JMB MANHATTAN ASSOCIATES LTD, 10-Q, 1995-11-14

JMB MANHATTAN ASSOCIATES LTD
10-Q, 1995-11-14
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended September 30, 1995 Commission file #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 . . . . . . 18

PART II OTHER INFORMATION

Item 3. Defaults on Senior Securities . . . . . . . . . 23

Item 5. Other Information . . . . . . . . . . . . . . . 24

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . 25

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

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

BALANCE SHEETS

SEPTEMBER 30, 1995 AND DECEMBER 31, 1994

(UNAUDITED)

ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . $ -- 3,784,075
Short-term investments (note 1). . . . . . . . . . . . . . . . . . -- 9,912,520
Interest and other receivables . . . . . . . . . . . . . . . . . . -- 20,397
----------- -----------

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

Amounts due from affiliates (note 3) . . . . . . . . . . . . . . . 1,723,170 4,326,233
----------- -----------

$ 1,723,170 18,043,225
=========== ===========
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

BALANCE SHEETS - CONTINUED

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

SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -----------

Current liabilities:
Bank overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . $ 148,144 --
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 33,421 19,281
Amounts due to affiliates (note 3) . . . . . . . . . . . . . . . . 1,875,522 1,757,445
----------- -----------

Total current liabilities. . . . . . . . . . . . . . . . . 2,057,087 1,776,726

Investment in unconsolidated venture, at equity (note 2) . . . . . . 75,083,793 71,382,485

Commitments and contingencies (notes 1, 2, 3 and 5)

Partners' capital accounts (deficits) (note 1):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . 1,500 1,500
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . (4,204,239) (3,941,200)
Cumulative cash distributions. . . . . . . . . . . . . . . . . (737,500) (112,500)
------------ -----------
(4,940,239) (4,052,200)
------------ -----------
Limited partners (1,000 Interests):
Capital contributions, net of offering costs . . . . . . . . . 57,042,489 57,042,489
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . (109,519,960) (105,106,275)
Cumulative cash distributions. . . . . . . . . . . . . . . . . (18,000,000) (3,000,000)
------------ -----------
(70,477,471) (51,063,786)
------------ -----------

Total partners' capital accounts (deficits). . . . . . . . (75,417,710) (55,115,986)
------------ -----------

$ 1,723,170 18,043,225
============ ===========

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

STATEMENTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

(UNAUDITED)

<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Interest . . . . . . . . . . . . . . . . . . $ 36,907 411,720 375,354 1,233,988
------------ ----------- ----------- ----------
Expenses:
Interest . . . . . . . . . . . . . . . . . . 33,728 8,831 118,077 70,935
Professional services. . . . . . . . . . . . -- 14,907 155,414 93,162
Management fees paid to general
partners . . . . . . . . . . . . . . . . . -- -- 1,041,667 --
General and administrative . . . . . . . . . 12,621 6,691 35,612 34,476
------------ ----------- ----------- ----------
46,349 30,429 1,350,770 198,573
------------ ----------- ----------- ----------
Operating earnings (loss). . . . . . . (9,442) 381,291 (975,416) 1,035,415
Partnership's share of operations
of unconsolidated venture. . . . . . . . . . (15,799,331) (1,535,653) (19,191,424) (4,342,433)
------------ ----------- ----------- ----------
Net loss before extra-
ordinary item. . . . . . . . . . . . (15,808,773) (1,154,362) (20,166,840) (3,307,018)
Extraordinary item:
Partnership's share of gain on
forgiveness of indebtedness of
unconsolidated venture . . . . . . . . . . 15,490,116 -- 15,490,116 --
------------ ----------- ----------- ----------
Net loss . . . . . . . . . . . . . . . $ (318,657) (1,154,362) (4,676,724) (3,307,018)
============ =========== =========== ==========
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS - CONTINUED

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ----------- ----------
Net loss per limited partnership
interest (note 1):
Net operating loss . . . . . . . . $ (15,565) (1,108) (19,749) (3,175)
Partnership's share of gain on
forgiveness of indebtedness
of unconsolidated venture. . . . 15,335 -- 15,335 --
------------ ----------- ----------- ----------

Net loss . . . . . . . . . . . . $ (230) (1,108) (4,414) (3,175)
============ =========== =========== ==========

Cash distribution 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

NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (4,676,724) (3,307,018)
Items not requiring (providing) cash or cash equivalents:
Partnership's share of operating loss from operations
of unconsolidated venture. . . . . . . . . . . . . . . . . . . . . 19,191,424 4,342,433
Gain from forgiveness of indebtedness. . . . . . . . . . . . . . . . (15,490,116) --
Changes in:
Interest and other receivables . . . . . . . . . . . . . . . . . . . 20,397 (145,509)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 14,140 6,870
------------ -----------
Net cash provided by (used in) operating activities. . . . . . (940,879) 896,776

Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments . . . . 9,912,520 (2,329,554)
Change in amounts due to affiliates. . . . . . . . . . . . . . . . . . 118,077 48,542
------------ -----------
Net cash provided by (used in) investing activities. . . . . . 10,030,597 (2,281,012)
------------ -----------
Cash flows from financing activities:
Bank overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,144 --
Distributions to limited partners. . . . . . . . . . . . . . . . . . . (15,000,000) --
Distributions to general partners. . . . . . . . . . . . . . . . . . . (625,000) --
Change in amounts due from affiliates. . . . . . . . . . . . . . . . . 2,603,063 (872,138)
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . (12,873,793) (872,138)
------------ -----------
Net increase (decrease) in cash and cash equivalents . . . . . (3,784,075) (2,256,374)
Cash and cash equivalents, beginning of year . . . . . . . . . 3,784,075 2,315,827
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . . . . $ -- 59,453
============ ===========
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

SEPTEMBER 30, 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 nine months ended
September 30:
1995 1994
----------------------- -------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------

Net loss . . . . .$(4,676,724) (19,121,287) (3,307,018) (2,932,448)
Net loss
per limited
partnership
interest. . . . .$ (4,414) (18,917) (3,175) (2,815)
============ ========== ========== ==========

The net 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.

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 ($3,757,085 at December 31, 1994) 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. There are no
such amounts held in U.S. Government obligations at September 30, 1995.

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 anticipated 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 to be held and used (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. Any long-lived assets identified "to be
disposed of" would no longer be depreciated but adjustments for impairment
loss would be made in each period as necessary to report these assets at
the lower of historical cost and 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.

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 finalized its assessment
of the full impact of adopting SFAS 121, it is likely that additional
provisions for value impairment would be required for the properties owned
by the Partnership and its consolidated ventures, or by the Partnership's
unconsolidated ventures. Such provisions, including the Partnership's
share of such unconsolidated venture provisions, are currently estimated to
total approximately $160 million (all of which is expected to be allocated
to the venture partner) in the first period of implementation of SFAS 121.
In addition, upon the disposition of an impaired property, the Partnership

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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.

(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 sold their 32-story
office building in September 1995 (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 & York Developments, Limited
(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. 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 Joint Ventures of depreciation, amortization or
operating losses and the allocation of operating income from the 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

In October 1994, JMB/NYC entered into an agreement (the "Agreement")
with the Olympia & York affiliates to resolve certain disputes which are
more fully discussed below. Certain provisions of the Agreement became
immediately effective and, therefore, binding upon the partners, while
others become effective either upon 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 would be 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 agreed to file for
each of the Three Joint Ventures a pre-arranged bankruptcy plan for
reorganization under Chapter 11 of the Bankruptcy Code. In June 1995, the
2 Broadway Joint Ventures filed their pre-arranged bankruptcy plans for
reorganization, and in August 1995, the bankruptcy court entered an order
confirming their plans of reorganization. Bankruptcy filings for the other
Joint Ventures are expected to occur in 1996 and JMB/NYC would seek to
incorporate the proposed transactions contained in the Agreement in the
reorganization plans for the other Joint Ventures, although there is no
assurance that such proposed transactions would be incorporated. 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 significant share of future net proceeds
from operations, sale or refinancing. The restructuring of the Three Joint
Ventures' agreements would include 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
$251,588,694 as of September 30, 1995). In the event that one or more of
the transactions proposed in the Agreement are not consummated, JMB/NYC and
the Partnership may, among other things, recognize substantial gain for
Federal income tax purposes with no corresponding distributable proceeds.

In September 1995, the 2 Broadway Joint Ventures concluded the sale of
2 Broadway with a third party for a net purchase price, after commissions
and certain other payments but before prorations, of approximately $18.3
million. As a result of this sale and the disposition of its interest in
the 2 Broadway Joint Ventures, JMB/NYC recognized a net gain of
approximately $10,000,000 for financial reporting purposes. 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.
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

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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 joint venture
partners to reflect their respective ownership percentages before the
effect of the non-recourse Purchase Notes including accrued interest.

In October 1995, certain affiliates of O&Y, including one of the
partners in the Joint Ventures, filed for protection from creditors under
Chapter 11 of the United States Bankruptcy Code. These affiliates of O&Y
are preparing a plan to restructure their ownership interests in various
office buildings, including the 237 Park Avenue and 1290 Avenue of the
Americas office buildings, which could take the form of one or more real
estate investment trusts. Any such restructuring would be subject to the
approval of their various creditors as well as the bankruptcy court, and
would likely result in such creditors collectively obtaining control of
such ownership interests. Although JMB/NYC has had discussions with the
Olympia & York affiliates and certain of the creditors concerning possible
restructuring proposals, because of the preliminary status and the
complexity of the proposals, as well as the current divergence in the
interests of certain of the creditors, the Partnership does not know at
this time how a restructuring would affect the Joint Ventures, JMB/NYC's
ownership interest therein and/or the effectuation of various transactions
pursuant to the Agreement. One or more of the proposed transactions
contemplated by the Agreement may not be effected as a result of such
restructuring, which could result in, among other things, JMB/NYC and the
Partnership recognizing substantial gain for Federal income tax purposes
with no corresponding distributable proceeds.

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 between 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
$14,272,592 and $34,158,225 at September 30, 1995 and December 31, 1994,
respectively. 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 2 Broadway Joint Ventures is additionally secured by
JMB/NYC's interest in $20,000,000 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 $44,487,575 at
September 30, 1995. During 1994 and through September 30, 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 for the cancellation of indebtedness under the 2 Broadway Purchase
Notes in excess of $20 million. As discussed more fully below, in
September 1995 the 2 Broadway Joint Ventures concluded the sale of the 2
Broadway Building at a price which did not provide any proceeds to JMB/NYC

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

to repay the related Purchase Notes. Consequently, $20,000,000 of the 2
Broadway Purchase Notes has been re-allocated and is 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 variable 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 variable
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 variable 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
September 30, 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 variable 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 continue 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 nine months ended September 30, 1995 was
$87,363,401. Based upon the amount of interest determined by JMB/NYC for
the nine months ended September 30, 1995, interest expense for the Three
Joint Ventures was $51,700,688. The cumulative effect of recording the
interest expense calculated by JMB/NYC is to reduce the losses of the Three
Joint Ventures by $108,734,142 (of which the Partnership's share is
$12,640,344) for the period July 1, 1993 through September 30, 1995 and to
correspondingly reduce what would otherwise be JMB/NYC's funding obligation
with respect to the Three Joint Ventures.

Certain provisions of 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, retroactively effective from May 1, 1994. Net proceeds

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

available, if any, after 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. 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 $75,083,793 at September 30,
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.

The 237 Park Avenue and the 1290 Avenue of the America's office
buildings serve currently as collateral for the first mortgage loan. The
lender has asserted various defaults under the loan. A restructuring of
the loan now appears likely to depend on the restructuring of the ownership
interest of various affiliates of O&Y in a number of office buildings, as
discussed above. 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.

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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.

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 Venture. 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
September 30, 1995, $204,984 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 September 30, 1995.

The Corporate General Partner of the Partnership has determined to use
independent third parties to perform certain administrative services
beginning in the fourth quarter of 1995. Use of third parties is not
expected to have a material effect on the operations of the Partnership.

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 September 30, 1995, these obligations bore interest at
7.07% per annum and interest accrued on these obligations was $170,538.

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), including amounts previously accrued
under the minimum return guarantee. 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 $1,723,000 at September 30, 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 nine months ended September 30, 1995 and 1994 is as
follows:

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

Total income. . . . . . . . . . . . $103,041,028 117,625,535
============ ===========
Operating loss. . . . . . . . . . . $ 46,678,713 17,369,731
============ ===========
Partnership's share of loss . . . . $ 6,233,638 4,342,433
============ ===========

(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 September 30, 1995
and for the three and nine months ended September 30, 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 and made a related payment of management fees to the General
Partners of $1,041,667. Such amounts were made out of 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.

In addition, JMB, 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 $1,723,000 at September 30,
1995) from time to time, as needed, to fund the operations of the
Partnership. The Partnership's fundings from JMB under its minimum return
guarantee agreement were therefore available for the repayment of the
temporary bank overdraft at September 30, 1995 of approximately $148,000
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.

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. Approximately 21% of the building's
space under tenant leases will expire by the end of 1995. During the third
quarter of 1995, the Joint Venture that owns the building executed a lease
with a major insurance company for a lease of approximately 506,000 square
feet of space in the building, for a fifteen year term with occupancy to
commence in 1996. 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.

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 June 1995, the 2 Broadway Joint Ventures filed their pre-arranged
bankruptcy plans for reorganization, and in August 1995, the bankruptcy
court entered an order confirming their plans of reorganization.
Bankruptcy filings for the other Joint Ventures are expected to occur in
1996. The reorganization plans are 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 significant share of future net proceeds
from operations, sale or refinancing. The restructuring of the Joint
Ventures' agreements would include 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
$251,588,694 as of September 30, 1995). In the event that one or more of
the transactions proposed in the Agreement are not consummated, JMB/NYC and
the Partnership may, among other things, recognize substantial gain for
Federal income tax purposes with no corresponding distributable proceeds.

In October 1995, certain affiliates of O&Y, including one of the
partners in the Joint Ventures, filed for protection from creditors under
Chapter 11 of the United States Bankruptcy Code. These affiliates of O&Y
are preparing a plan to restructure their ownership interests in various
office buildings, including the 237 Park Avenue and 1290 Avenue of the
Americas office buildings, which could take the form of one or more real
estate investment trusts. Any such restructuring would be subject to the
approval of their various creditors as well as the bankruptcy court, and
would likely result in such creditors collectively obtaining control of
such ownership interests. Although the JMB/NYC has had discussions with
the Olympia & York affiliates and certain of the creditors concerning
possible restructuring proposals, because of the preliminary status and the
complexity of the proposals, as well as the current divergence in the
interests of certain of the creditors, the Partnership does not know at
this time how a restructuring would affect the Joint Ventures, the
JMB/NYC's ownership interest therein and/or the effectuation of various
transactions pursuant to the Agreement. One or more of the proposed
transactions contemplated by the Agreement may not be effected as a result
of such restructuring, which could result in, among other things, JMB/NYC
and the Partnership recognizing substantial gain for Federal income tax
purposes with no corresponding distributable proceeds.

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 continue to dispute this
calculation for the period commencing July 1, 1993, and contend that a 12-
3/4% per annum fixed rate applies. Certain provisions of the Agreement
with the Olympia & York affiliates, when effective, would resolve the
funding obligation dispute.

The 237 Park Avenue and the 1290 Avenue of the Americas office
buildings serve as collateral for the first mortgage loan. A restructuring
of the loan now appears likely to depend upon the restructuring of the
ownership interests of various affiliates of O&Y in a number of office
buildings as discussed above. The lender has asserted various defaults
under the loan. 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. 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.

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 Venture. 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.

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
interest and other receivables as of September 30, 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 September 30, 1995
as compared to December 31, 1994 is primarily due to the receipt of
$2,850,000 in February, 1995 from JMB 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 September 30, 1995 as compared to
December 31, 1994 is attributable to the Partnership's temporary bank
overdraft of approximately $148,000 at September 30, 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 September 30, 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 and nine months ended
September 30, 1995 as compared to the three and nine months ended September
30, 1994 and the increase in management fees paid to general partners for
the nine months ended September 30, 1995 as compared to the nine months
ended September 30, 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 and the related
payment of management fees to the General Partners of $1,041,667 in
February 1995.

The increase in interest expense for the three and nine months ended
September 30, 1995 as compared to the three and nine months ended September
30, 1994 is primarily due to the compounding of interest on the
Partnership's obligation to fund, on demand, $600,000 and $600,000 to
Carlyle Managers, Inc. and Carlyle Investors, Inc., respectively, of
additional paid-in capital (Note 3).

The increase in the Partnership's share of loss from operations of
unconsolidated ventures and the Partnership's share of gain from the
extinguishment of indebtedness of unconsolidated ventures for the three and
nine months ended September 30, 1995 as compared to the three and nine
months ended September 30, 1994 is primarily due to the Partnership's share
of loss from the disposition of the 2 Broadway ventures (Note 2) and the
related gain on the extinguishment of indebtedness.

PART II. OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The first mortgage lender has asserted various defaults under the loan
secured by the Joint Ventures' properties, 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 the existing mortgage loan. However, a
restructuring of the existing mortgage loan now appears likely to depend
upon the restructuring of the ownership interests of various affiliates of
O&Y in a number of office buildings. 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% 98% 98%

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

3. 2 Broadway Building
New York, New York . . . 30% 19% 19% 18% 18% 18% N/A
- ----------------
<FN>

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

</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., Carlyle-XIII
Associates, L.P., Carlyle-XIV associates, L.P. and Property Partners, L.P.,
as the limited partners, is hereby incorporated herein by reference to the
Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-14547)
dated May 11, 1995.

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, is hereby incorporated herein by reference to the Partnership's
Report for March 31, 1995 on Form 10-Q (File No. 0-14547) dated May 11,
1995.<PAGE>
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:November 9, 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:November 9, 1995

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995

<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,723,170
<CURRENT-LIABILITIES> 2,057,087
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (75,417,710)
<TOTAL-LIABILITY-AND-EQUITY> 1,723,170
<SALES> 0
<TOTAL-REVENUES> 375,354
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,232,693
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 118,077
<INCOME-PRETAX> (20,166,840)
<INCOME-TAX> (20,166,840)
<INCOME-CONTINUING> (20,166,840)
<DISCONTINUED> 0
<EXTRAORDINARY> 15,490,116
<CHANGES> 0
<NET-INCOME> (4,676,724)
<EPS-PRIMARY> (4,414)
<EPS-DILUTED> (4,414)

</TABLE>