ========= =========

The Partnership is required to pay a management fee to the Corporate
General Partner and the General Partners are entitled to receive a share of
cash distributions, when and as cash distributions are made to the Holders
of Interests, and a share of profits or losses.

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 December 31, 1999 and
December 31, 1998, which consists of management fees and leasing
commissions of $1,057,092 (included in the table above) and advances of
$675,876 (included in the table above) payable to the affiliated manager.
The cumulative deferred amounts do not bear interest and are subject to
payment 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. As of December 31, 1999, $1,057,092
(included in the table above) 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). In connection with the sale of the 260 Franklin Street
building in 1998, a pro rata share of the unpaid fees was transferred to
the accounts of the Partnership for financial reporting purposes.

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
December 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 December 31, 1999 and
December 31, 1998. Such deferred amount does not bear interest and is
subject to payment in future periods.

<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 required the
Partnership to make monthly payments to such company through 2010. Such
acquisition had no effect on the fees payable by the Partnership under any
existing agreements with such company. The Partnership disputed the
amounts due under such management termination agreement. Effective
September 29, 1999, the Partnership and such company executed a new
termination agreement whereby the Partnership agreed to pay a $659,028
termination fee in full satisfaction of all previous and future amounts due
through 2010 under the original termination agreement. Such amount was
determined primarily by estimating the future annual payments through
September 2010 to become due to such company under the original termination
agreement and discounting them to a present value at a 10% per annum rate.
At the time the new termination agreement was entered into, officers and
directors of the Corporate General Partner owned in the aggregate an
approximate 5% indirect interest in such company.

INVESTMENT IN UNCONSOLIDATED VENTURES

Summary financial information for Wells Fargo Center - South Tower,
JMB/Piper and JMB/Piper II JMB/900 (no longer an unconsolidated venture as
of March 1999, the venture partner interest purchase cdate) for the years
ended 1999 and 1998 follows:
1999 1998
------------ ------------

Current assets . . . . . . . . . . . $ 9,545,029 30,057,665
Current liabilities. . . . . . . . . (15,061,291) (18,191,860)
------------ ------------
Working capital (deficit). . . . (5,516,262) 11,865,805
------------ ------------
Other assets . . . . . . . . . . . . 30,904,880 43,398,071
Deferred expenses. . . . . . . . . . 6,723,036 7,053,036
Investment properties, net . . . . . 214,368,430 286,077,699
Other liabilities. . . . . . . . . . (17,392) (1,011,524)
Long-term debt . . . . . . . . . . . (275,359,348) (354,324,874)
Venture partners' equity . . . . . . 6,693,183 510,714
------------ ------------
Partnership's capital (deficit). $(22,203,473) (6,431,073)
============ ============
Represented by:
Invested capital . . . . . . . . . $111,275,212 148,405,103
Cumulative distributions . . . . . (40,483,173) (49,903,117)
Cumulative losses. . . . . . . . . (92,995,512) (104,933,059)
------------ ------------
$(22,203,473) (6,431,073)
============ ============
Total income . . . . . . . . . . . . $ 48,783,628 86,760,343
Expenses applicable to
operating earnings . . . . . . . . 66,346,587 79,960,482
------------ ------------
Operating earnings . . . . . . . . . (17,562,959) 6,799,861
------------ ------------
Net earnings (loss). . . . . . . . . $(17,562,959) 6,799,861
============ ============

The total income, expenses applicable to operating earnings and net
income for the above ventures for the year ended December 31, 1997 were
$87,541,408, $66,800,486 and $20,740,922, respectively.

<PAGE>

During 1996, as a result of the restructuring at Wells Fargo Center -
South Tower, the Partnership reversed previously recognized losses from the
unconsolidated venture. The Partnership's capital (deficit) in Wells Fargo
Center - South Tower differs from its investment in the unconsolidated
venture as reflected in the accompanying financial statements due to the
Partnership's 1996 reversal of previously recognized losses. The
Partnership's share of loss (approximately $3,629,000) was not recognized
in 1999, 1998 and 1997, share of income from Wells Fargo Center - South
Tower (approximately $464,000 and $286,000, respectively) has not been
recognized as such income amounts are not considered realizable.

SUBSEQUENT EVENT

On February 29, 2000, the Partnership made a distribution of
$39,905,634 ($90 per Interest) of sale proceeds (primarily related to the
sales of the California office building and the 900 Third Avenue office
building) to the Holders of Interests. Additionally, in February 2000, the
Partnership made a distribution of $17,735,837 ($40 per Interest) to the
Holders of Interests and $738,993 to the General Partners from Partnership
operational cash flow. The Corporate General Partner also received its
$1,231,655 management fee related to the February 2000 distribution.

<PAGE>

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

There were no changes of or disagreements with accountants during
fiscal years 1999 and 1998.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

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

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

The names, positions held and length of service therein of each
director and the executive officers of the Corporate General Partner are as
follows:

<PAGE>

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

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

Effective May 31, 1996, the Board of Directors of JMB established a special
committee, consisting of Messrs. Malkin, Glazov, Nathan, Sacks and
Schreiber, to deal with all matters relating to tender offers for
Interests.

There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 6, 2000. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 6,
2000. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.

JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-
II") and the managing general partner of JMB Income Properties, Ltd.-V
("JMB Income-V"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), and
JMB Income Properties, Ltd.-XI ("JMB Income-XI"). JMB is also the sole
general partner of the associate general partner of most of the foregoing
partnerships. The foregoing officers and directors are also officers
and/or directors of various affiliated companies of JMB including
Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners,
L.P.). Most of such directors and officers are also partners, directly or
indirectly, of certain partnerships which are associate general partners in
the following real estate limited partnerships: the Partnership,
Carlyle-XI, Carlyle-XIII, Carlyle-XIV, JMB Income-VII, JMB Income-XI, and
Carlyle Income Plus - II. Certain of such officers were also officers and
the sole director of Carlyle Advisors, Inc., formerly the general partner
of JMB/125. Reference is made to the Notes.

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

Judd D. Malkin (age 62) is an individual general partner of JMB
Income-V. Mr. Malkin has been associated with JMB since October, 1969.
Mr. Malkin is also a director of Urban Shopping Centers, Inc., an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is also a director of Chisox
Corporation, which is the general partner of a limited partnership that
owns the Chicago White Sox, a Major League Baseball team, and CBLS, Inc.,
which is the general partner of the general partner of a limited
partnership that owns the Chicago Bulls, a National Basketball Association
team. He is a Certified Public Accountant.

<PAGE>

Neil G. Bluhm (age 62) is an individual general partner of JMB
Income-V. Mr. Bluhm has been associated with JMB since August, 1970. Mr.
Bluhm is also a principal of Walton Street Capital, L.L.C., which sponsors
real estate investment funds, and a director of Urban Shopping Centers,
Inc. He is a member of the Bar of the State of Illinois and a Certified
Public Accountant.

Burton E. Glazov (age 61) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
Mr. Glazov is currently retired. He is a member of the Bar of the State of
Illinois.

Stuart C. Nathan (age 58) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.

A. Lee Sacks (age 66) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.

John G. Schreiber (age 53) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company engaged in the real estate investing business. He is also a
senior advisor and partner of Blackstone Real Estate Advisors L.P., an
affiliate of the Blackstone Group, L.P. Mr. Schreiber is also a director
of Urban Shopping Centers, Inc., Host Marriott Corporation, the Brickman
Group, Ltd., which is engaged in the landscape maintenance business, and a
number of investment companies advised by T. Rowe Price Associates, Inc.
and its affiliates, and a trustee of Amli Residential Properties Trust. He
holds a Masters degree in Business Administration from Harvard University
Graduate School of Business.

H. Rigel Barber (age 51) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.

Gary Nickele (age 47) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.

Gailen J. Hull (age 51) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Holders of Interests, and a
share of profits or losses. Reference is also made to the Notes for a
description of such transactions, distributions and allocations. The
General Partners received a share of Partnership profits for Federal income
tax purposes aggregating $3,701,665 in 1999. Such allocation of profits
reduces the deficit balances in the capital accounts of the General
Partners and an obligation under the terms of the Partnership Agreement to
make capital contributions in the amount of the deficit balances in their
capital accounts upon termination of the Partnership.

If upon completion of the liquidation and the distribution of all
Partnership funds, the Holders of Interests have not received a specified
amount of net sale or refinancing proceeds, the General Partners will be
required to return the net sale or refinancing proceeds received by them,
$170,311 as of the date of this report. The Holders of Interests are not
expected to receive the specified amount of net sale or refinancing
proceeds. Accordingly, it is expected that the General Partners will be
required to return the amount of net sale or refinancing proceeds received
by them.

<PAGE>

The Partnership is permitted to engage in various transactions
involving the General Partners and their affiliates, certain of which may
involve conflicts of interest, as discussed in Item 10 above. The
relationship of the Corporate General Partner (and its directors and
officers) to its affiliates is set forth above in Item 10.

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. In December 1994, the
affiliated manager sold substantially all of its assets and assigned its
interest in its management contracts, including the one for 260 Franklin
Street, to an unaffiliated third party. In connection with such
assignment, JMB Realty Corporation ("JMB") guaranteed payment to the
unaffiliated third party of the property management fees for the 260
Franklin Street property in 1995. Beginning in January 1996, the
unaffiliated property manager was paid management fees by the property.
Included in accounts payable are amounts due to affiliates of $1,732,968 at
December 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. Of the $1,057,092 of management and leasing fees
unpaid at December 31, 1999, $232,268 represents the amount JMB paid to the
unaffiliated third party manager pursuant to the guarantee. 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 December 31, 1999
(of which the Partnership's share is approximately $919,500). The
cumulative deferred amounts do not bear interest and are subject to payment
in future periods.

JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1999
aggregating $2,739 in connection with the provision of professional
liability insurance coverage for the Partnership. Such commissions are at
rates set by insurance companies for the classes of coverage provided.

The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses relating to
the administration of the Partnership and the operation of the
Partnership's real property investments. In 1999, there were no such
out-of-pocket expenses were incurred by the General Partner or its
affiliates.

Additionally, the General Partners are also entitled to reimbursements
of salaries for administrative, legal, accounting and portfolio management
services. Such costs for 1999 were $135,326, of which $41,688 was unpaid
as of December 31, 1999. Reference is made to the Notes.

<PAGE>

<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.

(b) The Corporate General Partner, its executive officers and directors and the Associate General Partner
beneficially own the following Interests of the Partnership:

NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests and Assignee
Interests therein JMB Realty Corporation 25 Interests (1) Less than 1%

Limited Partnership Corporate General Partner, 31.43852 Interests Less than 1%
Interests and Assignee its executive officers and (1)(2)
Interests therein directors and the
Associate General
Partner as a group

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

(1) Includes 20 Interests owned directly by JMB for which JMB has sole voting and investment power and 5
Interests owned by the Initial Limited Partner of the Partnership for which JMB, as its indirect majority
shareholder, is deemed to have shared voting and investment power.

(2) Includes 4.7578 Interests owned by an executive officer for which such officer has sole investment and
voting power as to such Interests so owned, and 1.68072 Interests owned by an estate for which an such officer
acts as co-executor and is deemed to have shared voting and investment power with respect to such Interests.

No executive officer or director of the Corporate General Partner of the Partnership possesses a right to
acquire beneficial ownership of Interests of the Partnership.

Reference is made to Item 10 for information concerning the ownership of the Corporate General Partner.

(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent
date result in a change in control of the Partnership.

</TABLE>

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

PART IV

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

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

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

(2) Exhibits.

3-A. Amended and Restated Agreement of Limited
Partnership, 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 on Form 10-Q (File No. 0-1611) for September 30,
1996 dated November 8, 1996.

4-A. Assignment Agreement set forth as Exhibit B to the
Prospectus is hereby incorporated herein by reference to Exhibit 4-A to the
Partnership's Report on Form 10-K (File No. 0-16111) for December 31, 1992
dated March 19, 1993.

4-B. Documents relating to the modification of the
mortgage loan secured by 260 Franklin Street Building are hereby
incorporated herein by reference to the Partnership's Report on Form 10-K
(File No. 0-16111) for December 31, 1992 dated March 19, 1993.

4-C. Forbearance agreement relating to the modification
of the mortgage loan secured by NewPark Mall dated October 1995 is
incorporated herein by reference to the Partnership's Report for September
30, 1995 on Form 10-Q (File No. 0-16111) dated November 9, 1995.

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

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

<PAGE>

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

10-A. Acquisition documents relating to the purchase by
the Partnership of an interest in the Piper Jaffray Tower in Minneapolis,
Minnesota, are hereby incorporated herein by reference to the Partnership's
Registration Statement on Form S-11 (File No. 2-95382) dated January 18,
1985.

10-B. Acquisition documents relating to the purchase by
the Partnership of an interest in the Crocker Center South Tower in Los
Angeles, California, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Amendment No. 2 to Form S-11 (File
No. 2-95382) dated July 5, 1985.

10-C. Acquisition documents relating to the purchase by
the Partnership of an interest in the California Plaza office building in
Walnut Creek, California are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 5 to
Form S-11 dated July 31, 1986.

10-D. Documents relating to the modification of the
mortgage loan secured by California Plaza are hereby incorporated herein by
reference to the Partnership's report for December 31, 1993 on Form 10-K
(File No. 0-16111) dated March 28, 1994.

10-E. Documents relating to the extension of the
mortgage loan secured by the 900 Third Building are incorporated herein by
reference to the Partnership's report for December 31, 1994 on Form 10-K
(File No. 0-16111) dated March 27, 1995.

10-F. Lockbox and forbearance agreements related to the
mortgage note secured by the Wells Fargo Building are incorporated herein
by reference to the Partnership's report for December 31, 1994 on Form 10-K
(File No. 0-16111) dated March 27, 1995.

10-G. Modification to Reserve Escrow Agreement relating
to the 260 Franklin Street Building is hereby incorporated by reference to
the Partnership's Report for June 30, 1995 on Form 10-Q (File No. 0-16111)
dated August 9, 1995.

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

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

<PAGE>

10-J. Modification to Reserve Escrow Agreement relating
to the 260 Franklin Street building dated May 22, 1997 is hereby
incorporated herein by reference to the Partnership's Report for June 30,
1997 on Form 10-Q (File No. 0-16111) dated August 8, 1997.

10-K. Purchase Agreement between C-C California Plaza
Partnership and California Plaza at Walnut Creek, Inc. entered into as of
December 16, 1999 is hereby incorporated by reference to the Partnership's
Report on Form 8-K (File No. 0-16111) dated December 23, 1999.

10-L. Agreement of Purchase and Sale between Progress
Partners and Paramount Group, Inc. dated July 27, 1999 is hereby
incorporated by reference to the Partnership's Report on Form 8-K (File No.
0-16111) dated November 17, 1999.

10-M. Amendment to Agreement of Purchase and Sale
between Progress Partners and Paramount Group, Inc. dated September 17,
1999 is hereby incorporated by reference to the Partnership's Report on
Form 8-K (File No. 0-16111) dated November 17, 1999.

10-N. Second Amendment to the Agreement of Purchase and
Sale between Progress Partners and Paramount Group, Inc. dated October 20,
1999 is hereby incorporated by reference to the Partnership's Report on
Form 8-K (File No. 0-16111) dated November 17, 1999.

10-O. Third Amendment to the Agreement of Purchase and
Sale between Progress Partners and Paramount Group, Inc. dated November 2,
1999 is hereby incorporated by reference to the Partnership's Report on
Form 8-K (File No. 0-16111) dated November 17, 1999.

10-P. Assignment of Partnership Interest between Federal
Deposit Insurance Corporation and 14-15 Office Associates, L.P., dated
March 10, 1999 is hereby incorporated by reference to the Partnership's
Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.

10-Q. 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 incorporated by reference to the
Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.

10-R. Assignment of Partnership Interest between 900
Realty, LLC and 900 3rd Avenue Associates dated March 22, 1999 is hereby
incorporated by reference to the Partnership's Report on Form 10-Q (File
No. 0-16111) dated May 12, 1999.

10-S. Amendment No. 2 to Amended and Restated Agreement
of General Partnership for Progress Partners dated March 17, 1999 is hereby
incorporated by reference to the Partnership's Report on Form 10-Q (File
No. 0-16111) dated May 12, 1999.

<PAGE>

10-T. Amendment No. 3 to Amended and Restated Agreement
of General Partnership for Progress Partners dated March 22, 1999 is hereby
incorporated by reference to the Partnership's Report on Form 10-Q (File
No. 0-16111) dated May 12, 1999.

10-U. 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
incorporated by reference to the Partnership's Report on Form 10-Q (File
No. 0-16111) dated May 12, 1999.

21. List of Subsidiaries.

24. Powers of Attorney.

27. Financial Data Schedule.

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

* Previously filed as Exhibits 10-G, 10-H and 10-I,
respectively, to the Partnership's Report for December 31, 1992 on Form 10-
K of the Securities Exchange Act of 1934 (File No. 0-16111) dated March 19,
1993 and hereby incorporated herein by reference.

(b) No reports on Form 8-K were filed since the beginning of the
last quarter of the period covered by this report.

No annual report for the fiscal year 1999 or proxy material has
been sent to the Partners of the Partnership. An annual report will be
sent to the Partners subsequent to this filing.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV

By: JMB Realty Corporation
Corporate General Partner

GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 24, 2000

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

By: JMB Realty Corporation
Corporate General Partner

JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 24, 2000

NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 24, 2000

H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 24, 2000

GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 24, 2000

A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 24, 2000

STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 24, 2000

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

GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 24, 2000

<PAGE>

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
EXHIBIT INDEX

Document
Incorporated
By Reference Page
------------ ----

3-A. Amended and Restated Agreement Yes
of Limited Partnership of the
Partnership, included as Exhibit A
to the Partnership's Prospectus
dated July 5, 1985.

3-B. Acknowledgement of Rights and
Dates of General Partners Yes

4-A. Assignment Agreement, included as Yes
Exhibit B to the Partnership's
Prospectus dated July 5, 1985.

4-B. Documents relating to the modification
of the mortgage loan secured by
the 260 Franklin Street Building Yes

4-C. Documents relating to the modification
of the mortgage loan secured by
NewPark Mall Yes

4-D. Documents relating to the modifica-
tion and extension of the mortgage
loan secured by Wells Fargo-
South Tower Yes

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

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

10-A. Acquisition documents relating
to the purchase by the Partnership
of an interest in the Piper Jaffray
Tower in Minneapolis, Minnesota Yes

10-B. Acquisition documents relating to
the purchase by the Partnership of
an interest in the Crocker Center
South Tower in Los Angeles,
California Yes

10-C. Acquisition documents relating to
the purchase by the Partnership of
an interest in the California Plaza
office building in Walnut Creek,
California Yes

10-D. Documents relating to the modification
of the mortgage loan secured by
California Plaza Yes

10-E. Documents relating to the extension
of the mortgage loan secured by the
900 Third Building Yes

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

<PAGE>

Document
Incorporated
By Reference Page
------------ ----

10-G. Modification to Reserve Escrow
Agreement relating to the
260 Franklin Street Building Yes

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

10-I.* Modification to Reserve Escrow
Agreement dated December 4,
1996 relating to the 260 Franklin
Street Building Yes

10-J. Modification to Reserve Escrow
Agreement relating to the 260 Franklin
Street building dated May 22, 1997 Yes

10-K. Purchase Agreement between
C-C California Plaza Partnership
and California Plaza at Walnut Creek,
Inc. entered into as of December 16,
1999 Yes

10-L. Agreement of Purchase and Sale between
Progress Partners and Paramount Group,
Inc. dated July 27, 1999 Yes

10-M. Amendment to Agreement of Purchase
and Sale between Progress Partners
and Paramount Group, Inc. dated
September 17, 1999 Yes

10-N. Second Amendment to the Agreement
of Purchase and Sale between Progress
Partners and Paramount Group, Inc.
dated October 20, 1999 Yes

10-O. Third Amendment to the Agreement of
Purchase and Sale between Progress
Partners and Paramount Group, Inc.
dated November 2, 1999 Yes

10-P. Assignment of Partnership Interest
between Federal Deposit Insurance
Corporation and 14-15 Office
Associates, L.P., dated March 10,
1999 Yes

10-Q. 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 Yes

10-R. Assignment of Partnership Interest
between 900 Realty, LLC and 900
3rd Avenue Associates dated
March 22, 1999 Yes

10-S. Amendment No. 2 to Amended and
Restated Agreement of General
Partnership for Progress Partners
dated March 17, 1999 Yes

<PAGE>

Document
Incorporated
By Reference Page
------------ ----

10-T. Amendment No. 3 to Amended
and Restated Agreement of
General Partnership for
Progress Partners dated
March 22, 1999 Yes

10-U. 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 Yes

21. List of Subsidiaries No

24. Powers of Attorney No

27. Financial Data Schedule No

EXHIBIT 21

LIST OF SUBSIDIARIES

The Partnership is a partner of the following joint ventures:
JMB/Piper Jaffray Tower Associates, an Illinois general partnership, which
is a partner in (i) OB Joint Venture II, a general partnership, which is a
partner of 222 South Ninth Street Limited Partnership, a limited partner-
ship, which holds title to the Piper Jaffray Tower office building in
Minneapolis, Minnesota, and (ii) OB Joint Venture, a general partnership,
which holds title to the land underlying the Piper Jaffray Tower office
building; JMB/Piper Jaffray Tower Associates II, a general partnership
which also is a partner in OB Joint Venture, a general partnership, which
holds title to the land underlying the Piper Jaffray Tower office building;
900 3rd Avenue Associates, an Illinois general partnership, which is a
partner of Progress Partners, a general partnership, which held title to
900 Third Avenue Building located in New York, New York; Maguire Thomas
Partners - South Tower, a limited liability company, which holds title to
Wells Fargo Center - South Tower located in Los Angeles, California.
Reference is made to the Notes for a description of the terms of such
venture partnerships. The Partnership is a 25% shareholder in Carlyle
Managers, Inc., the general Partner of JMB/NYC Office Building Associates,
L.P. ("JMB/NYC") and 25% shareholder in Carlyle Investors, Inc., which is
the general partner of Property Partners Partnership is a 99% limited
partner in Property Partners, L.P. in which holds an approximate 25%
limited partnership interest in JMB/NYC. JMB/NYC is a 99% limited partner
in Upper Tier Associates, L.P. Reference is made to the Notes for a
description of the terms of such joint venture partnership.

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XV, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1999, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 2000.

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

The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1999,
and any and all amendments thereto, the 31st day of January, 2000.

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

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

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

<PAGE>

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and/or
directors of JMB Realty Corporation, the corporate general partner of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV, do hereby nominate,
constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any
of them, attorneys and agents of the undersigned with full power of
authority to sign in the name and on behalf of the undersigned officer or
directors a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1999, and any and all amendments thereto, hereby
ratifying and confirming all that said attorneys and agents and any of them
may do by virtue hereof.

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 2000.

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

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

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

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

The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers and/or
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1999, and any and all amendments thereto, the 31st day
of January, 2000.

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

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

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

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<CIK> 0000761023
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999

<CASH> 98,865,495
<SECURITIES> 0
<RECEIVABLES> 2,442,997
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 101,308,492
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 102,036,799
<CURRENT-LIABILITIES> 1,972,411
<BONDS> 62,608,944
<COMMON> 0
0
0
<OTHER-SE> 1,418,310
<TOTAL-LIABILITY-AND-EQUITY>102,036,799
<SALES> 29,713,546
<TOTAL-REVENUES> 31,837,942
<CGS> 0
<TOTAL-COSTS> 13,378,729
<OTHER-EXPENSES> 1,425,364
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,145,840
<INCOME-PRETAX> (3,111,991)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,921,675)
<DISCONTINUED> 59,322,688
<EXTRAORDINARY> (3,989,364)
<CHANGES> 0
<NET-INCOME> 47,411,649
<EPS-BASIC> 106.36
<EPS-DILUTED> 106.36

</TABLE>