JMB MANHATTAN ASSOCIATES LTD, 10-Q, 1995-05-15

JMB MANHATTAN ASSOCIATES LTD
10-Q, 1995-05-15
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended March 31, 1995 Commission file number 0-14547

JMB/MANHATTAN ASSOCIATES, LTD.
(Exact name of registrant as specified in its charter)

Illinois 36-3339372
(State of organization) (I.R.S. Employer Identification No.)

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

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

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

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

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

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . 17

PART II OTHER INFORMATION

Item 3. Defaults on Senior Securities . . . . . . . . . 22

Item 5. Other Information . . . . . . . . . . . . . . . 23

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . 24

<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

BALANCE SHEETS

MARCH 31, 1995 AND DECEMBER 31, 1994

(UNAUDITED)

ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . $ 187,531 3,784,075
Short-term investments (note 1). . . . . . . . . . . . . . . . . . -- 9,912,520
Interest and other receivables . . . . . . . . . . . . . . . . . . 235 20,397
----------- -----------

Total current assets . . . . . . . . . . . . . . . . . . . 187,766 13,716,992
----------- -----------

Amounts due from affiliates (note 3) . . . . . . . . . . . . . . . 1,640,128 4,326,233
----------- -----------

$ 1,827,894 18,043,225
=========== ===========
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

BALANCE SHEETS - CONTINUED

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

MARCH 31, DECEMBER 31,
1995 1994
------------ -----------

Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,135 19,281
Bank overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . 226,651 --
Amounts due to affiliates (note 3) . . . . . . . . . . . . . . . . 1,805,539 1,757,445
----------- -----------

Total current liabilities. . . . . . . . . . . . . . . . . 2,064,325 1,776,726

Investment in unconsolidated venture, at equity (note 2) . . . . . . 73,374,516 71,382,485

Commitments and contingencies (notes 1, 2 and 5)

Partners' capital accounts (deficits) (note 1):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . 1,500 1,500
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . (4,055,998) (3,941,200)
Cumulative cash distributions. . . . . . . . . . . . . . . . . (737,500) (112,500)
------------ -----------
(4,791,998) (4,052,200)
------------ -----------
Limited partners (1,000 Interests):
Capital contributions, net of offering costs . . . . . . . . . 57,042,489 57,042,489
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . (107,861,438) (105,106,275)
Cumulative cash distributions. . . . . . . . . . . . . . . . . (18,000,000) (3,000,000)
------------ -----------
(68,818,949) (51,063,786)
------------ -----------

Total partners' capital accounts (deficits). . . . . . . . (73,610,947) (55,115,986)
------------ -----------

$ 1,827,894 18,043,225
============ ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1995 AND 1994

(UNAUDITED)

<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 290,470 409,915
------------ -----------

Expenses:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,094 31,052
Professional services. . . . . . . . . . . . . . . . . . . . . . . . . 67,722 34,450
Management fees paid to general partners . . . . . . . . . . . . . . . 1,041,667 --
General and administrative . . . . . . . . . . . . . . . . . . . . . . 10,917 19,098
------------ -----------

1,168,400 84,600
------------ -----------

Operating earnings (loss). . . . . . . . . . . . . . . . . . . (877,930) 325,315

Partnership's share of operations of
unconsolidated venture . . . . . . . . . . . . . . . . . . . . . . . . (1,992,031) (1,362,720)
------------ -----------

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,869,961) (1,037,405)
============ ===========

Net loss per limited partnership
interest (note 1). . . . . . . . . . . . . . . . . . . . . . $ (2,755) (996)
============ ===========

Cash distributions per limited
partnership interest . . . . . . . . . . . . . . . . . . . . $ 15,000 --
============ ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

STATEMENTS OF CHANGES IN CASH FLOWS

THREE MONTHS ENDED MARCH 31, 1995 AND 1994

(UNAUDITED)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,869,961) (1,037,405)
Items not requiring (providing) cash or cash equivalents:
Partnership's share of loss from operations of unconsolidated
venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,992,031 1,362,720
Changes in:
Interest and other receivables . . . . . . . . . . . . . . . . . . . 20,162 (40,215)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 12,854 (1,074)
------------ -----------
Net cash provided by (used in) operating activities. . . . . . (844,914) 284,026

Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments . . . . 9,912,520 (2,099,538)
Change in amounts due to affiliates. . . . . . . . . . . . . . . . . . 48,094 45,445
------------ -----------
Net cash provided by (used in) investing activities. . . . . . 9,960,614 (2,054,093)
------------ -----------
Cash flows from financing activities:
Distributions to limited partners. . . . . . . . . . . . . . . . . . . (15,000,000) --
Distributions to general partners. . . . . . . . . . . . . . . . . . . (625,000) --
Bank overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226,651 --
Change in amounts due from affiliates. . . . . . . . . . . . . . . . . 2,686,105 (304,384)
------------- -----------
Net cash used in financing activities. . . . . . . . . . . . . (12,712,244) (304,384)
------------ -----------
Net decrease in cash and cash equivalents. . . . . . . . . . . (3,596,544) (2,074,451)
Cash and cash equivalents, beginning of period . . . . . . . . 3,784,075 2,315,827
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . . . . $ 187,531 241,376
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . $ -- --
Non-cash investing and financing activities. . . . . . . . . . . . . . $ -- --
============ ===========

<FN>
See accompanying notes to financial statements.
</TABLE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 1995 AND 1994

(UNAUDITED)

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1994, which
are included in the Partnership's 1994 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.

(1) BASIS OF ACCOUNTING

The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's (indirect) interest
in JMB/NYC Office Building Associates, L.P. ("JMB/NYC") through Property
Partners, L.P. Accordingly, the financial statements do not include the
accounts of Property Partners, L.P. or JMB/NYC.

The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying 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"). Such
adjustments are not recorded on the records of the Partnership. The net
effect of these items is summarized as follows for the three months ended
March 31:
1995 1994
----------------------- -------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------

Net income
(loss). . . . . .$(2,869,961) (478,035) (1,037,405) 137,181
Net income
(loss) per
limited
partnership
interest. . . . .$ (2,755) (459) (996) 137
=========== ======== ========== =======

The net income (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of each
period (1,000). 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 to the Limited Partners.

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 the unconsolidated ventures are considered
cash flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
U.S. Government obligations at cost which approximates market. For the
purpose of these statements, the Partnership's policy is to consider all
such amounts held with original maturities of three months or less
($187,531 and $3,757,085 at March 31, 1995 and December 31, 1994,
respectively) as cash equivalents with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Provisions for value impairment (as discussed below) are recorded with
respect to the investment properties whenever the estimated future cash
flows from a property's operations and projected sale are less than the
property's net carrying value.

As more fully discussed in note 2, due to the potential sale of the 2
Broadway building at a sales price significantly below its original
carrying value, net of depreciation, the 2 Broadway venture made a
provision for value impairment on such investment property of $192,627,560
in 1993. The provision for value impairment was allocated $136,534,366 and
$56,093,194 to the O&Y affiliates and to JMB/NYC, respectively. Such
provision was allocated to the partners to reflect their respective
ownership percentages before the effect of the non-recourse promissory
notes including related accrued interest. The Partnership's share of the
provision was $14,023,299.

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.

Certain reclassifications have been made to the 1994 financial
statements to conform with the 1995 presentation.

During March 1995, 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. SFAS 121, when effective,
will require that the Partnership record an impairment loss on its long-
lived assets (primarily its consolidated investments in land, buildings and
improvements) whenever their carrying value cannot be fully recovered
through estimated undiscounted future cash flows from operations and sale.
The amount of the impairment loss to be recognized would be the difference
between the long-lived asset's carrying value and the asset's estimated
fair value less costs to sell.

The amount of any impairment loss recognized by the Partnership under
its current accounting policy has been limited to the excess, if any, of
the property's carrying value over the outstanding balance of the
property's non-recourse indebtedness. An impairment loss under SFAS 121
would be determined without regard to the nature or the balance of such
non-recourse indebtedness. Upon the disposition of a property for which an
impairment loss has been recognized under SFAS 121, the Partnership would
recognize, at a minimum, a net gain for financial reporting purposes to the
extent of any excess of the then outstanding balance of the property's non-
recourse indebtedness over the then carrying value of the property,
including the effect of any reduction for impairment loss under SFAS 121.

The Partnership expects to adopt SFAS 121 no later than the first
quarter of 1996. Although the Partnership has not currently assessed the
full impact of adopting SFAS 121, the amount of any such required
impairment loss could be materially higher than the amounts that have been
recorded in the past or may be recorded in 1995 under the Partnership's
current impairment policy. In addition, upon the disposition of an
impaired property, the Partnership would generally recognize more net gain
for financial reporting purposes under SFAS 121 than it would have under
the Partnership's current impairment policy, without regard to the amount,
if any, of cash proceeds received by the Partnership in connection with the
disposition. Although implementation of this new accounting statement
could significantly impact the Partnership's reported earnings, there would
be no impact on cash flows. Further, any such impairment loss would not be
recognized for Federal income tax purposes.

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

(2) VENTURE AGREEMENTS

The Partnership owns indirectly through Property Partners, L.P. and
JMB/NYC an interest in (i) the 237 Park Avenue Associates venture which
owns an existing 23-story office building, (ii) the 1290 Associates venture
which owns an existing 44-story office building, and (iii) the 2 Broadway
Associates and 2 Broadway Land Co. ventures which own an existing 32-story
office building (together "Three Joint Ventures" and individually a "Joint
Venture"). All of the buildings are located in New York, New York. In
addition to JMB/NYC, the partners of the Three Joint Ventures include O&Y
Equity Company, L.P. and O&Y NY Building Corp. (hereinafter sometimes
referred to as the "Olympia & York affiliates"), both of which are
affiliates of Olympia and York Developments, Ltd. (hereinafter sometimes
referred to as "O&Y").

JMB/NYC is a joint venture among Property Partners, L.P., Carlyle-XIV
Associates, L.P. and Carlyle-XIII Associates, L.P. as limited partners and
Carlyle Managers, Inc. as the sole general partner. The Partnership is a
20% shareholder of Carlyle Managers, Inc. and related to this investment,
has an obligation to fund, on demand, $600,000 of additional paid-in
capital to Carlyle Managers, Inc. (reflected in amounts due to affiliates
in the accompanying financial statements). JMB/NYC is a limited
partnership, and the Partnership's interest in JMB/NYC, which previously
had been held directly, was contributed to Property Partners, L.P. in
exchange for its limited partnership interest in that partnership. As a
result of these transactions, the Partnership currently holds, indirectly
as a limited partner of Property Partners, L.P., an approximate 25% limited
partnership interest in JMB/NYC. The sole general partner of Property
Partners, L.P. is Carlyle Investors, Inc., of which the Partnership is a
20% shareholder effective March 25, 1993. Related to this investment, the
Partnership has an obligation to fund, on demand, $600,000 of additional
paid-in capital (reflected in amounts due to affiliates in the accompanying
financial statements). The general partner in each of JMB/NYC and Property
Partners, L.P. is an affiliate of the Partnership. For financial reporting
purposes, the allocation of profits and losses of JMB/NYC to the
Partnership is 25%.

The terms of the JMB/NYC venture agreement generally provide that
JMB/NYC's share of the Three Joint Ventures' annual cash flow, sale or
refinancing proceeds, operating and capital costs (to the extent not
covered by cash flow from a property) and profit and loss will be
distributed to, contributed by or allocated to the Partnership in
proportion to its (indirect) share of capital contributions to JMB/NYC. As
discussed below, an agreement with the Olympia & York affiliates, when
effective, would provide first for allocation of cash flow to the Olympia &
York affiliates to the level of certain Preference Amounts, as defined.
This agreement would also, among other things, provide for no further
allocation from the Three Joint Ventures of depreciation, amortization or
operating losses and the allocation of operating income from the Three
Joint Ventures only to the extent of cash flow distributions to JMB/NYC.

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

approve almost all property management, leasing, sale (certain rights to
control a sale were retained by JMB/NYC through March 31, 2001) or
refinancing decisions and the establishment of a new preferential
distribution level payable to the Olympia & York affiliates from all future
sources of cash, (ii) sell the 2 Broadway Building, and (iii) restructure
the first mortgage loan on the terms discussed below. A more detailed
discussion of each of these items is contained below. As part of the
Agreement, in order to facilitate the restructuring, JMB/NYC and the
Olympia & York affiliates have agreed to file for each of the Three Joint
Ventures a pre-arranged bankruptcy plan for reorganization under Chapter 11
of the Bankruptcy Code. Such filings are expected to occur during 1995.
The reorganization plan is expected to incorporate the proposed
transactions contained in the Agreement. During the bankruptcy
proceedings, there exists a possibility that one or more of the proposed
transactions could be challenged by certain creditors resulting in the
elimination or changes to all or portions of the Agreement by the
bankruptcy court. Consequently, there are no assurances that the
transactions contemplated in the Agreement will be finalized. If the
transactions contemplated in the Agreement are finalized, there would
nevertheless need to be a significant improvement in current market and
property operating conditions resulting in a significant increase in the
value of the 237 Park Avenue and 1290 Avenue of the Americas properties
before JMB/NYC would receive any share of future net proceeds from
operations, sale or refinancing. The restructuring of the Three Joint
Ventures' agreements would include JMB/NYC converting from a general
partner to a limited partner and the elimination of any funding obligation
by JMB/NYC for any purposes. Consequently, in such event, JMB/NYC would
recognize, for financial reporting purposes, a gain to the extent of the
then current deficit investment balance (which amount was $191,560,351 as
of March 31, 1995). No significant net Federal income tax gain or any
distributable proceeds would result from the consummation of the
reorganization plan.

JMB/NYC purchased a 46.5% interest in each of the Three Joint Ventures
for approximately $173,600,000, subject to a long-term first mortgage loan
which has been allocated among the individual Joint Ventures. A portion of
the purchase price is represented by four 12-3/4% promissory notes (the
"Purchase Notes") which have an aggregate outstanding principal balance of
$34,158,225 at March 31, 1995 and December 31, 1994. Such Purchase Notes,
which contain cross-default provisions, and are non-recourse to JMB/NYC,
are secured by JMB/NYC's interests in the Three Joint Ventures, and such
Purchase Note relating to the purchase of the interest in the ventures
owning the 2 Broadway Building is additionally secured by JMB/NYC's
interest in $19,000,000 of distributable sale proceeds from the other two
Joint Ventures. A default under the Purchase Notes would include, among
other things, a failure by JMB/NYC to repay a Purchase Note upon
acceleration of the maturity, and could cause an immediate acceleration of
the Purchase Notes for the other Joint Ventures. Beginning in 1992, the
Purchase Notes provide for monthly interest only payments on the principal
and accrued interest based upon the level of distributions payable to
JMB/NYC discussed below. If there are no distributions payable to JMB/NYC
or if the distributions are insufficient to cover monthly interest on the
Purchase Notes, then the shortfall interest (as defined) accrues and
compounds monthly. Interest accruals total $97,977,442 at March 31, 1995.
During 1994 and through March 31, 1995, no payments were made on any of the
Purchase Notes. All of the principal and accrued interest on the Purchase
Notes is due in 1999 or, if earlier, on the sale or refinancing of the
related property. The Agreement with the Olympia & York affiliates, when
effective, would provide for a 5-year extension of the due dates on the
Purchase Notes to 2004. It further provides, upon the sale of the 2
Broadway Building, for the cancellation of indebtedness under the 2
Broadway Purchase Notes in excess of $19 million. As discussed more fully
below, the Olympia & York affiliates have informed JMB/NYC that they have

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

received a contract for the sale of the 2 Broadway Building at a price
which will not provide any proceeds to JMB/NYC to repay the related
Purchase Notes. Consequently, if the proposed sale is finalized,
$19,000,000 of the 2 Broadway Purchase Notes will be re-allocated and will
be payable out of JMB/NYC's share of distributable cash flow or sale
proceeds, if any, from the other two Joint Ventures.

Prior to 1992, operating profits (excluding depreciation and
amortization) were allocated 30% to JMB/NYC and 70% to the Olympia & York
affiliates, and operating losses (excluding depreciation and amortization)
were allocated 96% to JMB/NYC and 4% to the Olympia & York affiliates.
Depreciation and amortization were allocated 46.5% to JMB/NYC and 53.5% to
the Olympia & York affiliates. Subsequent to 1991, pursuant to the
agreement reached in March, 1993 between JMB/NYC and the Olympia & York
affiliates, for the period January 1, 1992 to June 30, 1993, as discussed
below, gross income was allocable to the Olympia & York affiliates to the
extent of the distributions of excess monthly cash flow received for the
period with the balance of operating profits or losses allocated 46.5% to
JMB/NYC and 53.5% to the Olympia & York affiliates. Beginning July 1,
1993, operating profits or losses, in general, are allocated 46.5% to
JMB/NYC and 53.5% to the Olympia & York affiliates. The Agreement with the
Olympia & York affiliates, when effective, would provide for no further
allocation to JMB/NYC of depreciation, amortization or operating losses and
the allocation of operating income only to the extent of cash flow
distributions, if any, during the remaining term of the Joint Ventures.
There was no allocation of depreciation, amortization or operating income
or losses to JMB/NYC for Federal income tax purposes in 1994.

Under the terms of the Three Joint Ventures' agreements, JMB/NYC was
entitled to a preferred return of annual cash flow, with any additional
cash flow distributable 99% to the Olympia & York affiliates and 1% to
JMB/NYC, through 1991. The Olympia & York affiliates were obligated to
make capital contributions to the Three Joint Ventures to pay any operating
deficits (as defined) and to pay JMB/NYC's preferred return through
December 31, 1991. JMB/NYC did not receive its preferred return for the
fourth quarter 1991 and the Olympia & York affiliates applied JMB/NYC's
preferred return to 1992 disputed interest calculations (see below).
Subsequent to 1991, capital contributions to pay for property operating
deficits and other requirements that may be called for under the Three
Joint Ventures' agreements are required to be shared 46.5% by JMB/NYC and
53.5% by the Olympia & York affiliates. The Olympia & York affiliates have
alleged that pursuant to the Three Joint Ventures' agreements between the
Olympia & York affiliates and JMB/NYC, the effective rate of interest with
reference to the first mortgage loan for the purpose of calculating
JMB/NYC's share of operating cash flow or deficits after 1991 is as though
the rate were fixed at 12-3/4% per annum (versus the short-term U.S.
Treasury obligation rate plus 1-3/4% per annum (with a minimum 7%) payable
on the first mortgage loan). JMB/NYC believes that, commencing in 1992,
the Three Joint Ventures' agreements require an effective rate of interest
with reference to the first mortgage loan, based upon each Joint Venture's
allocable share of the loan, to be 1-3/4% over the short-term U.S. Treasury
obligation rate plus any excess monthly operating cash flow after capital
costs of each of the Three Joint Ventures, such sum not to be less than a
7% nor to exceed a 12-3/4% per annum interest rate, rather than the 12-3/4%
per annum fixed rate that applied prior to 1992. The Olympia & York
affiliates have disputed this calculation of interest expense and contended
that the 12-3/4% per annum fixed rate applied after 1991.

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

During the quarter ended March 31, 1993, an agreement was reached
between JMB/NYC and the Olympia & York affiliates (the "1993 Agreement")
which rescinded the default notices previously received by JMB/NYC and
eliminated the alleged operating deficit funding obligation of JMB/NYC for
the period January 1, 1992 through June 30, 1993. Pursuant to the 1993
Agreement, during this period, JMB/NYC recorded interest expense at 1-3/4%
over the short-term U.S. Treasury obligation rate (subject to a minimum
rate of 7% per annum), which is the interest rate on the underlying first
mortgage loan. Under the terms of the 1993 Agreement, during this period,
the amount of capital contributions that the Olympia & York affiliates and
JMB/NYC would have been required to make to the Three Joint Ventures, if
the first mortgage loan bore interest at a rate of 12-3/4% per annum (the
Olympia & York affiliates' interpretation), became a priority distribution
level to the Olympia & York affiliates from the Three Joint Ventures'
annual cash flow or net sale or refinancing proceeds. The 1993 Agreement
also entitles the Olympia & York affiliates to a 7% per annum return on
such unpaid priority distribution level. During this period the excess
available operating cash flow after the payment of the priority
distribution level discussed above from any of the Three Joint Ventures was
advanced in the form of loans to pay operating deficits and/or unpaid
priority distribution level amounts of any of the other Three Joint
Ventures. Such loans bear a market rate of interest, have a final maturity
of ten years from the date when made and are repayable only out of first
available annual cash flow or net sale or refinancing proceeds. The 1993
Agreement also provides that, except as specifically agreed otherwise, the
parties each reserve all rights and claims with respect to each of the
Three Joint Ventures and each of the partners thereof, including, without
limitation, the interpretation of or rights under each of the joint venture
partnership agreements for the Three Joint Ventures. As a result of the
above noted agreement with the Olympia & York affiliates, the cumulative
priority distribution level payable to the Olympia & York affiliates at
March 31, 1995 is approximately $50,000,000. The term of the 1993
Agreement expired on June 30, 1993. Therefore, effective July 1, 1993,
JMB/NYC is recording interest expense at 1-3/4% over the short-term U.S.
Treasury obligation rate plus any excess operating cash flow after capital
costs of the Three Joint Ventures, such sum not to be less than a 7% nor
exceed a 12-3/4% per annum interest rate. The Olympia & York affiliates
continued to dispute this calculation and for the period commencing July 1,
1993 contend that a 12-3/4% per annum fixed rate applies. Based upon this
interpretation, interest expense for the Three Joint Ventures for the three
months ended March 31, 1995 was $29,086,175. Based upon the amount of
interest determined by JMB/NYC for the three months ended March 31, 1995,
interest expense for the Three Joint Ventures was $17,466,639. The
cumulative effect of recording the interest expense calculated by JMB/NYC
is to reduce the losses of the Three Joint Ventures by $84,690,965 (of
which the Partnership's share is $9,845,325) for the period July 1, 1993
through March 31, 1995 and to correspondingly reduce what would otherwise
be JMB/NYC's funding obligation with respect to the Three Joint Ventures.

The Agreement with the Olympia & York affiliates, when effective,
would resolve the funding obligation dispute. In general, the priority
distribution level created in the 1993 Agreement and JMB/NYC's alleged
funding obligation subsequent to June 30, 1993 would be eliminated in
return for the creation of a new preferential distribution level to the
Olympia & York affiliates payable from all sources of available cash
("Preference Amount"). Such Preference Amount would be $81.5 million for
1290 Avenue of the Americas and $38.5 million for 237 Park Avenue and both
amounts would bear interest at 9% per annum, compounded monthly,
retroactive effective May 1, 1994. Net proceeds available, if any, after

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

repayment of the Preference Amounts plus interest, would then be
distributable in accordance with the original terms of the Three Joint
Ventures' Agreements which provide for, in general, that net proceeds from
all sources will be distributable 46.5% to JMB/NYC and 53.5% to the Olympia
& York affiliates, subject to, as described above, repayment by JMB/NYC of
its Purchase Notes.

The terms of the current joint venture partnership agreements between
the Olympia & York affiliates and JMB/NYC for the Three Joint Ventures
provide, in the event of a dissolution and liquidation of a Joint Venture,
that if there is a deficit balance in the tax basis capital account of
JMB/NYC, after the allocation of profits or losses and the distribution of
all liquidation proceeds, then JMB/NYC generally would be required to
contribute cash to the Joint Venture in the amount of its deficit capital
account balance. Taxable gain arising from the sale or other disposition
of a Joint Venture's property generally would be allocated to the joint
venture partner or partners then having a deficit balance in its or their
respective capital accounts in accordance with the terms of the joint
venture agreement. However, if such taxable gain is insufficient to
eliminate the deficit balance in its account in connection with a
liquidation of a Joint Venture, JMB/NYC would be required to contribute
funds to the Joint Venture (regardless of whether any proceeds were
received by JMB/NYC from the disposition of the Joint Venture's property)
to eliminate any remaining deficit capital account balance.

The Partnership's potential liability for such contribution, if any,
would be its share, if any, of the liability of JMB/NYC and would depend
upon, among other things, the amounts of JMB/NYC's and the Olympia & York
affiliates' respective capital accounts at the time of a sale or other
disposition of Joint Venture property, the amount of JMB/NYC's share of the
taxable gain attributable to such sale or other disposition of the Joint
Venture property and the timing of the dissolution and liquidation of the
Joint Venture. In such event, the Partnership could be required to sell or
dispose of other assets in order to satisfy any obligation attributable to
it as a partner of JMB/NYC to make such contribution. Although the amount
of such liability could be material, the Limited Partners of the
Partnership would not be required to make additional contributions of
capital to satisfy such obligation, if any, of the Partnership. The
Partnership's deficit investment balance in JMB/NYC as reflected in the
balance sheet (aggregating $74,575,906 at March 31, 1995) does not
necessarily represent the amount, if any, the Partnership would be required
to pay to satisfy a deficit capital account restoration obligation. Under
the Agreement with the Olympia & York affiliates, subject to the
satisfaction of certain conditions, any deficit capital account funding
obligation of JMB/NYC to the Joint Ventures would be eliminated.

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

loan will be obtained under these or any other terms. In previous
negotiations, the Olympia & York affiliates reached an agreement with the
first mortgage lender whereby effective January 1, 1993, the Olympia & York
affiliates are limited to taking distributions of $250,000 on a monthly
basis from the Three Joint Ventures and reserving the remaining excess cash
flow in a separate interest-bearing account to be used exclusively to meet
the obligations of the Three Joint Ventures as approved by the lender.
Interest on the first mortgage loan is currently calculated based upon a
variable rate related to the short-term U.S. Treasury obligation rate,
subject to a minimum rate on the loan of 7% per annum. An increase in the
short-term U.S. Treasury obligation rate could result in increased interest
payable on the first mortgage loan by the Three Joint Ventures.

The Olympia & York affiliates have informed JMB/NYC that they have
received a contract for the sale of 2 Broadway for a net purchase price of
$15 million. The first mortgage lender has preliminarily agreed, in the
loan restructuring proposal discussed above, to the sale of the building
according to the terms of the 2 Broadway sales contract. A sale pursuant
to the contract received by the Olympia & York affiliates would be subject
to, among other things, the final approval of the first mortgage lender as
well as JMB/NYC, whose approval is incorporated into the Agreement.
Furthermore, in the event of the filing a pre-arranged bankruptcy plan for
reorganization, such sale would be subject to the approval of the
bankruptcy court as part of the plan of reorganization of the Joint Venture
that owns the building. In anticipation of this sale and in accordance
with the Agreement, the unpaid first mortgage indebtedness previously
allocated to 2 Broadway was allocated to 237 Park Avenue and 1290 Avenue of
the Americas during 1994. While there can be no assurance that a sale
would occur pursuant to such contract or any other contract, if this
contract were to be accepted by or consented to by all required parties and
the sale completed pursuant thereto, JMB/NYC would no longer have an
ownership interest in the 2 Broadway Joint Ventures. A provision for value
impairment was recorded at December 31, 1993 for financial reporting
purposes for $192,627,560, net of the non-recourse portion of the purchase
notes given to the Olympia & York affiliates as part of the consideration
for JMB/NYC's acquisition of its interests in the Three Joint Ventures,
including accrued interest related to the 2 Broadway Joint Venture
interests payable by JMB/NYC to the Olympia & York affiliates in the amount
of $46,646,810. The provision for value impairment was allocated
$136,534,366 and $56,093,194 to the Olympia & York affiliates and JMB/NYC,
respectively. Such provision was allocated to the partners to reflect
their respective ownership percentages before the effect of the non-
recourse purchase notes including accrued interest.

The properties are being managed by an affiliate of the Olympia & York
affiliates for a fee equal to 1% of gross receipts. An affiliate of the
Olympia & York affiliates performs certain maintenance and repair work and
construction of certain tenant improvements at the investment properties.
Additionally, the Olympia & York affiliates have lease agreements and
occupy approximately 95,000 square feet of space at 237 Park Avenue at
rental rates which approximate market.

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

O & Y and certain of its affiliates have been involved in bankruptcy
proceedings in the United States and Canada and similar proceedings in
England. The Olympia & York affiliates have not to date been directly
2involved in these proceedings. In addition, a reorganization of the
management of the company's United States operations has been completed,
and affiliates of O&Y are in the process of renegotiating or restructuring
a number of loans affecting various properties in the United States in
which they have an interest. The Partnership is unable to assess and
cannot presently determine to what extent these events may adversely affect
the willingness and ability of the Olympia & York affiliates either to meet
their own obligations to the Three Joint Ventures and JMB/NYC or to
finalize the transactions contemplated by the Agreement.

Should a restructuring of the joint venture partnership agreements
providing for the elimination of JMB/NYC's funding obligations in
accordance with the Agreement not be finalized, JMB/NYC may decide not to
commit any additional amounts to the Three Joint Ventures. In addition,
under these circumstances, it is possible that JMB/NYC may determine to
litigate these issues with the Olympia & York affiliates. A decision not
to commit any additional funds or an adverse litigation result could, under
certain circumstances, result in the loss of JMB/NYC's interest in the
related Joint Ventures. The loss of an interest in a particular Joint
Venture could, under certain circumstances, permit an acceleration of the
maturity of the related Purchase Note (each Purchase Note is secured by
JMB/NYC's interest in the related venture). Under certain circumstances,
the failure to repay a Purchase Note could constitute a default under, and
permit an immediate acceleration of, the maturity of the Purchase Notes for
the other Joint Ventures. In such event, JMB/NYC may decide not to repay,
or may not have sufficient funds to repay, any of the Purchase Notes and
accrued interest thereon. This could result in JMB/NYC no longer having an
interest in any of the related Joint Ventures, which would result in
substantial net gain for financial reporting and Federal income tax
purposes to JMB/NYC (and through JMB/NYC and the Partnership, to the
Limited Partners) with no distributable proceeds. In such event, the
Partnership would then proceed to terminate its affairs.

(3) TRANSACTIONS WITH AFFILIATES

In accordance with the Partnership Agreement, the General Partners are
required to loan back to the Partnership, for distribution to the Limited
Partners, its share of Distributable Cash (as defined) if a distribution
made to all partners in a particular quarter does not result in a
distribution to the Limited Partners which equates to a 7% per annum return
on their adjusted capital investment. Consequently, for the distributions
made to the partners in 1989 and 1990, the General Partners have loaned
$300,000 of Distributable Cash, as defined, (including such amounts
reflected as a management fee to the General Partners) to the Partnership
for distribution to the Limited Partners. Any amounts loaned bear interest
at a rate not to exceed 10% per annum (currently 10% per annum). As of
March 31, 1995, $181,497 represented interest earned on such loans, all of
which was unpaid. These loans and accrued interest will be repaid upon
sale or refinancing only after the Limited Partners have received an amount
equal to their contributed capital plus any deficiency in a stipulated
return thereon.

The Corporate General Partner and its affiliates are entitled to
reimbursement for direct expenses and out-of-pocket expenses relating to
the administration of the Partnership and operation of the Partnership's
real property investments. Additionally, the Corporate General Partner and
its affiliates are entitled to reimbursements for legal and accounting
services. Such costs totalled $15,058 for 1995 and 1994, all of which was
unpaid and is included in accounts payable at March 31, 1995.

JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS - CONCLUDED

As more fully discussed in note 2, the Partnership has an obligation
to fund, on demand, $600,000 and $600,000 to Carlyle Managers, Inc. and
Carlyle Investors, Inc., respectively, of additional paid-in capital
(reflected in amounts due to affiliates in the accompanying financial
statements). As of March 31, 1995, these obligations bore interest at
5.78% per annum and interest accrued on these obligations was $124,042.

In accordance with an agreement between JMB Realty Corporation ("JMB")
(an affiliate of the Corporate General Partner) and the Partnership, JMB
has guaranteed that the Partnership will receive a certain minimum return
on its working capital (as defined). In February 1995, JMB paid $2,850,000
of the accrued amount due under this agreement to the Partnership. In
addition, JMB has agreed to remit amounts due under this agreement
(approximately $1,640,000 at March 31, 1995) from time to time, as needed,
to fund the operations of the Partnership. The balance of JMB's
obligation, if any, will be paid at the discretion of the Corporate General
Partner, but no later than the time of dissolution and termination of the
Partnership.

(4) SUMMARIZED FINANCIAL INFORMATION - JMB/NYC

Summary income statement information for JMB/NYC and unconsolidated
ventures for the three months ended March 31, 1995 and 1994 is as follows:

1995 1994
----------- ------------

Total income. . . . . . . . . . . . $33,684,436 37,623,603
=========== ===========
Operating loss. . . . . . . . . . . $15,839,645 10,909,958
=========== ===========
Partnership's share of loss . . . . $ 1,992,031 1,362,720
=========== ===========

(5) ADJUSTMENTS

In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation (assuming the Partnership continues as a going concern, see
note 2) have been made to the accompanying figures as of March 31, 1995 and
for the three months ended March 31, 1995 and 1994.

PART I. FINANCIAL INFORMATION

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

LIQUIDITY AND CAPITAL RESOURCES

All references to "Notes" are to Notes to Financial Statements
contained in this report. There is substantial doubt about the
Partnership's ability to continue as a going concern (see discussion below
and in Note 2).

In February 1995, the Partnership distributed $15,000,000 to the
Limited Partners ($15,000 per Interest) and $625,000 to the General
Partners representing excess working capital reserves plus $2,850,000
received from JMB Realty Corporation ("JMB") (an affiliate of the Corporate
General Partner) under its working capital minimum guarantee (as more fully
discussed in note 3). The Partnership believes that the transactions
proposed in an agreement entered into with the Olympia & York affiliates in
October 1994 (as more fully discussed below and in Note 2), although
subject to the satisfaction of certain conditions, will be completed,
thereby eliminating any potential funding obligation of the Partnership in
the future. Consequently, the Partnership believed that its working
capital reserves were in excess of the amount necessary for the future
operations of the Partnership. Therefore, in February 1995, the
Partnership distributed its excess working capital to the Partners in
accordance with the Partnership Agreement.

At March 31, 1995, the Partnership had cash and cash equivalents of
approximately $188,000. In addition, JMB Realty Corporation ("JMB") (an
affiliate of the Corporate General Partner), in accordance with its
agreement with the Partnership to guarantee the Partnership a certain
minimum return on its working capital (as more fully discussed in Note 3)
has agreed to remit amounts due under this agreement (approximately
$1,640,000 at March 31, 1995) from time to time, as needed, to fund the
operations of the Partnership. The Partnership's cash and cash equivalents
and the fundings from JMB under its minimum return guarantee agreement were
therefore available for the repayment of the temporary bank overdraft at
March 31, 1995 of approximately $227,000 and for the Partnership's working
capital requirements. The property manager has budgeted in 1995
approximately $8,907,000 for tenant improvements and capital expenditures
for the three properties, which amount is expected to be paid for out of
funds generated by the properties. Actual amounts expended in 1995 may
vary depending on a number of factors including actual leasing activity,
results of property operations, liquidity considerations, market conditions
over the course of the year and the current status of the disputes with the
unaffiliated venture partners as discussed below.

At the 2 Broadway Building, occupancy during the quarter remained at
18%. The Downtown Manhattan office leasing market remains depressed due to
the significant supply of, and the relatively weak demand for, tenant
space. In addition to the competition for tenants in the Downtown
Manhattan market from other buildings in the area, there is ever increasing
competition from less expensive alternatives to Manhattan, such as
locations in New Jersey and Brooklyn, which are also experiencing high
vacancy levels. Rental rates in the Downtown market continue to be at
depressed levels and this can be expected to continue while the large
amount of vacant space is gradually absorbed. In addition, the property is
in need of a major renovation in order to compete in the office leasing
market. However, there are currently no plans for a renovation because of
the potential sale of the property discussed below and because the
effective rents that could be obtained under current office market
conditions likely are not sufficient to justify the costs of the
renovation. As more fully discussed below, the Olympia & York affiliates
have informed JMB/NYC that they have received a contract for the sale of
the 2 Broadway Building.

Occupancy at 1290 Avenue of the Americas remained at 94% during the
quarter. A new lease with Alex Brown (78,000 square feet or approximately
4% of the building's leasable space) was executed during the third quarter
of 1994. The lease has an eighteen year term. It is expected that the
property will continue to be adversely affected by low effective rental
rates achieved upon releasing of space under existing leases which expire
over the next few years and may be adversely affected by an increased
vacancy rate over the next few years. Although approximately 21% of the
building's space under tenant leases will expire by the end of 1995,
negotiations are currently being conducted with a number of prospective
tenants in the financial services industry to lease a significant portion
of the current and anticipated vacant space. There can be no assurances
that such negotiations will be successful. During the fourth quarter of
1994, the Joint Venture that owns the building negotiated an amendment with
a tenant, Deutsche Bank Financial Products Corporation, under which the
tenant will surrender space on the 12th and 13th floors (137,568 square
feet or approximately 7% of the building's leasable space) on or before
June 30, 1996. The original lease (as amended) was to terminate on
December 31, 2003. The amendment also added space on the 8th and 9th
floors (44,360 square feet or approximately 2% of the building's leasable
space) which will expire on or before December 31, 1997. In consideration
for this amendment, the tenant paid an early termination fee of $29,000,000
to the Joint Venture on December 1, 1994. John Blair & Co. (which had
leased 253,193 square feet or approximately 13% of the building's leasable
space) filed for Chapter 11 bankruptcy protection in 1993. Because much of
the John Blair space had been subleased, the Joint Venture had been
collecting approximately 70% of the monthly rent due from John Blair from
the subtenants. During the second quarter of 1994, a settlement was
reached whereby the Joint Venture received a $7,000,000 lease termination
fee which included settlement of past due amounts. In conjunction with the
settlement, effective July 1, 1994, John Blair was released from all future
lease obligations and the Joint Venture now has direct leases with the
original John Blair subtenants. Such subtenants occupy 228,398 square feet
or approximately 11% of the building's leasable space.

Occupancy at 237 Park Avenue during the quarter remained at 98%. It
is expected that the property will be adversely affected by the low
effective rental rates achieved upon releasing of space under existing
leases which expire over the next few years and may be adversely affected
by an increased vacancy rate over the next few years.

In October 1994, JMB/NYC entered into an agreement (the "Agreement")
with the affiliates (the "Olympia & York affiliates") of Olympia & York
Developments, Ltd. ("O&Y") who are the venture partners in the Joint
Ventures to resolve certain disputes which are more fully discussed below.
Certain provisions of the Agreement are immediately effective and,
therefore, binding upon the partners, while others become effective upon
either certain conditions being met or upon execution and delivery of final
documentation. In general, the parties have agreed to: (i) amend the
Three Joint Ventures' agreements to eliminate any funding obligation by
JMB/NYC for any purpose in return for JMB/NYC relinquishing its rights to
approve almost all property management, leasing, sale (certain rights to
control a sale were retained by JMB/NYC through March 31, 2001) or
refinancing decisions and the establishment of a new preferential
distribution level payable to the Olympia & York affiliates from all future
sources of cash, (ii) sell the 2 Broadway Building, and (iii) restructure
the first mortgage loan on the terms discussed below. A more detailed
discussion of each of these items is contained below and in Note 2. As
part of the Agreement, in order to facilitate the restructuring, JMB/NYC
and the Olympia & York affiliates have agreed to file for each of the Three
Joint Ventures a pre-arranged bankruptcy plan for reorganization under
Chapter 11 of the Bankruptcy Code. Such filings are expected to occur
during 1995. The reorganization plan is expected to incorporate the
proposed transactions contained in the Agreement. During the bankruptcy
proceedings, there exists a possibility that one or more of the proposed
transactions could be challenged by certain creditors resulting in the
elimination or changes to all or portions of the Agreement by the
bankruptcy court. Consequently, there are no assurances that the
transactions contemplated in the Agreement will be finalized. If the
transactions contemplated in the Agreement are finalized, there would
nevertheless need to be a significant improvement in current market and
property operating conditions resulting in a significant increase in the
value of the 237 Park Avenue and 1290 Avenue of the Americas properties
before JMB/NYC would receive any share of future net proceeds from
operations, sale or refinancing. The restructuring of the Three Joint
Ventures' agreements would include JMB/NYC converting from a general
partner to a limited partner and the elimination of any funding obligation
by JMB/NYC for any purpose. Consequently, in such event, JMB/NYC would
recognize, for financial reporting purposes, a gain to the extent of the
then current deficit investment balance (which amount was $191,560,351 as
of March 31, 1995). No significant net Federal income tax gain or any
distributable proceeds would result from the consummation of the
reorganization plan.

JMB/NYC has had a dispute with the Olympia & York affiliates over the
calculation of the effective interest rate with reference to the first
mortgage loan, which covers all three properties, for the purpose of
determining JMB/NYC's deficit funding obligation, as described more fully
in Note 2 of Notes to Financial Statements. During the quarter ended March
31, 1993, an agreement was reached between JMB/NYC and the Olympia & York
affiliates (the "1993 Agreement") which rescinded the default notices
previously received by JMB/NYC and eliminated the operating deficit funding
obligation of JMB/NYC for the period January 1, 1992 through June 30, 1993.

Pursuant to the 1993 Agreement, during this period, JMB/NYC recorded
interest expense at 1-3/4% over the short-term U.S. Treasury obligation
rate (subject to a minimum rate of 7% per annum), which is the interest
rate on the underlying first mortgage loan. Under the terms of the 1993
Agreement, during this period, the amount of capital contributions that the
Olympia & York affiliates and JMB/NYC would have been required to make to
the Three Joint Ventures, if the first mortgage loan bore interest at a
rate of 12-3/4% per annum (the Olympia & York affiliates' interpretation),
became a priority distribution level to the Olympia & York affiliates from
the Three Joint Ventures' annual cash flow or net sale or refinancing
proceeds. The 1993 Agreement also entitles the Olympia & York affiliates
to a 7% per annum return on such unpaid priority distribution level.
During this period, the excess available operating cash flow after the
payment of the priority distribution level discussed above from any of the
Three Joint Ventures was advanced in the form of loans to pay operating
deficits and/or unpaid priority distribution level amounts of any of the
other Three Joint Ventures. Such loans bear a market rate of interest,
have a final maturity of ten years from the date when made and are
repayable only out of first available annual cash flow or net sale or
refinancing proceeds. The 1993 Agreement also provides that, except as
specifically agreed otherwise, the parties each reserve all rights and
claims with respect to each of the Three Joint Ventures and each of the
partners thereof, including, without limitation, the interpretation of or
rights under each of the joint venture partnership agreements for the Three
Joint Ventures. The term of the 1993 Agreement expired on June 30, 1993.
Therefore, effective July 1, 1993, JMB/NYC is recording interest expense at
1-3/4% over the short-term U.S. Treasury obligation rate plus any excess
operating cash flow after capital costs of each of the Three Joint
Ventures, such sum not to be less than 7% nor exceed a 12-3/4% per annum
interest rate. The Olympia & York affiliates continued to dispute this
calculation for the period commencing July 1, 1993, contend that a 12-3/4%
per annum fixed rate applies. The Agreement with the Olympia & York
affiliates, when effective, would resolve the funding obligation dispute.

O & Y and certain of its affiliates have been involved in bankruptcy
proceedings in the United States and Canada and similar proceedings in
England. The Olympia & York affiliates have not been directly involved in
these proceedings. In addition, a reorganization of the management of the
company's United States operations has been completed, and affiliates of O
& Y are in the process of renegotiating or restructuring a number of loans
affecting various properties in the United States in which they have an
interest. The Partnership is unable to assess and cannot presently
determine to what extent these events may adversely affect the willingness
and ability of the Olympia & York affiliates either to meet their own
obligations to the Three Joint Ventures and JMB/NYC or to finalize the
transactions contemplated by the Agreement.

All of the office buildings serve as collateral for the first mortgage
loan. The lender has asserted various defaults under the loan. On June
30, 1994, the Olympia & York affiliates, on behalf of the Three Joint
Ventures, signed a non-binding letter of intent with representatives of the
lender (consisting of a steering committee of holders of notes evidencing
the mortgage loan) to restructure certain terms of the existing mortgage
loan. The Agreement with the Olympia & York affiliates, when effective,
would provide for acceptance by JMB/NYC of this proposed restructuring.
The restructuring, as proposed, would change the interest rate on the notes
from a floating rate equal to 1.75% over the rate on three-month U.S.
treasury bills to a fixed rate of 9% per annum with periodic payments of
interest only at a pay rate of 7% per annum. Unpaid interest would accrue
at 9% per annum and unless previously paid out of excess property cash flow
would be payable at maturity. There is no assurance that a restructuring
of the loan will be obtained under these or any other terms. In previous
negotiations, the Olympia & York affiliates reached an agreement with the
first mortgage lender whereby effective January 1, 1993, the Olympia & York
affiliates are limited to taking distributions of $250,000 on a monthly
basis from the Three Joint Ventures reserving the remaining excess cash
flow in a separate interest-bearing account to be used exclusively to meet
the obligations of the Three Joint Ventures as approved by the lender.
Interest on the first mortgage loan is currently calculated based upon a
variable rate related to the short-term U.S. Treasury obligation rate,
subject to a minimum rate on the loan of 7% per annum. In the absence of
the contemplated restructuring, an increase in the short-term U.S. Treasury
obligation rate could result in increased interest payable on the first
mortgage loan by the Three Joint Ventures.

The Olympia & York affiliates have informed JMB/NYC that they have
received a contract for the sale of 2 Broadway for a net purchase price of
$15 million. The first mortgage lender has preliminarily agreed, in the
loan restructuring proposal discussed above, to the sale of the building
according to the terms of the 2 Broadway sales contract. A sale pursuant
to the contract received by the Olympia & York affiliates would be subject
to, among other things, the final approval of the first mortgage lender as
well as JMB/NYC, whose approval is incorporated into the Agreement.
Furthermore, in the event of the filing a pre-arranged bankruptcy plan for
reorganization, such sale would be subject to the approval of the
bankruptcy court as part of the plan of reorganization of the Joint Venture
that owns the building. In anticipation of this sale and in accordance
with the Agreement, the unpaid first mortgage indebtedness previously
allocated to 2 Broadway was reallocated to 237 Park Avenue and 1290 Avenue
of the Americas during 1994. While there can be no assurance that a sale
would occur pursuant to such contract or any other contract, if this
contract were to be accepted by or consented to by all required parties and
the sale completed pursuant thereto, JMB/NYC would no longer have an
ownership interest in the 2 Broadway Joint Ventures. A provision for value
impairment was recorded at December 31, 1993 for financial reporting
purposes for $192,627,560, net of the non-recourse portion of the purchase
notes given to the Olympia & York affiliates as part of the consideration
for JMB/NYC's acquisition of its interests in the Three Joint Ventures,
including accrued interest related to the 2 Broadway Joint Venture
interests payable by JMB/NYC to the Olympia & York affiliates in the amount
of $46,646,810. The provision for value impairment was allocated
$136,534,366 and $56,093,194 to the Olympia & York affiliates and JMB/NYC,
respectively. Such provision was allocated to the partners to reflect
their respective ownership percentages before the effect of the non-
recourse purchase notes including accrued interest.

Should a restructuring of the joint venture partnership agreements
providing for the elimination of JMB/NYC's funding obligations in
accordance with the Agreement not be finalized, JMB/NYC may decide not to
commit any additional amounts to the Three Joint Ventures. In addition,
under these circumstances, it is possible that JMB/NYC may determine to
litigate these issues with the Olympia & York affiliates. A decision not
to commit any additional funds or an adverse litigation result could, under
certain circumstances, result in the loss of the interest in the related
Joint Ventures. The loss of an interest in a particular Joint Venture
could, under certain circumstances, permit an acceleration of the maturity
of the related purchase note (each purchase note is secured by JMB/NYC's
interest in the related Joint Venture). Under certain circumstances, the
failure to repay a purchase note could constitute a default under, and
permit an immediate acceleration of, the maturity of the purchase notes for
the other Joint Ventures. In such event, JMB/NYC may decide not to repay,
or may not have sufficient funds to repay, any of the purchase notes and
accrued interest thereon. This could result in JMB/NYC no longer having an
interest in any of the related Joint Ventures, which would result in
substantial net gain for financial reporting and Federal income tax
purposes to JMB/NYC (and through JMB/NYC and the Partnership, to the
Limited Partners) with no distributable proceeds. In such event, the
Partnership would then proceed to terminate its affairs.

The Partnership believes that the transactions proposed in the
Agreement, although subject to satisfaction of certain conditions, will be
completed, thereby eliminating any potential funding obligation of the
Partnership in the future (as more fully discussed in Note 2).
Consequently, the Partnership believed that its working capital reserves
were in excess of the amount necessary for the future operations of the
Partnership. Therefore, in February 1995, the Partnership distributed its
excess working capital to the Partners in accordance with the Partnership
Agreement.

Due to the various factors discussed above, it is unlikely that the
Partnership will be able to return a substantial amount of the Limited
Partners' original capital. It should be noted, however, that in
connection with any sale or other disposition (including a foreclosure) of
the properties (or interests therein) owned by the Three Joint Ventures (or
JMB/NYC), the Limited Partners would be allocated substantial net gain for
Federal income tax purposes even though the Partnership would not be able
to return a substantial amount of the Limited Partners' original capital.

RESULTS OF OPERATIONS

The decrease in cash and cash equivalents, short-term investments and
the interest and other receivables on such short-term investments as of
March 31, 1995 as compared to December 31, 1994 is due to the Partnership's
use of such resources to make a distribution to partners of $15,625,000 and
the related payment of management fees to the General Partners of
$1,041,667 in February 1995.

The decrease in amounts due from affiliates as of March 31, 1995 as
compared to December 31, 1994 is primarily due to the receipt of $2,850,000
in February from JMB Realty Corporation (an affiliate of the Corporate
General Partner) relating to its agreement to guarantee a minimum return on
the Partnership's working capital (as more fully discussed in Note (3)),
partially offset by the accrual of additional interest earned on such
guaranteed amounts.

The increase in bank overdraft as of March 31, 1995 as compared to
December 31, 1994 is attributable to the Partnership's temporary bank
overdraft of approximately $227,000 at March 31, 1995 resulting from the
timing of the Partnership's maturities of short-term investments and
fundings received from JMB relating to its agreement to guarantee a minimum
return on the Partnership's working capital (as more fully described in
Note 3).

The increase in amounts due to affiliates as of March 31, 1995 as
compared to December 31, 1994 represents the increased accrued interest on
the Partnership's paid-in capital obligation to Carlyle Investors, Inc.
(the general partner of Property Partners, L.P.) and Carlyle Managers, Inc.
(the general partner of JMB/NYC Office Building Associates, L.P.) ($600,000
and $600,000, respectively) of which the Partnership is a 20% shareholder
(see Note 2).

The decrease in interest income for the three months ended March 31,
1995 as compared to the three months ended March 31, 1994 is due to the
lower average of amounts invested in U.S. Government securities during 1995
as compared to 1994 resulting from the Partnership's distribution to
partners of $15,625,000 in February 1995.

The increase in management fees paid to the general partners for the
three months ended March 31, 1995 as compared to the three months ended
March 31, 1994 is due to the February 1995 payment of a distribution to
partners, a portion of which ($1,041,667) is the management fee.

The increase in the Partnership's share of loss from operations of
unconsolidated ventures for the three months ended March 31, 1995 as
compared to the three months ended March 31, 1994 is primarily due to the
Partnership's share of a decrease in rental income at the 2 Broadway
building relating to Bear Stearns vacating its space (approximately 11% of
the buildings leasable space) in April 1994 upon the expiration of its
lease.

PART II. OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The first mortgage lender has asserted various defaults under the
loan, including defaults in providing certain reports and certifications
and the failure to pay real estate taxes for the 2 Broadway Building. The
Olympia & York affiliates, on behalf of the Three Joint Ventures, continue
to negotiate with representatives of the lender (consisting of a steering
committee of holders of notes evidencing the mortgage loan) to restructure
certain terms of the existing mortgage loan in order to provide for, among
other things, a fixed rate of interest on the loan during the remaining
loan term until maturity. Reference is made to Part I. Financial
Information, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for further information regarding the
first mortgage loan and its possible restructuring.
<TABLE>
PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

OCCUPANCY

The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties:

<CAPTION>
1994 1995
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. 237 Park Avenue Building
New York, New York . . . 98% 98% 98% 98% 98%

2. 1290 Avenue of the
Americas Building
New York, New York . . . 90% 91% 91% 94% 94%

3. 2 Broadway Building
New York, New York . . . 30% 19% 19% 18% 18%

</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

4-A.* Long-term debt contract relating to the mortgage
note secured by the 237 Park Avenue Building in New York, New York.

4-B.* Long-term debt contract relating to the mortgage
note secured by the 237 Park Avenue Building in New York, New York.

4-C.* Long-term debt contract relating to the mortgage
note secured by the 2 Broadway Building in New York, New York.

10-A.* Agreement relating to the purchase by the
Partnership of an interest in the 237 Park Avenue Building in New York, New
York.

10-B.* Agreement relating to the purchase by the
Partnership of an interest in the 1290 Avenue of the Americas Building in
New York, New York.

10-C.* Agreement relating to the purchase by the
Partnership of an interest in the 2 Broadway Building in New York, New
York.

10-D.* Pledge, Junior Pledge and Security agreements dated
July 1, 1985 between JMB/Manhattan Associates and JMB Realty Corporation
and Chemical Bank relating to guarantees of Limited Partnership
contributions by the Limited Partners.

10-E.* Agreement dated August 14, 1984 relating to the
management of the 2 Broadway Building in New York, New York.

10-F.* Agreement dated July 27, 1984 relating to the
management of the 1290 Avenue of the Americas Building in New York, New
York.

10-G.* Agreement dated August 14, 1984 relating to the
management of the 237 Park Avenue Building in New York, New York.

10-H.* Amended and Restated Agreement of General
Partnership of JMB/NYC Office Building Associates dated July 18, 1984.

10-I.* Interest Rate Guaranty Agreement dated July 1, 1984
between JMB Realty Corporation and JMB/Manhattan Associates, Ltd. dated
April 30, 1984.

10-J.* Loan Agreement between JMB/Manhattan Associates,
JMB/Manhattan Investors, Inc., BPA Associates and APB Associates relating
to the loan back of cash distributions of the Partnership.

10-K.* Consent Agreement dated April 30, 1985 between
JMB/NYC Office Building Associates, O&Y Equity Corporation, Olympic and
York, 2 Broadway Limited Partnership and Fame Associates relating to the
rights of mortgage loan participation.

10-L.* Mortgage Spreader and Consolidation Agreement and
Trust Indenture dated March 20, 1984 between O&Y Equity Corporation and
affiliates and Manufacturer's Hanover Trust Company relating to the
$970,000,000 first mortgage loan on the 2 Broadway, 1290 Avenue of the
Americas and 237 Park Avenue Buildings.

10-M.* First Amendment to and First Amended and Restated
Agreement of General Partnership of 1290 Associates dated April 15, 1985.

10-N.* $9,758,363 12.75% promissory note, due March 20,
1999 between JMB/NYC Office Building Associates and Olympia and York
Holdings Corporation relating to the 1290 Avenue of Americas Building.

10-O.* First Amendment to and Agreement of General
Partnership of 237 Park Avenue Associates dated April 15, 1985.

10-P.* $4,514,229 12.75% promissory note, due March 20,
1999 between JMB/NYC Office Building and Olympia and York Holdings
Corporation relating to the 237 Park Avenue Building.

10-Q.* First Amendment to and First Amended and Restated
Agreement of General Partnership of 2 Broadway Land Company.

10-R.* $19,014,777 12.75% promissory note, due March 20,
1999 between JMB/NYC Office Building Associates and Olympia and York
Holdings Corporation relating to the 2 Broadway Building.

10-S.* First Amendment to and First Amended and Restated
Agreement of General Partnership of 2 Broadway Associates.

10-T.* $871,556 12.75% promissory note, due March 20, 1999
between JMB/NYC Office Building and Olympia and York Broadway Limited
relating to the 2 Broadway Building.

10-U. Agreement dated March 25, 1993 between JMB/NYC and
the Olympia & York affiliates regarding JMB/NYC's deficit funding
obligations from January 1, 1992 through June 30, 1993 is hereby
incorporated by reference to the Partnership's report for December 31, 1992
on Form 10-K (File No. 0-14547) filed March 30, 1993.

10-V. Agreement of Limited Partnership of Property
Partners, L.P. is hereby incorporated by reference to the Partnership's
report on Form 10-Q (File No. 0-14547) filed May 14, 1993.

10-W. Second Amended and Restated Articles of Partnership
of JMB/NYC Office Building Associates is hereby incorporated by reference
to the Partnership's report on Form 10-K (File No. 0-14547) filed March 28,
1994.

10-W. Second Amended and Restated Articles of Partnership
of JMB/NYC Office Building Associates is incorporated by reference to the
Partnership's report for December 31, 1993 on Form 10-K (File No. 0-14547)
filed March 28, 1994.

10-X. Amended and Restated Certificate of Incorporation of
Carlyle-XIV Managers, Inc., (known as Carlyle Managers, Inc.) is
incorporated by reference to the Partnership's report for December 31, 1993
on Form 10-K (File No. 0-14547) filed March 28, 1994.

10-Y. Amended and Restated Certificate of Incorporation of
Carlyle-XIII Managers, Inc., (known as Carlyle Investors, Inc.) is
incorporated by reference to the Partnership's report for December 31, 1993
on Form 10-K (File No. 0-14547) filed March 28, 1994.

10-Z. $600,000 demand note between JMB/Manhattan
Associates, L.P. and Carlyle Managers, Inc. is incorporated by reference to
the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-
14547) filed March 28, 1994.

10-AA. $600,000 demand note between JMB/Manhattan
Associates, L.P. and Carlyle Investors, Inc. is incorporated by reference
to the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-
14547) filed March 28, 1994.

10-BB. Proposed Restructure of Two Broadway, 1290 Avenue of
the Americas and 237 Park Avenue, New York, New York and Summary of Terms
dated October 14, 1994, is hereby incorporated by reference to the
Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-14547
dated March 27, 1995).

10-CC. Assumption Agreements dated October 14, 1994 made by
237 Park Avenue Associates and by 1290 Associates in favor and for the
benefit of O&Y Equity Company, L.P., O&Y NY Building Corp. and JMB/NYC
Office Building Associates, L.P., is hereby incorporated by reference to
the Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-
14547 dated March 27, 1995).

10-DD. Assumption Agreements dated October 14, 1994 made by
O&Y Equity Company, L.P., and by O&Y NY Building Corp. and by JMB/NYC
Office Building Associates, L.P. in favor and for the benefit of 2 Broadway
Associates and 2 Broadway Land Company, is hereby incorporated by reference
to the Partnership's Report for December 31, 1994 on Form 10-K (File No. 0-
14547 dated March 27, 1995).

10-EE. Amendment No. 1 to the Second Amended and Restated
Articles of Partnership of JMB/NYC Office Building Associates, L.P. dated
January 1, 1994, by and between Carlyle Managers, Inc., as general partners
and Carlyle-XIII Associates, L.P., Carlyle-XIV Associates, L.P. and Property
Partners, L.P. as the limited partners, a copy of which is filed herewith.

10-FF. Amendment No.1 to the Agreement of Limited
Partnership of Property Partners, L.P. dated January 1, 1994 by and between
Carlyle Investors, Inc. a Delaware corporation as general partner, and
JMB/Manhattan Associates, Ltd., a Delaware limited partnership, as limited
partner, a copy of which is filed herewith.

27. Financial Data Schedule
* Previously filed as Exhibits to the Partnership's
Registration Statement on Form 10 (as amended) of the Securities Exchange
Act of 1934 (file no. 2-88687) filed April 29, 1986 and hereby incorporated
by reference to the Partnership's report for December 31, 1992 on Form 10-K
filed March 30, 1993.

(b) Reports on Form 8-K

None

SIGNATURES

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

JMB/MANHATTAN ASSOCIATES, LTD.

BY: JMB/Manhattan Investors, Inc.
Corporate General Partner

By: GAILEN J. HULL
Gailen J. Hull, Vice President
Date:May 11, 1995

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

GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date:May 11, 1995

AMENDMENT NO. 1 TO THE
SECOND AMENDED AND RESTATED
ARTICLES OF PARTNERSHIP OF
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

This Amendment No. 1 to the Second Amended and Restated Articles of
Partnership made and entered into as of January 1, 1994 by and between
Carlyle Managers, Inc., a Delaware corporation, as general partner
(hereinafter the "General Partner") and Carlyle-XIII Associates, L.P., a
Delaware limited partnership ("Carlyle- XIII"), Carlyle-XIV Associates, L.P.,
a Delaware limited partnership ("Carlyle-XIV"), and Property Partners, L.P.,
a Delaware limited partnership ("Property"), as the limited partners
(hereinafter collectively the "Limited Partners" and, together with the
General Partner, sometimes hereinafter collectively referred to as the
"Partners"). 9

WITNESSETH

THAT WHEREAS, the parties hereto have formed, or ratified the
formation of, a partnership, (hereinafter the "Partnership") pursuant to the
Uniform Partnership Act as in effect in the State of Illinois; and, except as
otherwise provided in the Partnership's Articles of Partnership (the
"Articles");

THAT WHEREAS, the parties have continued the Partnership as a limited
partnership pursuant to the Revised Uniform Partnership Act as in effect in
the State of Illinois, as amended (the "Act"); and

THAT WHEREAS, the Partners desire to amend the Articles to revise the
respective Partnership Shares of the Partners such that, from the date hereof
up to and including December 31, 1996, the Partnership Shares shall be 10% to
the General Partner, 22.5% to Carlyle-XIII, 45% to Carlyle-XIV and 22.5% to
Property.

NOW, THEREFORE, Section 7.E of the Agreement is hereby amended such
that the Partnership Shares shall be, from the date hereof up to and including
December 31, 1996, 10% to the General Partner, 22.5% to Carlyle-XIII, 45%
to Carlyle-XIV and 22.5% to Property.

IN WITNESS WHEREOF, the Partners have executed this Amendment No. 1 to
the Second Amended and Restated Articles of Partnership as of the day and year
first above written.

GENERAL PARTNER LIMITED PARTNERS

Carlyle Managers, Inc. Carlyle-XIII Associates, L.P.

By: By: Carlyle Investors, Inc.,
Its: Corporate General Partner

By:
Its:

Carlyle-XIV Associates, L.P.

By: Carlyle Investors, Inc.
Corporate General Partner

By:
Its:

Property Partners, L.P.

By: Carlyle Investors, Inc.
General Partner

By:
Its:

AMENDMENT NO. 1 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PROPERTY PARTNERS, L.P.

This Amendment No. 1 to the Agreement of Limited
Partnership made and entered into as of January 1, 1994 by and
between Carlyle Investors, Inc., a Delaware corporation, as
general partner (hereinafter the "General Partner") and
JMB/Manhattan Associates, Ltd., a Delaware limited
partnership, as limited partner (hereinafter the "Limited
Partner" and, together with the General Partner, sometimes
hereinafter collectively referred to as the "Partners").

WITNESSETH

THAT WHEREAS, the parties hereto have formed a limited
partnership, (hereinafter the "Partnership") pursuant to the
Revised Uniform Limited Partnership Act as in effect in the
State of Delaware (hereinafter the "Act"), except as otherwise
provided in the Partnership's Agreement of Limited Partnership
(the "Agreement");

THAT WHEREAS, the Partners desire to amend the Agreement
to revise the respective Partnership Shares of the Partners
such that, from the date hereof up to and including December
31, 1996, the Partnership Shares shall be 90% to the Limited
Partner and 10% to the General Partner.

NOW, THEREFORE, Section 7.A. of the Agreement is hereby
amended such that the Partnership Shares shall be, from the
date hereof up to and including December 31, 1996, 90% to the
Limited Partner and 10% to the General Partner.

IN WITNESS WHEREOF, the Partners have executed this
Amendment No. 1 to the Agreement of Limited Partnership as of
the day and year first above written.

GENERAL PARTNER LIMITED PARTNER

Carlyle Investors, Inc. JMB/Manhattan Associates, Ltd.

By: By:
JMB/Manhattan Investors, Inc.,
Its: Corporate General Partner

By:
Its:

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<CIK> 0000771210
<NAME> JMB/MANHATTAN ASSOCIATES, LTD.

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995

<CASH> 187,531
<SECURITIES> 0
<RECEIVABLES> 235
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 187,766
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,827,894
<CURRENT-LIABILITIES> 2,064,325
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (73,610,947)
<TOTAL-LIABILITY-AND-EQUITY> 1,827,894
<SALES> 0
<TOTAL-REVENUES> 290,470
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,120,306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,094
<INCOME-PRETAX> (877,930)
<INCOME-TAX> (2,869,961)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,869,961)
<EPS-PRIMARY> (2,775)
<EPS-DILUTED> 0

</TABLE>