JMB MANHATTAN ASSOCIATES LTD, 10-K405, 1997-03-31

JMB MANHATTAN ASSOCIATES LTD
10-K405, 1997-03-31
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year
ended December 31, 1996 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

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

Name of each exchange on
Title of each class which registered
- ------------------- -------------------------
None None

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

LIMITED PARTNERSHIP INTERESTS
(Title of Class)

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

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

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

Documents incorporated by reference: None

TABLE OF CONTENTS

Page
----
PART I

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

Item 2. Properties . . . . . . . . . . . . . . . . . 3

Item 3. Legal Proceedings. . . . . . . . . . . . . . 5

Item 4. Submission of Matters to a
Vote of Security Holders . . . . . . . . . . 5

PART II

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

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

Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . 8

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 10

Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . 34

PART III

Item 10. Director and Executive Officers
of the Partnership . . . . . . . . . . . . . 34

Item 11. Executive Compensation . . . . . . . . . . . 37

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 38

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 39

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 39

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 43

PART I

ITEM 1. BUSINESS

Unless otherwise indicated, all references to "Notes" are to Notes to
Financial Statements of JMB/Manhattan Associates, Ltd. contained in this
report. Capitalized items used herein, but not defined, have the same
meanings as used in the Notes.

The registrant, JMB/Manhattan Associates, Ltd. (the "Partnership"), is
a limited partnership formed during 1984 and currently governed by the
Revised Uniform Limited Partnership Act of the State of Illinois for the
purpose of acquiring and owning an approximate 25% interest in JMB/NYC
Office Building Associates, L.P. ("JMB/NYC"), an Illinois limited
partnership consisting indirectly of the Partnership and two partnerships
sponsored by an affiliate of the General Partners of the Partnership,
Carlyle Real Estate Limited Partnership - XIII ("Carlyle-XIII"), an
Illinois limited partnership, and Carlyle Real Estate Limited Partnership -
XIV ("Carlyle-XIV"), an Illinois limited partnership. JMB/NYC acquired
interests in three office buildings and the underlying land (the
"Buildings"), through various other joint ventures (each a "Joint Venture"
and collectively, the "Three Joint Ventures"), in New York, New York. On
April 30, 1985, the Partnership commenced a private offering of $62,700,000
of Limited Partnership Interests (the "Interests") pursuant to a Private
Placement Memorandum (the "Private Placement Memorandum") in accordance
with Rules 501-503 and 506 of Regulation D of the Securities Act of 1933.
A total of 1,000 Interests were sold at $62,700 per Interest of which
$14,053 per Interest was due upon admission, with the remaining purchase
price paid in annual installments from 1986 through 1988, except for 41.5
Interests paid for entirely upon subscription. The offering closed on
October 31, 1985. The Holders of Interests (herein after "Holders" or
Holders of Interests") in the Partnership share in their portion of the
benefits of ownership of the Partnership's real property investments
according to the number of Interests held. The Partnership has been
engaged, indirectly through other entities, in owning and leasing the
buildings located in New York, New York. Approximately $43,000,000 of the
net proceeds of the public offering was contributed to JMB/NYC related to
the acquisition of the interests in the Buildings and for working capital
requirements.

In October 1994, the Partnership and its affiliated partners (together
with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered
into an agreement (the "Agreement") with the affiliates (the "Olympia &
York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the
venture partners in the Joint Ventures which owned 237 Park Avenue, 1290
Avenue of the Americas and 2 Broadway, to resolve certain disputes among
the Affiliated Partners and the Olympia & York affiliates. In general, the
parties agreed to: (i) restructure the first mortgage loan; (ii) sell the
2 Broadway Building; (iii) reduce or eliminate approval rights of JMB/NYC
with respect to virtually all property management, leasing, sale or
refinancing; (iv) amend the Joint Ventures' agreements to eliminate any
funding obligations by JMB/NYC and (v) establish a new preferential cash
distribution level for the Olympia & York affiliates. In accordance with
the Agreement and in anticipation of the sale of the 2 Broadway Building,
the unpaid first mortgage indebtedness previously allocated to 2 Broadway
was allocated in 1994 to 237 Park Avenue and 1290 Avenue of the Americas.

As part of the Agreement, JMB/NYC and the Olympia & York affiliates
agreed to file a pre-arranged bankruptcy plan for reorganization under
Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring
of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and
the debt encumbering the two properties remaining after the sale of 2
Broadway. 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.

In September 1995, the sale of the 2 Broadway Building was completed. Such
sale did not result in any distributable proceeds to JMB/NYC or the Olympia
and York affiliates.

Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue
and 1290 Avenue of the Americas properties were made in April 1996, and in
August 1996, an Amended Plan of Reorganization and Disclosure Statement
(the "Plan") was filed with the Bankruptcy Court for these Joint Ventures.
The Plan was accepted by the various classes of debt and equity holders and
confirmed by the Court on September 20, 1996 and became effective October
10, 1996 ("Effective Date"). The Plan provides that JMB/NYC has an
indirect limited partnership interest which, before taking into account
significant preferences to other partners, equals approximately 4.9% of the
reorganized and restructured ventures owning 237 Park and 1290 Avenue of
the Americas (the "Properties"). Neither O&Y nor any of its affiliates has
any direct or indirect continuing interest in the Properties. The new
ownership structure gives control of the Properties to a newly-organized
real estate investment trust which is owned primarily by holders of the
first mortgage debt which encumbered the Properties prior to the
bankruptcy. JMB/NYC has, under certain limited circumstances, through
January 1, 2001 rights of consent regarding sale of the Properties or the
consummation of certain other transactions that significantly reduce
indebtedness of the Properties.

The restructuring and reorganization discussed above eliminates any
potential additional obligation of the Partnership in the future to provide
additional funds under its previous joint venture agreements. In 1995, the
Partnership distributed to its partners virtually all of its working
capital funds leaving as the Partnership's only asset its receivable from
JMB Realty Corporation ("JMB"), an affiliate of the Corporate General
Partner. This receivable has been the Partnership's sole source of capital
to fund continuing operations of the Partnership. During 1996, such
receivable was collected and the proceeds thereof have been used by the
Partnership toward funding its portion of the collateral required pursuant
to the $25 million indemnification provided by the Affiliated Partners to
the newly organized REIT as of the Effective Date. The balance of the
Partnership's share of the collateral was advanced by JMB in order for the
Partnership to satisfy its full portion as discussed below. The
Partnership's sole source of capital to fund continuing operations are
advances from JMB.

The Affiliated Partners entered into a joint and several obligation to
indemnify, through a date no later than January 2, 2001, the newly formed
real estate investment trust to the extent of $25 million to ensure their
compliance with the terms and conditions relating to JMB/NYC's indirect
limited partnership interest in the restructured and reorganized joint
ventures that own the Properties. The Affiliated Partners contributed
approximately $7.8 million (of which the Partnership's share was
approximately $1.9 million) to JMB/NYC which was deposited into an escrow
account as collateral for such indemnification. These funds have been
invested in stripped U.S. Government obligations with a maturity date of
February 15, 2001. Compliance with the provisions of the indemnification
agreement generally deal with impacting the operations of the newly
organized real estate investment trust. Compliance, therefore, is within
the control of the Affiliated Partners and non-compliance with such
provisions by either the Partnership or the Affiliated Partners is highly
unlikely. Therefore, it is highly likely that the Partnership's share of
the collateral will be returned to it at the termination of the
indemnification agreement. Upon return of such funds, advances made by JMB
Realty Corporation (including accrued and deferred interest) will be
repaid. After establishing an appropriate working capital reserve, the
remainder, if any, would be available for distribution to the Limited
Partners. The level of distributable cash is dependent upon the amount of
advances made by JMB Realty Corporation. The Partnership's sole source of
capital to pay for continuing operations is advances from JMB Realty
Corporation. Advances made by JMB Realty Corporation are evidenced by a
promissory note with a maximum principal sum of $2 million and is due June
30, 1999. The note bears interest at the applicable Federal rate which
ranged between 5.67% and 5.98% per annum in 1996.

remaining on the Properties, the original purchase money notes payable by
JMB/NYC, the significant preference levels within the reorganized structure
and other liabilities of the Partnership.

The Partnership has no employees.

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

ITEM 2. PROPERTIES

The Partnership had owned, indirectly through JMB/NYC and the Joint
Ventures, an interest in the properties referred to in Item 1 above. Upon
the effective date of the Plan ownership interests in the remaining
properties were converted to limited partnership interests.

The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1996 and 1995 for the Partnership's investment properties owned
during 1996:

<TABLE>
<CAPTION>
1995 1996
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 237 Park Avenue
Building
New York,
New York. . . . . . . Advertising 98% 98% 98% 98% 98% 98% 98% *
Insurance
Paper
Real Estate

2. 1290 Avenue of
the Americas
Building
New York,
New York. . . . . . . Men's Clothing 94% 94% 94% 93% 78% 71% 81% *
Financial
Services

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

Reference is made to Item 7 for further information regarding property occupancy, competitive conditions and
tenant leases at the Partnership's investment properties.

An "*" indicates that the joint venture which owns the property was restructured. Reference is made to the
Notes for further information regarding the reorganized and restructured ventures.

</TABLE>

ITEM 3. LEGAL PROCEEDINGS

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

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

There were no matters submitted to a vote of security holders during
fiscal years 1995 and 1996.

PART II

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

As of December 31, 1996, there were 863 record holders of Interests of
the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. The Interests
have not been registered under the Securities Act of 1933, as amended, or
(with certain exceptions) under State securities laws. Transfers of the
Interests must be made in compliance with applicable Federal and State
securities laws. There are certain conditions and restrictions on the
transfer of Interests, including, among other things, the requirement that
the substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Corporate General
Partner which may be granted or withheld in its sole discretion. The
rights of a transferee of Interests who does not become a substituted
Limited Partner will be limited to the rights to receive his share of
profits or losses and cash distributions from the Partnership, and such
transferee will not be entitled to vote such Interests or have other rights
of a Limited Partner. No transfer will be effective until the first day of
the next succeeding calendar quarter after the requisite transfer form
satisfactory to the Corporate General Partner has been received by the
Corporate General Partner. The transferee consequently will not be
entitled to receive any cash distributions or any allocable share of
profits or losses for tax purposes until such next succeeding calendar
quarter. Profits or losses from operations of the Partnership for a
calendar year in which a transfer occurs will be allocated between the
transferor and the transferee based upon the number of quarterly periods in
which each was recognized as the Holder of the Interests, without regard to
the results of the Partnership's operations during particular quarterly
periods and without regard to whether cash distributions were made to the
transferor or transferee. Profits or losses arising from the sale or other
disposition of Partnership properties will be allocated to the recognized
Holder of the Interests as of the last day of the quarter in which the
Partnership recognized such profits or losses. Cash distributions to a
Holder of Interests arising from the sale or other disposition of
Partnership properties will be distributed to the recognized Holder of the
Interests as of the last day of the quarterly period with respect to which
such distribution is made.

Reference is made to Item 6 below for a discussion of cash
distributions made to Holders of Interests.

<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)

YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992

(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1996 1995 1994 1993 1992
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . $ 120,331 405,719 1,649,889 1,500,142 1,380,338
============ ============ ============ ============ ============
Operating earnings
(loss). . . . . . . . . $ (166,985) (1,006,925) 1,382,820 1,257,032 1,212,777
Partnership's share of
income (loss) from
unconsolidated venture
(including income
from restructuring
of $72,474,557 in
1996) . . . . . . . . . 72,259,794 (6,794,224) (6,266,667) (22,166,989) (7,124,283)
Partnership's share
of loss on sale
of investment
property by uncon-
solidated venture . . . -- (14,789,529) -- -- --
Partnership's share of
extraordinary gain on
forgiveness of
indebtedness
of unconsolidated
venture . . . . . . . . -- 15,632,407 -- -- --
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . . $ 72,092,809 (6,958,271) (4,883,847) (20,909,957) (5,911,506)
============ ============ ============ ============ ============
Net earnings (loss)
per Interest:
Net operating
earnings (loss). . . . $ 69,209 (7,489) (4,688) (20,494) (5,675)
Share of loss on sale
of investment
property by uncon-
solidated venture. . . -- (14,642) -- -- --
Share of gain on
forgiveness of
indebtedness
of unconsolidated
venture . . . . . . . . -- 15,476 -- -- --
------------ ------------ ------------ ------------ ------------

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

YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992 - CONTINUED

1996 1995 1994 1993 1992
------------- ------------- ----------- ------------ ------------

Net earnings (loss)
per Interest (b). . . . $ 69,209 (6,655) (4,688) (20,494) (5,675)
============ ============ ============ ============ ============

Total assets. . . . . . . $ 1,679 1,688,536 18,043,225 16,555,044 15,267,890
Cash distributions per
Interest (b)(c) . . . . $ -- 15,000 -- -- --
============ ============ ============ ============ ============

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

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

(b) The net earnings (loss) and cash distributions per Interest are based upon the number of Interests
outstanding at the end of each period (1,000).

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

</TABLE>

ITEM 7. 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 of
JMB/Manhattan Associates, Ltd. contained in this report.

On April 30, 1985, the Partnership commenced a private offering of
$62,700,000 in Limited Partnership Interests pursuant to a Private
Placement Memorandum as described in Item 1. The net offering proceeds
were utilized primarily for the payment of the Partnership's bank
borrowings and related interest, additional contributions to JMB/NYC and
working capital requirements.

In February 1995, the Partnership distributed $15,000,000 to the
Holders of Interests ($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. The Partnership believed that the working
capital reserves were in excess of the amount necessary for the future
operations of the Partnership as a result of the agreement entered into
with the Olympia & York affiliates. Subsequent to the $2,850,000 funding
made in March 1995, JMB funded an additional $65,000 in December 1995 to
pay for 1995 operating costs. During 1996, JMB funded its remaining
obligation under the working capital minimum guarantee of approximately
$1,800,000 and advanced the Partnership an additional $530,000. Such funds
were used to fund 1996 operating costs and to fund the Partnership's share
of the collateral required pursuant to the terms of the restructuring of
the Partnership's indirect ownership interest in the properties as
described more fully in the Notes. Advances made by JMB Realty Corporation
are evidenced by a promissory note with a maximum principal sum of $2
million and is due June 30, 1999. The note bears interest at the
applicable Federal rate which ranged between 5.67% and 5.98% per annum in
1996. The balance of the note including accrued interest as of December
31, 1996 is $536,685. The Partnership's sole source of capital to fund
continuing operations is advances from JMB Realty Corporation.

Based upon the restructured joint ventures, it is unlikely that the
Partnership will be able to make any significant additional distributions
to the Holders of Interests. It should be noted, however, that in the
future, the Holders of Interest will be allocated substantial net gain for
Federal income tax purposes even though the Partnership would not be able
to make any significant additional amounts of distributions. Such gain may
be offset by suspended losses from prior years that have been allocated to
the Limited Partners.

The Affiliated Partners entered into a joint and several
indemnification obligation to ensure their compliance with certain terms
and conditions relating to the restructuring as more fully described in the
Notes.

RESULTS OF OPERATIONS

The results of operations for the years ended December 31, 1996, 1995
and 1994 are primarily attributable to the operations of the real property
investments owned by the Partnership through JMB/NYC and restructuring of
the Joint Ventures as described in the Notes, and interest earned on the
Partnership's working capital.

The bank overdraft at December 31, 1995 and the decrease in amounts
due from affiliates as of December 31, 1996 as compared to December 31,
1995 are the result of the timing of fundings received from JMB relating to

its agreement to guarantee a minimum return on the Partnership's working
capital. Such guarantee has been fully funded in order to secure
compliance by the Affiliated Partners with the terms of the restructuring
of certain of the Joint Ventures during 1996 as described more fully in the
Notes.

The decrease in the deficit balance of the investment in
unconsolidated venture is due to capital contributions of approximately
$2,009,000 during the year and Partnership's share of income from
unconsolidated venture recognized during 1996. As a result of the Plan of
Reorganization of certain of the Joint Ventures, JMB/NYC adopted the cost
method of accounting for its indirect investment in the unconsolidated
ventures now owning the Properties. Accordingly, JMB/NYC has suspended
loss recognition relative to its real estate investments and has reversed
those previously recognized losses that it is no longer obligated to fund.
The Partnership's share of income from operations of unconsolidated venture
related to the restructuring is partially offset by loss from operations
prior to such reorganization of $248,326. The deficit balance of the
investment in unconsolidated venture has been adjusted so as to reflect the
Partnership's proportionate share of the maximum exposure to the
Partnership under its indemnification as more fully described in the Notes.

The decrease in interest income for the year ended December 31, 1996
as compared to the year ended December 31, 1995 and for the year ended
December 31, 1995 as compared to 1994 and the increase in management fees
paid to general partners for the year ended December 31, 1995 as compared
to the year ended December 31, 1996 and December 31, 1994 is primarily due
to a reduction in amounts invested in U.S. Government securities during
1996 and 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 the Partnership's share of loss from operations of
unconsolidated venture for the twelve months ended December 31, 1995 as
compared to the twelve months ended December 31, 1994 is primarily due to
the loss of rental income as a result of the sale of 2 Broadway in
September 1995.

The Partnership's share of loss on sale of investment property and the
Partnership's share of gain from the extinguishment of indebtedness of
unconsolidated venture for the year ended December 31, 1995 is primarily
due to the Partnership's share of loss from the sale of the 2 Broadway
Building and the related share of the gain on the extinguishment of
indebtedness.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

INDEX

Independent Auditors' Report
Balance Sheets, December 31, 1996 and 1995
Statements of Operations, years ended December 31,
1996, 1995 and 1994
Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1996, 1995 and 1994
Statements of Cash Flows, years ended December 31,
1996, 1995 and 1994

Notes to Financial Statements

SCHEDULES NOT FILED:

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

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

INDEX

Independent Auditors' Report
Balance Sheet, December 31, 1996
Statement of Operations, year ended December 31, 1996
Statement of Partners' Capital Accounts (Deficits), year ended
December 31, 1996
Statement of Cash Flows, year ended December 31, 1996

Notes to Financial Statements

SCHEDULES NOT FILED:

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

INDEPENDENT AUDITORS' REPORT

The Partners
JMB/Manhattan Associates, Ltd.:

We have audited the financial statements of JMB/Manhattan Associates,
Ltd., a limited partnership (the Partnership), as listed in the
accompanying index. These financial statements are the responsibility of
the General Partners of the Partnership. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our report dated March 25, 1996, we did not express an opinion on
the Partnership's 1995 and 1994 financial statements due to material
uncertainties relating to the Partnership's ability to continue as a going
concern and certain unresolved disputes between the Partnership and the
unaffiliated venture partners in the Partnership's real estate investments.

As disclosed in the notes to the financial statements, the joint ventures
owning the Partnership's real estate investments were restructured during
1996. As a result of the restructuring, the Partnership now holds a
nominal indirect interest in the real estate investments. The
restructuring and reorganization also eliminated any potential additional
obligations of the Partnership to provide additional funds under the
previous joint venture agreements. Accordingly, although such
restructuring did not eliminate the uncertainty as to the Partnership's
ability to continue as a going concern, our present opinion on the 1995 and
1994 financial statements, as presented herein, is different from our
previous report.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of JMB/Manhattan
Associates, Ltd. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that
the Partnership will continue as a going concern. As discussed in the
notes to the financial statements, the Partnership has suffered recurring
losses form operations and has a net capital deficiency that raise
substantial doubt about its ability to continue as a going concern. The
General Partners' plans in regard to these matters are also described in
the notes to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 21, 1997

<TABLE>

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

BALANCE SHEETS

DECEMBER 31, 1996 AND 1995

ASSETS
------
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,679 --
Amounts due from affiliates . . . . . . . . . . . . . . . . . . . . -- 354,082
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . 1,679 354,082
------------ -----------

Amounts due from affiliates . . . . . . . . . . . . . . . . . . . . . -- 1,334,454
------------ -----------

$ 1,679 1,688,536
============ ===========

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

BALANCE SHEETS - CONTINUED

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

1996 1995
------------ -----------
Current liabilities:
Bank overdraft. . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 155,322
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 1,274 9,922
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . 1,205,330 1,888,718
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . 1,206,604 2,053,962

Note payable to an affiliate - long-term. . . . . . . . . . . . . . 536,685 --
------------ -----------

Total liabilities . . . . . . . . . . . . . . . . . . . . . 1,743,289 2,053,962

Investment in unconsolidated venture. . . . . . . . . . . . . . . . . 3,864,838 77,333,831

Commitments and contingencies

Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . 1,500 1,500
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (1,361,105) (4,244,817)
Cumulative cash distributions . . . . . . . . . . . . . . . . . (737,500) (737,500)
------------ -----------
(2,097,105) (4,980,817)
------------ -----------
Limited partners (1,000 Interests):
Capital contributions, net of offering costs. . . . . . . . . . 57,042,489 57,042,489
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (42,551,832) (111,760,929)
Cumulative cash distributions . . . . . . . . . . . . . . . . . (18,000,000) (18,000,000)
------------ -----------
(3,509,343) (72,718,440)
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . (5,606,448) (77,699,257)
------------ -----------
$ 1,679 1,688,536
============ ===========

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

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

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Interest. . . . . . . . . . . . . . . . . . . . . $ 120,331 405,719 1,649,889
------------ ------------ ------------
Expenses:
Interest. . . . . . . . . . . . . . . . . . . . . 123,461 131,272 110,620
Professional services . . . . . . . . . . . . . . 86,822 185,439 99,596
Management fees paid to general partners. . . . . -- 1,041,667 --
General and administrative. . . . . . . . . . . . 77,033 54,266 56,853
------------ ------------ ------------
287,316 1,412,644 267,069
------------ ------------ ------------
Operating earnings (loss) . . . . . . . . . . (166,985) (1,006,925) 1,382,820
Partnership's share of income (loss)
from unconsolidated venture (including
income from restructuring of $72,474,557
in 1996). . . . . . . . . . . . . . . . . . . . . 72,259,794 (6,794,224) (6,266,667)
------------ ------------ ------------
Net operating earnings (loss) . . . . . . . . 72,092,809 (7,801,149) (4,883,847)
Partnership's share of earnings (loss)
on sale of investment property by
unconsolidated venture. . . . . . . . . . . . . . -- (14,789,529) --
------------ ------------ ------------
Earnings (loss) before extraordinary item . . 72,092,809 (22,590,678) (4,883,847)

Extraordinary item:
Partnership's share of gain on
forgiveness of indebtedness of
unconsolidated venture. . . . . . . . . . . . . -- 15,632,407 --
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . . $ 72,092,809 (6,958,271) (4,883,847)
============ ============ ============

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

STATEMENTS OF OPERATIONS - CONTINUED

1996 1995 1994
------------ ------------ ------------

Net earnings (loss) per limited
partnership interest:
Net operating earnings (loss). . . . . . . $ 69,209 (7,489) (4,688)
Partnership's share of earnings
(loss) on sale of investment
property by unconsolidated
venture . . . . . . . . . . . . . . . . . -- (14,642) --
Partnership's share of gain on
forgiveness of indebtedness
of unconsolidated venture . . . . . . . . -- 15,476 --
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . $ 69,209 (6,655) (4,688)
============ ============ ============

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

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

STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (1,000 INTERESTS)
--------------------------------------------- -------------------------------------------------
CONTRI-
BUTIONS
NET CASH NET OF NET
CONTRI- EARNINGS DISTRI- OFFERING EARNINGS CASH
BUTIONS (LOSS) BUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficits)
December 31,
1993 . . . . $1,500 (3,745,846) (112,500) (3,856,846) 57,042,489 (100,417,782) (3,000,000)(46,375,293)

Net earnings
(loss) . . . -- (195,354) -- (195,354) -- (4,688,493) -- (4,688,493)
------ ---------- --------- ----------- ----------- ----------- ----------- -----------

Balance
(deficits)
December 31,
1994 . . . . 1,500 (3,941,200) (112,500) (4,052,200) 57,042,489 (105,106,275) (3,000,000)(51,063,786)

Cash distri-
butions
($15,000 per
limited
partnership
interest). . -- -- (625,000) (625,000) -- -- (15,000,000)(15,000,000)
Net earnings
(loss) . . . -- (303,617) -- (303,617) -- (6,654,654) -- (6,654,654)
------ ---------- --------- ----------- ----------- ----------- ----------- -----------

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

STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED

GENERAL PARTNERS LIMITED PARTNERS (1,000 INTERESTS)
--------------------------------------------- -------------------------------------------------
CONTRI-
BUTIONS
NET CASH NET OF NET
CONTRI- EARNINGS DISTRI- OFFERING EARNINGS CASH
BUTIONS (LOSS) BUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ----------- ----------- ----------- ---------- ------------- -----------
Balance
(deficits)
December 31,
1995 . . . . 1,500 (4,244,817) (737,500) (4,980,817) 57,042,489 (111,760,929) (18,000,000)(72,718,440)

Net earnings
(loss) . . . -- 2,883,712 -- 2,883,712 -- 69,209,097 -- 69,209,097
------ ---------- --------- ----------- ----------- ----------- ----------- -----------

Balance
(deficits)
December 31,
1996 . . . . $1,500 (1,361,105) (737,500) (2,097,105) 57,042,489 (42,551,832) (18,000,000) (3,509,343)
====== ========== ========= =========== =========== =========== =========== ===========

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

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

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $ 72,092,809 (6,958,271) (4,883,847)
Items not requiring (providing) cash or
cash equivalents:
Partnership's share of (income) loss from
unconsolidated venture (including
income from restructuring
of $72,474,557 in 1996) . . . . . . . . . . . (72,259,794) 6,794,224 6,266,667
Partnership's share of loss on sale
of investment property by
unconsolidated venture. . . . . . . . . . . . -- 14,789,529 --
Partnership's share of gain from
forgiveness of indebtedness of
unconsolidated venture. . . . . . . . . . . . -- (15,632,407) --
Changes in:
Interest and other receivables. . . . . . . . . -- 20,397 28,332
Accounts payable . . . . . . . . . . . . . . . (8,648) (9,359) (1,259)
Amounts due to affiliates . . . . . . . . . . . 123,461 131,273 106,620
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . (52,172) (864,614) 1,516,513
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities of
short-term investments. . . . . . . . . . . . . -- 9,912,520 1,091,305
Partnership's contributions to
unconsolidated venture. . . . . . . . . . . . . (2,009,199) -- --
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . (2,009,199) 9,912,520 1,091,305
----------- ----------- -----------
Cash flows from financing activities:
Bank overdraft. . . . . . . . . . . . . . . . . (155,322) 155,322 --
Distributions to limited partners . . . . . . . -- (15,000,000) --
Distributions to general partners . . . . . . . -- (625,000) --
Amounts received from affiliates. . . . . . . . 2,218,372 2,637,697 (1,139,570)
----------- ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . 2,063,050 (12,831,981) (1,139,570)
----------- ----------- -----------

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

STATEMENTS OF CASH FLOWS - CONTINUED

1996 1995 1994
----------- ----------- -----------

Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . 1,679 (3,784,075) 1,468,248

Cash, beginning of year . . . . . . . . . -- 3,784,075 2,315,827
----------- ----------- -----------
Cash, end of year . . . . . . . . . . . . $ 1,679 -- 3,784,075
=========== =========== ===========

Supplemental disclosure of
cash flow information:
Cash paid for mortgage and
other interest. . . . . . . . . . . . . . . . . $ -- -- --
=========== =========== ===========
Non-cash investing and financing activities:
Reduction in investment in unconsolidated
venture . . . . . . . . . . . . . . . . . . . $ 800,000 -- --
=========== =========== ===========
Reduction in amounts due to affiliates. . . . . $ (800,000) -- --
=========== =========== ===========

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

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

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

OPERATIONS AND BASIS OF ACCOUNTING

GENERAL

The Partnership holds an approximate 25% interest in JMB/NYC Office
Building Associates, L.P. ("JMB/NYC") which in turn owns an indirect
approximate 4.9% interest in commercial real estate in the city of New
York, New York consisting of the 237 Park Avenue and 1290 Avenue of the
Americas properties (the "Properties").

The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's 25% indirect
interest in JMB/NYC through Property Partners, L.P. Accordingly, the
financial statements do not include the accounts of JMB/NYC or Property
Partners, L.P. Effective with the confirmation and acceptance of the
Amended Plan of Reorganization and Disclosure Statement on October 10, 1996
("Effective Date"), JMB/NYC accounts for its indirect interest in the
Properties on the cost basis of accounting as a result of JMB/NYC
converting its ownership interest in the joint ventures which owned the
Properties to a limited partner. As a limited partner, JMB/NYC has no
future funding obligations (other than that related to a certain
indemnification provided in connection with the restructuring) and has no
influence or control over the day-to-day affairs of the Partnerships which
own the Properties subsequent to the Effective Date. Accordingly, JMB/NYC
(and the Partnership) have suspended loss recognition relative to their
respective real estate investments and have reversed those previously
recognized losses that the Partnership and JMB/NYC are no longer obligated
to fund. The Partnership maintains a deficit balance in its investment in
unconsolidated venture to reflect its maximum exposure under the
indemnification agreement. The share of income from unconsolidated
ventures in the accompanying Partnership financial statements and financial
statements of JMB/NYC includes the respective partnerships' proportionate
share of the operations of the Properties through the Effective Date, as
well as income from restructuring consisting primarily of the reversal of
previously recognized losses as noted above and the adjustments necessary
to record the restructuring. JMB/NYC utilized the equity method to account
for such investments prior to the Effective Date.

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
GAAP and consolidation adjustments are not recorded on the records of the
Partnership. The net effect of these items for the years ended December 31,
1996 and 1995 is summarized as follows:

1996 1995
------------------------------- ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ -----------

Total assets. . . . . . . . . . . . $ 1,679 9,164,644 1,688,536 12,083,306
Partners' capital accounts
(deficits):
General partners. . . . . . . . . (2,097,105) (21,452,634) (4,980,817) (22,805,104)
Limited partners. . . . . . . . . (3,509,343) (71,303,843) (72,718,440) (75,295,495)
Net income (loss):
General partners. . . . . . . . . 2,883,712 1,352,470 (303,617) (171,131)
Limited partners. . . . . . . . . 69,209,097 3,991,652 (6,654,654) (14,486,657)
Net income (loss) per
limited partnership
interest. . . . . . . . . . . . . 69,209 3,992 (6,655) (14,487)
============ ============ ============ ============

</TABLE>

The net earnings (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.

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

The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. SFAS 121 requires that the Partnership record an
impairment loss on its properties to be held for investment whenever their
carrying value cannot be fully recovered through estimated undiscounted
future cash flows from their operations and sale. The amount of the
impairment loss to be recognized would be the difference between the
property's carrying value and the property's estimated fair value. The
Partnership's policy is to consider a property to be held for sale or
disposition when the Partnership has committed to sell (or dispose) of such
property and active marketing activity has commenced or is expected to
commence in the near term (or the Partnership has concluded that it may
dispose of the property by no longer funding operating deficits or debt
service requirements of the property thus allowing the lender to realize
upon its security). In accordance with SFAS 121, any properties identified
as "held for sale or disposition" are no longer depreciated. Adjustments
for impairment loss for such properties (subsequent to the date of adoption
of SFAS 121) are made in each period as necessary to report these
properties at the lower of carrying value or fair value less costs to sell.

The adoption of SFAS 121 did not have any effect on the Partnership's
financial position, results of operations or liquidity.

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.

JMB/NYC

JMB/NYC is a limited partnership 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, $200,000 (reduced
from $600,000 during 1996) of additional paid-in capital to Carlyle
Managers, Inc. (reflected in amounts due to affiliates in the accompanying
financial statements). 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, $200,000 (reduced from $600,000 during 1996)
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.

In October 1994, the Partnership and its affiliated partners (together
with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered
into an agreement (the "Agreement") with the affiliates (the "Olympia &
York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the
venture partners in the Joint Ventures which owned 237 Park Avenue, 1290
Avenue of the Americas and 2 Broadway, to resolve certain disputes among
the Affiliated Partners and the Olympia and York affiliates. In general,
the parties agreed to: (i) restructure the first mortgage loan; (ii) sell
the 2 Broadway Building; (iii) reduce or eliminate approval rights of
JMB/NYC with respect to virtually all property management, leasing, sale or
refinancing; (iv) amend the Joint Ventures' agreements to eliminate any
funding obligations by JMB/NYC and (v) establish a new preferential cash
distribution level for the Olympia & York affiliates. In accordance with
the Agreement and in anticipation of the sale of the 2 Broadway Building,
the unpaid first mortgage indebtedness previously allocated to 2 Broadway
was allocated in 1994 to 237 Park Avenue and 1290 Avenue of the Americas.

In September 1995, the sale of the 2 Broadway Building was completed. Such
sale did not result in any distributable proceeds to JMB/NYC or the Olympia
& York affiliates.

Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue
and 1290 Avenue of the Americas properties were made in April 1996, and in
August 1996, an Amended Plan of Reorganization and Disclosure Statement
(the "Plan") was filed with the Bankruptcy Court for these Joint Ventures.
The Plan was accepted by the various classes of debt and equity holders and
confirmed by the Court on September 20, 1996 and became effective October
10, 1996 ("Effective Date"). The Plan provides that JMB/NYC has an
indirect limited partnership interest which, before taking into account
significant preferences to other partners, equals approximately 4.9% of the
reorganized and restructured ventures owning 237 Park and 1290 Avenue of
the Americas. Neither O&Y nor any of its affiliates has any direct or
indirect continuing interest in the Properties. The new ownership
structure gives control of the Properties to a newly-organized real estate
investment trust which is owned primarily by holders of the first mortgage
debt which encumbered the Properties prior to the bankruptcy. JMB/NYC has,
under certain limited circumstances, through January 1, 2001 rights of
consent regarding sale of the Properties or the consummation of certain
other transactions that significantly reduce indebtedness of the
Properties.

The restructuring and reorganization discussed above eliminates any
potential additional obligation of the Partnership in the future to provide
additional funds under its previous joint venture agreements. In 1995, the
Partnership distributed to its partners virtually all of its working
capital funds leaving as the Partnership's only asset its receivable from
JMB Realty Corporation ("JMB"), an affiliate of the Corporate General
Partner. This receivable has been the Partnership's sole source of capital
to fund continuing operations of the Partnership. During 1996, such
receivable was collected and the proceeds thereof have been used by the
Partnership toward funding its portion of the collateral required pursuant
to the $25 million indemnification provided by the Partnership and the
Affiliated Partners to the newly organized REIT as of the Effective Date.
The balance of the Partnership's share of the collateral was advanced by
JMB in order for the Partnership to satisfy its full portion as discussed
below. The Partnership's sole source of capital to fund continuing
operations are advances from JMB.

The Affiliated Partners entered into a joint and several obligation to
indemnify, through a date no later than January 2, 2001, the newly formed
real estate investment trust to the extent of $25 million to ensure their
compliance with the terms and conditions relating to JMB/NYC's indirect
limited partnership interest in the restructured and reorganized joint
ventures that own the Properties. The Affiliated Partners contributed
approximately $7.8 million (of which the Partnership's share was
approximately $1.9 million) to JMB/NYC which was deposited into an escrow
account as collateral for such indemnification. These funds have been
invested in stripped U.S. Government obligations with a maturity date of
February 15, 2001. Compliance with the provisions of the indemnification
agreement generally deal with impacting the operations of the newly
organized real estate investment trust. Compliance, therefore, is within
the control of the Affiliated Partners and non-compliance with such
provisions by either the Partnership or the Affiliated Partners is highly
unlikely. Therefore, it is highly likely that the Partnership's share of
the collateral will be returned to it at the termination of the
indemnification agreement. Upon return of such funds, advances made by JMB
Realty Corporation (including accrued and deferred interest) will be
repaid. After establishing an appropriate working capital reserve, the
remainder, if any, would be available for distribution to the Limited
Partners. The level of distributable cash is dependent upon the amount of
advances made by JMB Realty Corporation. The Partnership's sole source of
capital to pay for continuing operations is advances from JMB Realty
Corporation. Advances made by JMB Realty Corporation are evidenced by a
promissory note with a maximum principal sum of $2 million and is due June
30, 1999. The demand note bears interest at the applicable Federal rate
which ranged between 5.67% and 5.98% per annum in 1996.

While the Partnership is not expected to terminate in the near term,
it currently appears unlikely that any significant distributions will be
made by the Partnership at any time due to the level of indebtedness
remaining on the Properties, the original purchase money notes payable by
JMB/NYC and the significant preference levels within the reorganized
structure.

PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Holders
of Interests and 4% to the General Partners. However, certain provisions
of the Federal income tax law prohibit the allocation of net tax losses to
the Holders of Interests if the net tax losses exceed the Holders of
Interests' current basis in the Partnership. The Holders of Interests'
basis in the Partnership is essentially equal to their initial capital
contributions less cumulative cash distributions and tax losses incurred
plus the Holders of Interests' share of the minimum taxable gain from a
hypothetical disposition of the properties. For the years ended December
31, 1994 and 1995, the Holders of Interests were allocated tax losses in an
amount equal their share of the increase in the Partnership's minimum
taxable gain during 1994 and 1995. In 1996, the Holders of interests were
allocated ordinary income and also capital gain in an amount, when
combined, equal their share of the decrease in the Partnership's minimum
taxable gain during 1996. Profits from the sale or other disposition of
all or substantially all of the Partnership's interest in JMB/NYC or of the
Properties are to be allocated to the General Partners to the greater of 1%
of such profits or the amount of cash distributable to the General Partners
from any such sale or disposition (as described below), plus an additional
amount of such profits, if necessary, to reduce deficits in the General
Partners' capital accounts to a level consistent with the gain anticipated
to be realized from future sales. Losses from the sale of all or
substantially all of the Partnership's interest in JMB/NYC or of the
Properties are to be allocated 1% to the General Partners. The remaining
sale or disposition profits and losses are allocable to the Holders of
Interests. All such profits or losses generally will be allocated among
the Holders of Interests in proportion to their percentage interests in the
Partnership, subject to allocations of taxable gain among the Holders of
Interests in order to equalize their capital accounts as a result of
disproportionate allocations of losses during the offering period.

The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership. Distributions of "Distributable Cash"
(as defined) of the Partnership are allocated 90% to the Holders of
Interests and 10% to the General Partners (of which 6.25% constitutes a
management fee).

TRANSACTIONS WITH AFFILIATES

In accordance with the Partnership Agreement, the General Partners are
required to loan back to the Partnership, for distribution to the Holders
of Interests, their 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 Holders of Interests 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 Holders of Interests. Any amounts
loaned bear interest at a rate not to exceed 10% per annum (currently 10%
per annum). As of December 31, 1996, $268,401 represented interest earned
on such loans, all of which was unpaid. These loans and accrued interest
can be repaid upon sale or refinancing only after the Holders of Interests
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 portfolio management,
legal and accounting services. Such costs were $3,146, $16,393 and $15,058
for 1996, 1995 and 1994, $2,026 of which was unpaid at December 31, 1996.

The Partnership had obligations to fund, on demand, $600,000 and
$600,000 to Carlyle Investors, Inc. and Carlyle Managers, Inc.,
respectively, of additional paid-in capital (reflected in the amounts due
to affiliates in the accompanying financial statements). These obligations
were reduced to $200,000 and $200,000, respectively. As of December 31,
1996, the obligations bore interest of 5.93% per annum and cumulative
interest accrued on these obligations was $236,929.

JMB advanced the Partnership $529,835 during 1996. Advances made by
JMB Realty Corporation are evidenced by a promissory note with a maximum
principal sum of $2 million and is due June 30, 1999. The demand note
bears interest at the applicable Federal rate which ranged between 5.67%
and 5.98% per annum in 1996. The balance of the note including accrued
interest as of December 31, 1996 is $536,685. The Partnership's sole
source of capital to pay for continuing operations is advances from JMB
Realty Corporation.

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 March 1995, JMB paid
$2,850,000 of the accrued amount due under this agreement to the
Partnership. During 1996, JMB funded its remaining obligation under the
working capital minimum guarantee of approximately $1,800,000 which was
used to fund 1996 operating costs and to fund the Partnership's share of
the collateral required pursuant to the terms of the restructuring of the
Partnership's indirect ownership interests in the properties.

INVESTMENT IN UNCONSOLIDATED VENTURE

Summary financial information for JMB/NYC as of and for the years
ended December 31, 1996 and 1995 (combined to include its unconsolidated
ventures through December 31, 1995) is as follows:

1996 1995
------------ ------------

Current assets. . . . . . . . . . . . $ 27,859 13,898,980
Current liabilities (includes
$902,603,491 of current portion
of long-term debt at December 31,
1995) . . . . . . . . . . . . . . . -- (930,523,456)
------------ ------------
Working capital (deficit). . . . . 27,859 (916,624,476)
------------ ------------
Investment property, net. . . . . . . -- 649,606,970
Escrow deposits . . . . . . . . . . . 7,937,459 --
Accrued rent receivable . . . . . . . -- 52,194,637
Deferred expenses . . . . . . . . . . -- 18,168,925
Other liabilities . . . . . . . . . . (91,313,934) (85,039,094)
Investment in partnership . . . . . . (25,000,000) --
Venture partners' deficit . . . . . . 86,068,182 213,270,871
------------ ------------
Partnership's capital (deficit). . $(22,280,434) (68,422,167)
============ ============
Represented by:
Invested capital . . . . . . . . . . $ 54,596,097 52,586,784
Cumulative net losses. . . . . . . . (67,502,782) (111,635,202)
Cumulative cash
distributions . . . . . . . . . . (9,373,749) (9,373,749)
------------ ------------
$(22,280,434) (68,422,167)
============ ============
Total income. . . . . . . . . . . . . $228,184,030 163,838,267
============ ============
Expenses applicable to operating loss $ 11,202,134 180,511,256
============ ============
Net income (loss) (including income
from restructuring of $220,431,722
in 1996) . . . . . . . . . . . . . . $216,981,896 (16,672,989)
============ ============

During 1996, as a result of the adoption of the Plan, JMB/NYC adopted
the cost method of accounting for its investments in unconsolidated
ventures. Accordingly, JMB/NYC adjusted its deficit basis in the
unconsolidated ventures to the extent of its share of the maximum
obligation escrow of $25,000,000. The net income for the year ended
December 31, 1996 includes $7,618,056 of income from operations through the
Effective Date of which the Partnership's share is $1,904,514. The
Partnership's capital (deficit) in JMB/NYC differs from its investment in
unconsolidated venture as reflected in the accompanying financial
statements due to the Partnership's 1996 reversal of previously recognized
losses in JMB/NYC as a result of the restructuring of partnership
interests.

Total income and net loss for the year ended December 31, 1995
includes a loss on sale of investment property of $38,214,703, offset by an
extraordinary gain on forgiveness of indebtedness of $62,529,627 related to
the sale of the 2 Broadway building in September 1995.

INDEPENDENT AUDITORS' REPORT

The Partners
JMB/Manhattan Associates, Ltd.:

We have audited the financial statements of JMB/NYC Office Building
Associates, L.P. (JMB/NYC) as of December 31, 1996, and the related
statements of operations, partners' capital accounts (deficits), and cash
flows for the year then ended. These financial statements are the
responsibility of the General Partners of JMB/Manhattan Associates, Ltd.
(the Partnership). Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of JMB/NYC as of
December 31, 1996, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 21, 1997

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

BALANCE SHEET

DECEMBER 31, 1996

ASSETS
------

Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . $ 27,859
-----------
Total current assets. . . . . . . . . . . 27,859
-----------
Escrow deposits . . . . . . . . . . . . . . . . . . 7,937,459
-----------
$ 7,965,318
===========

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

Liabilities:
Investment in unconsolidated venture. . . . . . . $25,000,000
Notes payable and accrued interest. . . . . . . . 91,313,934
-----------

Commitments and contingencies

Total liabilities . . . . . . . . . . . . 116,313,934
Partners' capital accounts (deficits):
JMB/Manhattan Associates, Ltd.:
Capital contributions . . . . . . . . . . . . . 54,596,097
Cumulative net losses . . . . . . . . . . . . . (67,502,782)
Cumulative cash distributions . . . . . . . . . (9,373,749)
------------
(22,280,434)
------------
Venture partners:
Capital contributions . . . . . . . . . . . . . 606,073,597
Cumulative net losses . . . . . . . . . . . . . (610,257,029)
Cumulative cash distributions . . . . . . . . . (81,884,750)
------------
(86,068,182)
------------
Total partners' capital accounts (deficits) (108,348,616)
------------
$ 7,965,318
============

See accompanying notes to financial statements.

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996

Income:
Interest income. . . . . . . . . . . . . . . . . . $ 134,252
-----------
134,252
-----------
Expenses:
Interest expense . . . . . . . . . . . . . . . . . 10,876,797
Depreciation . . . . . . . . . . . . . . . . . . . 133,362
Other general and administrative . . . . . . . . . 191,975
-----------
11,202,134
-----------
Income from unconsolidated ventures (including
income from restructuring of $220,431,722). . . . 228,049,778
-----------

Net earnings (loss) . . . . . . . . . . . $216,981,896
============

See accompanying notes to financial statements.

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

STATEMENT OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEAR ENDED DECEMBER 31, 1996

JMB/MANHATTAN VENTURE
ASSOCIATES, LTD. PARTNERS
---------------- ------------

Balance (deficits) at
December 31, 1995. . . . . . . . $(78,535,221) (254,834,908)

Capital contributions . . . . . . 2,009,313 6,030,304

Net earnings (loss) . . . . . . . 54,245,474 162,736,422
------------ ------------

Balance (deficits) at
December 31, 1996. . . . . . . . $(22,280,434) (86,068,182)
============ ============

See accompanying notes to financial statements.

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 1996

Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $216,981,896
Items not requiring (providing) cash:
Depreciation. . . . . . . . . . . . . . . . . . 133,362
Income from unconsolidated ventures
(including income from restructuring
of $220,431,722). . . . . . . . . . . . . . . (228,049,778)
Changes in:
Accounts payable and other accrued expenses . . (21,576)
Accrued interest. . . . . . . . . . . . . . . . 10,876,797
------------
Net cash (used in) provided by
operating activities . . . . . . . . . . (79,299)
------------
Cash flows from investing activities:
Amounts deposited into escrow . . . . . . . . . . (7,937,459)
------------
Net cash provided by (used in)
investing activities . . . . . . . . . . (7,937,459)
------------
Cash flows from financing activities:
Capital contributions . . . . . . . . . . . . . . 8,039,617
------------
Net cash provided by (used in)
financing activities . . . . . . . . . . 8,039,617
------------
Net increase (decrease)
in cash. . . . . . . . . . . . . . . . . 22,859

Cash, beginning of year. . . . . . . . . . 5,000
------------
Cash, end of year. . . . . . . . . . . . . $ 27,859
============
Supplemental disclosure of cash flow information:
Cash paid for interest. . . . . . . . . . . . . $ --
============
Non-cash investing and financing activities . . $ --
============

See accompanying notes to financial statements.

JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996

OPERATIONS AND BASIS OF ACCOUNTING

GENERAL

The accompanying financial statements have been prepared for the
purpose of complying with Rule 3.09 of Regulation S-X of the Securities and
Exchange Commission. The Partnership owns an indirect ownership interest
in JMB/NYC Office Building Associates, L.P. ("JMB/NYC") through Property
Partners, L.P. JMB/NYC is a limited partnership 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.

JMB/NYC holds an approximate 4.9% indirect interest (before taking
into account certain preferences to other partners) in commercial real
estate in the city of New York, New York through 237/1290 Upper Tier
Associates, L.P. ("Upper Tier"), a Delaware limited partnership, in which
JMB/NYC is a 99% limited partner. Effective October 10, 1996, JMB/NYC
accounts for its indirect interest in the partnerships that own the
Properties on the cost basis of accounting. Previously, JMB/NYC utilized
the equity method of accounting for such investments. Reference is made to
the Notes to the Partnership's Financial Statements filed with this annual
report. Such notes are incorporated herein by reference.

JMB/NYC accounts for its investment in the Upper Tier on the equity
method.

The records of JMB/NYC 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 accounts in accordance
with generally accepted accounting principles ("GAAP"). Such adjustments
are not recorded on the records of the JMB/NYC.

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

No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the venture partners rather than the
ventures.

ESCROW DEPOSITS

The Affiliated Partners entered into a joint and several obligation to
indemnify the newly formed real estate investment trust to the extent of
$25 million to ensure their compliance with the terms and conditions
relating to JMB/NYC's indirect limited partnership interest in the
restructured and reorganized joint ventures that own the Properties. The
Affiliated Partners contributed approximately $7.8 million (of which the
Partnership's share was approximately $1.9 million) to JMB/NYC which was
deposited into an escrow account as collateral for such indemnification.
These funds have been invested in stripped U.S. Government obligations with
a maturity date of February 15, 2001. Compliance with the provisions of the
indemnification agreement is within the control of the Affiliated Partners

and non-compliance with such provisions by either the Partnership or the
Affiliated Partners is highly unlikely. Therefore, it is highly likely
that the Partnership's share of the collateral will be returned to it at
the termination of the indemnification agreement. JMB/NYC has however
maintained a deficit balance in its investment in unconsolidated venture so
as to reflect its maximum exposure under the indemnification agreement.

NOTES PAYABLE

Notes payable consist of the following at December 31, 1996.

1996
------------
Promissory notes payable, bearing interest at 12.75%
per annum; cross-collaterally secured by JMB/NYC's
indirect interest in the Properties, interest accrues
and is deferred, compounded monthly, until December 31,
1991; monthly payments of accrued interest, based
upon the level of distributions to JMB/NYC,
thereafter until maturity; principal and accrued
interest due January 2, 2001. Accrued deferred
interest of $58,041,342 is outstanding at
December 31, 1996. . . . . . . . . . . . . . . . . . . $91,313,934
-----------
Less current portion of notes payable. . . . . . . --
-----------
Long-term notes payable . . . . . . . . . . . $91,313,934
===========

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

There were no changes in or disagreements with accountants during 1996
and 1995.

PART III

ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Corporate General Partner of the Partnership, JMB/Manhattan
Investors, Inc., is a wholly-owned subsidiary of JMB Investment Holdings-I,
Inc., a Delaware corporation, the outstanding shares of stock of which are
owned 25% by Northbrook Corporation, a Delaware corporation, and 75% by JMB
Realty Corporation, a Delaware corporation ("JMB"). Substantially all of
the outstanding shares of Northbrook Corporation are owned by JMB and
certain of its officers, directors, members of their families and their
affiliates. Substantially all of the shares of JMB are owned by its
officers, directors, members of their families and their affiliates. The
Corporate General Partner has responsibility for all aspects of the
Partnership's operations, subject to the requirement that generally the
sale of all or any substantial portion of the Partnership's interest in
JMB/NYC or of all or any substantial portion of JMB/NYC's interests in the
Properties, unless required by an agreement or instrument relating to such
interests, must be approved by an Associate General Partner of the
Partnership, BPA Associates, L.P., an Illinois limited partnership with
JMB/Manhattan Investors, Inc. as the sole general partner. BPA Associates,
L.P. shall be directed by a majority in interest of its limited partners
(who are generally officers, directors and affiliates of JMB or its
affiliates) as to whether to provide its approval of any such sale. BPA
Associates, L.P. is also the sole general partner of APB Associates, an
Illinois limited partnership, that is the other Associate General Partner
of the Partnership.

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

The director and the executive and certain other officers of the
Corporate General Partner are as follows:

NAME OFFICE
- ---- ------

Judd D. Malkin Chairman
Neil G. Bluhm Vice President
Stuart C. Nathan President and Director
Howard Kogen Vice President and Treasurer
Gary Nickele Vice President and General Counsel
H. Rigel Barber Vice President
Gailen J. Hull Vice President

There is no family relationship among any of the foregoing officers or
director. The foregoing director has been elected to serve a one-year term
until the annual meeting of the Corporate General Partner to be held on
August 13, 1997. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on August
13, 1997. All of the forgoing officers have served in the capacities
indicated since the date of incorporation of the Corporate General Partner
on December 27, 1984, except for Howard Kogen who became treasurer on
January 1, 1991 and Stuart Nathan, who had been a Vice President, became
President and Director on August 8, 1993. There are no arrangements or
understandings between or among any of said director or officers and any
other person pursuant to which the director or any officer was elected as
such.

The foregoing director and officers are also officers and/or directors
of JMB. JMB is the corporate general partner of Carlyle Real Estate
Limited Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited
Partnership-IX ("Carlyle-IX"), Carlyle Real Estate Limited Partnership-XI
("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XII ("Carlyle-
XII"), Carlyle Real Estate Limited Partnership-XIII ("Carlyle-XIII"),
Carlyle Real Estate Limited Partnership-XIV ("Carlyle-XIV"), Carlyle Real
Estate Limited Partnership-XV ("Carlyle-XV"), Carlyle Real Estate Limited
Partnership-XVI ("Carlyle-XVI"), Carlyle Real Estate Limited Partnership-
XVII ("Carlyle-XVII"), JMB Mortgage Partners, Ltd.-III ("Mortgage
Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage Partners-IV"),
Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and Carlyle Income Plus,
Ltd.-II ("Carlyle Income Plus-II") and the managing general partner of JMB
Income Properties, Ltd.-IV ("JMB Income-IV"), JMB Income Properties, Ltd.-V
("JMB Income-V"), JMB Income Properties, Ltd.-VI ("JMB Income-VI"), JMB
Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties
Ltd.-X ("JMB Income-X"), JMB Income Properties, Ltd.-XI, ("JMB Income-XI"),
JMB Income Properties, Ltd.-XII ("JMB Income-XII"), and JMB Income
Properties, Ltd.-XIII, ("JMB Income-XIII"). JMB is also the sole general
partner of the associate general partners of most of the foregoing
partnerships.

The foregoing director and officers are also officers and/or directors
of various affiliated companies of JMB including Income Growth Managers,
Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd.
("IDS/BIG")), Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB
Partners, L.P. ("Arvida")), and Arvida/JMB Managers-II, Inc. (the general
partner of Arvida/JMB Partners, L.P.-II ("Arvida-II")). Most of such
officers and the director are also partners, directly or indirectly, of
certain partnerships which are associate general partners in the following
real estate limited partnerships: the Partnership, Carlyle-VII,
Carlyle-IX, Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV,
Carlyle-XVI, Carlyle-XVII, JMB Income-VI, JMB Income-VII, JMB Income-X, JMB
Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage Partners-III, Mortgage
Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.
Certain of such officers are also officers and the sole director of Carlyle
Managers, Inc., the general partner of JMB/NYC.

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

Judd D. Malkin (age 59) is Chairman of the Board and a director of JMB
and its Chief Financial Officer. He is also an individual general partner
of JMB Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB
since October, 1969. Mr. Malkin is a director of Urban Shopping Centers,
Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment
trust in the business of owning, managing and developing shopping centers.
He is a Certified Public Accountant.

Neil G. Bluhm (age 59) is President and a director of JMB. He is also
an individual general partner of JMB Income-IV and JMB Income-V. Mr. Bluhm
has been associated with JMB since August, 1970. Mr. Bluhm is a director
of USC, Inc. He is a member of the Bar of the State of Illinois and a
Certified Public Accountant.

Stuart C. Nathan (age 55) is Executive Vice President and a director
of JMB. He has been associated with JMB since July, 1972. Mr. Nathan is
also a director of Sportmart, Inc., a retailer of sporting goods. He is a
member of the Bar of the State of Illinois.

Howard Kogen (age 61) is Senior Vice President and Treasurer of JMB.
He has been associated with JMB since March, 1973. He is a Certified
Public Accountant.

Gary Nickele (age 44) is Executive Vice President and General Counsel
of JMB. He has been associated with JMB since February, 1984. Mr. Nickele
holds a J.D. degree from the University of Michigan Law School and is a
member of the Bar of the State of Illinois.

H. Rigel Barber (age 48) is Chief Executive Officer of JMB. He has
been associated with JMB since March, 1982. Mr. Barber received a J.D.
degree from the Northwestern Law School. He is a member of the Bar of the
State of Illinois.

Gailen J. Hull (age 48) is Senior Vice President of JMB. Mr. Hull has
been associated with JMB since March, 1982. He holds a Masters degree in
Business Administration from Northern Illinois University and is a
Certified Public Accountant.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The General Partners
are entitled to receive a share of cash distributions, when and as cash
distributions are made to the Holders of Interests, and a share of profits
or losses. In 1996, the General Partners received no distributions from
the Partnership. In 1995, the General Partners received their share of
Distributable Cash in the amount of $1,666,667 (including $1,041,667 paid
as a partnership management fee). In 1994, the General Partners received
no distributions from the Partnership. In accordance with the Partnership
Agreement, the General Partners have loaned their aggregate share of
certain prior distributions ($300,000 at December 31, 1996) of
Distributable Cash, as defined, (including such amounts reflected as a
management fee to the General Partners) to the Partnership. Any amounts
loaned bear interest at a rate not to exceed 10% per annum (currently 10%
per annum). As of December 31, 1996, $268,401 represents interest earned
on such loans, all of which was unpaid. The General Partners received a
share of Partnership income for tax purposes aggregating $1,352,470 in
1996.

The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses relating to
the administration of the Partnership and the acquisition and operation of
the Partnership's real property investments. The General Partners or their
affiliates are also entitled to reimbursements for portfolio management,
legal and accounting services. Such costs were $3,146, $16,393 and $15,058
for 1996, 1995 and 1994, $2,026 of which was unpaid at December 31, 1996.

In accordance with an agreement between JMB and the Partnership, JMB
guaranteed that the Partnership would receive a certain minimum return on
its working capital (as defined). In March and December 1995, JMB paid
approximately $2,850,000 and $65,000, respectively, of the amount due under
this agreement to the Partnership. During 1996, JMB funded its remaining
obligation under the working capital minimum guarantee of approximately
$1,800,000 which was used to fund operating costs and to fund the
Partnership's share of the collateral required pursuant to the terms of the
restructuring of the Partnership's indirect ownership interests in the
properties.

The Partnership had obligations to fund, on demand, $600,000 and
$600,000 to Carlyle Investors, Inc. and Carlyle Managers, Inc.,
respectively, of additional paid-in capital. During 1996, these
obligations were reduced to $200,000 and $200,000, respectively. As of
December 31, 1996, these obligations bore interest of 5.93% per annum and
interest accrued on these obligations aggregated $236,929.

JMB advanced approximately $530,000 to the Partnership during 1996.
As of December 31, 1996, the loan bore interest of 5.67% per annum and
interest accrued on this loan aggregated $6,850.

The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership.
The relationship of the Corporate General Partner (and its director and
officers) to its affiliates is also set forth above in Item 10.

<TABLE>

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

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

(b) The Corporate General Partner, its officers and director and the Associate General Partners own the
following Interests of the Partnership.

NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests Neil G. Bluhm 15 Interests (1) 1.5%
indirectly

Limited Partnership
Interests Judd D. Malkin 19 Interests (1)(2) 1.9%
indirectly

Limited Partnership
Interests Corporate General 19 Interests (1)(2) 1.9%
Partner, its officers indirectly
and director and
the Associate General
Partners as a group

<FN>

(1) Includes 15 Interests owned by two investment partnerships of which Messrs. Neil Bluhm and Judd Malkin
are the managing general partners and have shared voting and investment power with respect to the Interests so
owned.

(2) Includes 4 Interests owned by an investment partnership of which Mr. Judd Malkin is the managing general
partner and has sole voting and investment power with respect to the Interests so owned.

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

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

</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10, 11 and 12 above.

PART IV

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

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

(1) Financial Statements (See Index to Financial
Statements and Supplementary Data filed with this report).

(2) Exhibits.

3. Amended and Restated Agreement of Limited
Partnership is hereby incorporated herein by reference to Exhibit 3 to the
Partnership's Report for December 31, 1992 on Form 10-K (File No. 0-14547)
dated March 30, 1993.

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 1290 Avenue of the Americas Building in New York, New
York.

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

10-B.* 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-C.* 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-D.* 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-E.* $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-F.* $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-G. Agreement of Limited Partnership of Property
Partners, L.P. is hereby incorporated by reference to the Partnership's
Report for March 31, 1993 on Form 10-Q (File No. 0-14547) dated May 14,
1993.

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

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

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

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

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

10-M. 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-N. 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.

10-O. Amended, Restated and Consolidated Promissory
Note between JMB/NYC Office Building Associates, L.P. and Olympia & York
Massachusetts Financial Company dated May 31, 1995, is hereby incorporated
herein by reference to the Partnership's Report for December 31, 1995 on
Form 10-K (File No. 0-14547) dated March 25, 1996.

10-P. Amended, Restated and Consolidated Security
Agreement between JMB/NYC Office Building Associates, L.P. and Olympia &
York Massachusetts Financial Company dated May 31, 1995, is hereby
incorporated herein by reference to the Partnership's Report for December
31, 1995 on Form 10-K (File No. 0-14547) dated March 25, 1996.

10-Q. Agreement of Sale between 2 Broadway Associates,
L.P. and 2 Broadway Acquisition Corp. dated August 10, 1995, is hereby
incorporated herein by reference to the Partnership's Report for December
31, 1995 on Form 10-K (File No. 0-14547) dated March 25, 1996.

10-R. Agreement of Conversion of 1290 Associates into
1290 Associates, L.L.C. dated October 10, 1995 among JMB/NYC Office
Building Associates, L.P., an Illinois limited partnership, O&Y Equity
Company, L.P., a Delaware limited partnership and O&Y NY Building Corp., a
Delaware corporation, is hereby incorporated herein by reference to the
Partnership's Report for December 31, 1995 on Form 10-K (File No. 0-14547)
dated March 25, 1996.

10-S. Agreement of Conversion of 237 Park Avenue
Associates into 237 Park Avenue Associates, L.L.C., dated October 10, 1995
among JMB/NYC Office Building Associates, L.P., an Illinois limited
partnership, O&Y Equity Company, L.P., a Delaware limited partnership and
O&Y NY Building Corp., a Delaware corporation, is hereby incorporated
herein by reference to the Partnership's Report for December 31, 1995 on
Form 10-K (File No. 0-14547) dated March 25, 1996.

10-T. Disclosure Statement for the Second Amended
Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290
Associates, L.L.C. dated August 9, 1996 is hereby incorporated herein by
reference to the Partnership's Report for September 30, 1996 on Form 10-Q
(File No. 0-14547) dated November 8, 1996.

10-U. Consent of Director of Carlyle-XIV Managers,
Inc. (known as Carlyle Managers, Inc.) dated October 31, 1996 is filed
herewith.

10-V. Consent of Director of Carlyle-XIII, Managers,
Inc. (known as Carlyle Investors, Inc.) dated October 31, 1996 is filed
herewith.

10-W. Allonge to demand note between JMB/Manhattan
Associates, L.P. and Carlyle Managers, Inc. dated October 31, 1996 is filed
herewith.

10-X. Allonge to demand note between JMB/Manhattan
Associates, L.P. and Carlyle Investors, Inc., dated October 31, 1996 is
filed herewith.

10-Y. $2,000,000 promissory note between JMB/Manhattan
Associates, Ltd. and JMB Realty Corporation dated October 7, 1996 is filed
herewith.

10-Z. Indemnification agreement between Property
Partners, L.P., Carlyle-XIII Associates, L.P., and Carlyle-XIV Associates,
L.P. dated as of October 10, 1996 is filed herewith.

10-AA. Agreement of Limited Partnership of 237/1290
Lower Tier Associates, L.P. dated as of October 10, 1996 is filed herewith.

10-BB. Amended and Restated Limited Partnership
Agreement of 237/1290 Upper Tier Associates, L.P. dated as of October 10,
1996 is filed herewith.

21. List of Subsidiaries

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
herein by reference.

SIGNATURES

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

JMB/MANHATTAN ASSOCIATES, LTD.

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

GAILEN J. HULL
By: Gailen J. Hull
Vice President
Date: March 21, 1997

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

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

STUART C. NATHAN
By: Stuart C. Nathan, President and Director
Principal Executive Officer
Date: March 21, 1997

JUDD D. MALKIN
By: Judd D. Malkin, Chairman
Principal Financial Officer
Date: March 21, 1997

GAILEN J. HULL
By: Gailen J. Hull, Vice President
Principal Accounting Officer
Date: March 21, 1997

JMB/MANHATTAN ASSOCIATES, LTD.

EXHIBIT INDEX

DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------- ----

3. Amended and Restated Agreement
of Limited Partnership Yes

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

4-B. Long-term debt contract relating
to the mortgage note secured
by the 1290 Avenue of the
Americas Building in New York,
New York. Yes

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

10-B. 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. Yes

10-C. 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. Yes

10-D. 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. Yes

10-E. $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 Yes

10-F. $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. Yes

10-G. Agreement of Limited Partnership
of Property Partners, L.P. Yes

10-H. Second Amended and Restated
Articles of Partnership of
JMB/NYC Office Building Associates Yes

10-I. Amended and Restated Certificate
of Incorporation of Carlyle-XIV
Managers, Inc. (known as Carlyle
Managers, Inc.) Yes

10-J. Amended and Restated Certificate
of Incorporation of Carlyle-XIII
Managers, Inc. (known as Carlyle
Investors, Inc.) Yes

10-K. $600,000 demand note between
JMB/Manhattan Associates, Ltd.
and Carlyle Managers, Inc. Yes

10-L. $600,000 demand note between
JMB/Manhattan Associates, Ltd.
and Carlyle Investors, Inc. Yes

10-M. Amendment No. 1 to JMB/NYC Office
Building Associates Yes

10-N. Amendment No. 1 to agreement of
limited partnership of Property
Partners, L.P. Yes

10-O. Amended, Restated and Consolidated
Promissory Note between JMB/NYC
Office Building Associates, L.P. and
Olympia & York Massachusetts
Financial Company Yes

10-P. Amended, Restated and Consolidated
Security Agreement between JMB/NYC
Office Building Associates, L.P. and
Olympia & York Massachusetts
Financial Company. Yes

10-Q. Agreement of Sale between 2 Broadway
Associates, L.P. and 2 Broadway
Acquisition Corp., dated August 10,
1995. Yes

10-R. Agreement of Conversion of 1290
Associates into 1290 Associates,
L.L.C. dated October 10, 1995. Yes

10-S. Agreement of Conversion of 237
Park Avenue Associates into
237 Park Avenue Associates,
L.L.C. dated October 10, 1995 Yes

10-T. Disclosure Statement for the
Second Amended Joint Plan of
Reorganization of 237 Park Avenue
Associates, L.L.C. and 1290
Associates, L.L.C. dated August 9,
1996 Yes

10-U. Consent of Director of
Carlyle-XIV Managers, Inc. (known
as Carlyle Managers, Inc.) dated
October 31, 1996 Yes

10-V. Consent of Director of
Carlyle-XIII Managers, Inc. (known
as Carlyle Investors, Inc.) dated
October 31, 1996 Yes

10-W. Allonge to demand note between
JMB/Manhattan Associates, L.P.
and Carlyle Managers, Inc. dated
October 31, 1996 Yes

10-X. Allonge to demand note between
JMB/Manhattan Associates, L.P.
and Carlyle Investors, Inc.
dated October 31, 1996 Yes

10-Y. $2,000,000 promissory note between
JMB/Manhattan Associates, Ltd.
and JMB Realty Corporation dated
October 7, 1996 Yes

10-Z. Indemnification agreement between
Property Partners, L.P., Carlyle-XIII
Associates, L.P., and Carlyle-XIV
Associates, L.P. dated as of
October 10, 1996 Yes

10.AA*. Agreement of Limited Partnership of
237/1290 Lower Tier Associates, L.P.
dated as of October 10, 1996 No

10-BB*. Amended and Restated Limited
Partnership Agreement of 237/1290 Upper
Tier Associates, L.P. dated as of
October 10, 1996 No

21. List of Subsidiaries No

27. Financial Data Schedule No

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

* FILED ON PAPER IN ACCORDANCE WITH RULE 201 OF REGULATION S-T, THESE
AGREEMENTS ARE BEING FILED IN PAPER PURSUANT TO A TEMPORARY HARDSHIP
EXEMPTION.

EXHIBIT 10-U
- ------------
(Manhattan)

CONSENT OF DIRECTOR
OF
CARLYLE MANAGERS, INC.

The undersigned, being all the directors of Carlyle Manager, Inc., a
Delaware corporation (the "Corporation"), acting by written consent
pursuant to Section 141(f) of the Delaware General Corporation Law, hereby
consent to the adoption of, and do hereby adopt, the following resolutions:

WHEREAS, this Corporation is the holder of certain demand notes made
by its shareholders in the aggregate original principal amount of
$3,000,000 (the "Notes"), as set forth in EXHIBIT A attached hereto; and,

WHEREAS, this Corporation desires to make a distribution to its
shareholders aggregating $2,000,000, as a return of capital (the
"Distribution"); and,

WHEREAS, in order to effect the Distribution, the outstanding
principal amount of the Notes will be reduced as set forth in such Exhibit
A.

NOW, THEREFORE, BE IT RESOLVED, that this Corporation make the
Distribution, as a return of capital, effective as of the date hereof, to
be paid by the reduction of the outstanding principal amount as set forth
EXHIBIT A attached hereto; and,

FURTHER RESOLVED, that any officer of this Corporation is hereby
authorized and directed to effect the Distribution as of the date hereof,
to enter into, execute and deliver, or to ratify, any and all documents
incidental or related thereto, including without limitation, those
documents deemed necessary or appropriate to evidence the reduction in the
outstanding principal balances of each of the Notes as set forth herein,
and any said officer is hereby authorized and directed to take whatever
actions said officer deems reasonably necessary in order to consummate the
transaction described or contemplated.

Dated: October 31, 1996

STUART C. NATHAN
- --------------------
Stuart C. Nathan

Being the sole director or Carlyle Managers, Inc., a Delaware corporation.

EXHIBIT A
---------

Original
Principal Principal
Payor Date of Note Amount Reduction
- ----- -------------- ---------- ---------

JMB Realty Corporation March 25, 1993 $ 600,000 $400,000

JMB/Manhattan
Associates, Ltd. March 25, 1993 $ 600,000 $400,000

Carlyle Real Estate
Limited Partnership-XIII March 25, 1993 $ 600,000 $400,000

Carlyle Real Estate
Limited Partnership-XIV March 25, 1993 $1,200,000 $800,000

EXHIBIT 10-V
- ------------
(Manhattan)

CONSENT OF DIRECTOR
OF
CARLYLE INVESTORS, INC.

The undersigned, being all the directors of Carlyle Investors, Inc.,
a Delaware corporation (the "Corporation"), acting by written consent
pursuant to Section 141(f) of the Delaware General Corporation Law, hereby
consent to the adoption of, and do hereby adopt, the following resolutions:

WHEREAS, this Corporation desires to make a distribution to its
shareholders aggregating $2,000,000, as a return of capital (the
"Distribution"); and,

WHEREAS, in order to effect the Distribution, the outstanding
principal amount of the Notes will be reduced as set forth in such Exhibit
A.

Dated: October 31, 1996

STUART C. NATHAN
- --------------------
Stuart C. Nathan

Being the sole director or Carlyle Investors, Inc., a Delaware corporation.

EXHIBIT A
---------

Original
Principal Principal
Payor Date of Note Amount Reduction
- ----- -------------- ---------- ---------

JMB Realty Corporation March 25, 1993 $ 450,000 $300,000

JMB/Manhattan
Associates, Ltd. March 25, 1993 $ 600,000 $400,000

Carlyle Real Estate
Limited Partnership-XIII March 25, 1993 $ 600,000 $400,000

Carlyle Real Estate
Limited Partnership-XIV March 25, 1993 $1,200,000 $800,000

JMB Service Bureau
company (a division of
Northbrook Corporation),
as successor-in-interest
to JMB Holdings Corporation March 25, 1993 $ 150,000 $100,000

EXHIBIT 10-W
- ------------
(Manhattan)

ALLONGE TO DEMAND NOTE
----------------------

Reference is made to that certain Demand Note, dated as March 25,
1993 (the "Note"), made by JMB/Manhattan Associates, Ltd., an Illinois
limited partnership ("Manhattan"), in favor or Carlyle Managers, Inc., a
Delaware corporation ("Investors"), in the original principal amount of
$600,000.

In consideration for the return of capital made by Investors to
Manhattan as of the date hereof in the amount of $400,000, the undersigned
hereby reduces the outstanding principal balance of the Note to $200,000.
Such reduction shall not serve to reduce or cancel any accrued and unpaid
interest which may be outstanding on the Note.

This Allonge shall be attached to and become a part of the Note.

Dated as October 31, 1996. CARLYLE MANAGERS, INC.,
a Delaware corporation

By:
____________________

Its:
____________________

Acknowledged and Agreed:

JMB/MANHATTAN ASSOCIATES, LTD.,
an Illinois limited partnership

By: JMB/MANHATTAN INVESTORS, INC.,
an Illinois corporation,
Corporate General Partner

By:
____________________

Its:
____________________

EXHIBIT 10-X
- ------------
(Manhattan)

ALLONGE TO DEMAND NOTE
----------------------

Reference is made to that certain Demand Note, dated as March 25,
1993 (the "Note"), made by JMB/Manhattan Associates, Ltd., an Illinois
limited partnership ("Manhattan"), in favor or Carlyle Investors, Inc., a
Delaware corporation ("Investors"), in the original principal amount of
$600,000.

This Allonge shall be attached to and become a part of the Note.

Dated as October 31, 1996. CARLYLE INVESTORS, INC.,
a Delaware corporation

By:
____________________

Its:
____________________

Acknowledged and Agreed:

JMB/MANHATTAN ASSOCIATES, LTD.,
an Illinois limited partnership

By: JMB/MANHATTAN INVESTORS, INC.,
an Illinois corporation,
Corporate General Partner

By:
____________________

Its:
____________________

EXHIBIT 10-Y
- ------------
(Manhattan)

PROMISSORY NOTE
---------------

For value received, the undersigned,JMB/Manhattan Associates, Ltd.
("Payor"), promises to pay, on or before June 30, 1999, to the order of JMB
Realty Corporation ("Payee"): (i) Two million dollars ($2,000,000), or, if
less, the aggregate unpaid principal amount of all loans made by Payee to
Payor as reflected on either the books and records of Payee or on Schedule
A attached hereto and incorporated herein, and (ii) accrued interest on
such outstanding principal amount, as further provided hereinafter. In the
event of any conflict between Schedule A and the books and records of Payee
regarding the principal balance hereunder, the latter shall control.

The unpaid principal amount of loans from time to time outstanding
hereunder shall bear interest from the date any such loan is made through
maturity at the applicable Federal rate for short term loans in effect for
the first month of each semi-annual period (i.e. January or July) under
Section 1274 of the Internal Revenue of 1986, as amended, compounded semi-
annually on December 31 and June 30 of each calendar year, and payable at
maturity. For any principal amounts loaned between January 1 and July 1,
or between July 1 and January 1, interest shall be computed on such amounts
for such partial periods at the applicable Federal short term rate, in
effect on the day the loan is made.

Prior to maturity, accrued interest on this Note shall compound at
the end of each interest period, which shall be June 30 and December 31 as
applicable. If Payor does not make payment of the interest then accrued at
the end of any interest period, the accrued interest shall be added to
principal on the last day of the applicable interest period, and the amount
added to principal shall be entered on Schedule A and on the books and
records of Payee as additional principal. After maturity, interest shall
be payable upon demand by Payee. Interest shall be computed for the actual
number of days elapsed on the basis of a year consisting of 365 or 366
days. The final interest period for this Note shall terminate at maturity.

Payor may prepay without premium or penalty all or any part of the
principal or interest evidence by this note at any time. Prepayments shall
be applied first to interest then accrued (whether or not the interest
period has then elapsed) and then to principal.

The undersigned further agrees, subject only to any limitation
imposed by applicable law, to pay all expenses of every kind, including
reasonable attorney's fees and costs, incurred by Payee in endeavoring to
collect any amounts payable hereunder which are not paid when due whether
or not any lawsuit is ever filed with respect thereto. Payments of both
principal and interest shall be made in lawful money or the United States
of America in immediately available federal funds, in accordance with
instructions issued by Payee from time to time.

Payor and all sureties, endorsers, and guarantors of this Note (i)
waive demand, presentment for payment, notice of non-payment, protest,
notice of protest, notice of intent to accelerate, acceleration and all
other notice, filing of suit and diligence in collecting this Note, (ii)
agree that Payee or any other holder hereof shall not be required first to
institute suit in order to enforce payment of this Note, and (iii) consent
to any extension or postponement of time of payment of this Note and to any
other indulgence with respect hereto without notice thereof to any of them.

This Note is intended to be performed in accordance with and only to
the extent permitted by all applicable law. If any portion of this Note or
the application thereof to any person or circumstance shall, for any reason
and to any extent, be invalid or unenforceable, neither the remainder of
this instrument nor the application of such provisions to other persons or
circumstances shall be affected thereby, but rather shall be enforced to
the greatest extent permitted by law.

No single or partial exercise by Payee, or delay or omission in the
exercise by Payee, or any right or remedy shall preclude, waive or limit
any other or further exercise thereof or the exercise of any other right or
remedy. This Note may not be modified or amended except in a writing
expressly intended for such purpose and executed by Payor and Payee.
Notwithstanding any provision herein to the contrary, liability of Payor to
Payee hereunder shall be limited to and satisfied from any and all assets
of Payor (other than rights of Payor against its partners), and no present
or future partner, shareholder, officer, director, trustee, beneficiary,
employee or agent of Payor shall have any personal liability under or in
connection with this Note, and no deficit capital account of any partner of
Payor shall be treated as an asset of Payor for purposes of the foregoing.
Payee may elect, in its sole discretion, to direct Payor to pay all or any
portion of the principal and interest payable hereunder to any person or
entity specified by Payee. Payee may assign, transfer, pledge or otherwise
encumber this Note from time to time in its sole discretion.

This Note shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.

This Note is made under and governed by the internal laws of the
State of Illinois.

Dated: October 7, 1996

By: JMB/Manhattan Associates, Ltd.

By: JMB/Manhattan Investors, Inc.
General Partner

By:
____________________

Title:
____________________

EXHIBIT 10-Z
- ------------
(Manhattan)

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT dated as of the 10 day of October
1996, given by PROPERTY PARTNERS, L.P., CARLYLE - XIII ASSOCIATES, L.P.,
and CARLYLE - XIV ASSOCIATES, L.P., each a Delaware limited partnership
having an office at 900 North Michigan Avenue - 19th floor, Chicago,
Illinois 60611 (hereinafter individually referred to as an "Indemnitor" and
collectively as the "Indemnitors") to METROPOLIS REALTY TRUST, INC., a
Maryland corporation having an office c/o Victor Capital Group, L.P., 885
Third Avenue - 12th Floor, New York, New York 10022, Attn: John Klopp
(hereinafter referred to as "Indemnitee").

WITNESSETH:

WHEREAS, each Indemnitor is a partner in JMB/NYC Office Building
Associates, L.P. ("JMB LP"), an Illinois limited partnership and a member
of 237 Park Avenue Associates, LLC and 1290 Associates, LLC (collectively,
the "Debtors"), each a New York limited liability company and the obligors
under certain notes in the aggregate original principal amount of
$970,000,000 issued pursuant to that certain Mortgage Spreader and
Consolidation Agreement and Trust Indenture dated as of March 20, 1984
among O&Y Equity Corp., Olympia & Holdings Corporation, FAME Associates,
Olympia & York 2 Broadway Land Company, Olympia & York 2 Broadway Company
and Manufacturers Hanover Trust Company as Trustee, as supplemented and
(the "Indenture"), which encumbers the fee estates of the Debtors in
properties known as 237 Park Avenue and 1290 Avenue of the Americas;

WHEREAS, the Debtors defaulted under the Indenture beyond the
expiration of all applicable notice and cure periods;

WHEREAS, the Debtors, JMB LP and Indemnitors requested that the
Trustee and the holders of the Existing Notes forbear from exercising their
rights to pursue an action to foreclose the Indenture in order to provide
the Debtors with an opportunity to file a pre - negotiated plan of
reorganization (hereinafter referred to as the "Plan") under the Bankruptcy
Code, which Plan provides for, among other things, (i) a transfer of the
Properties to the Property Owning Partnerships, (ii) the Lower Tier
Partnership to own a 99% interest as a limited partner in each of the
Property Owning Partnerships, (iii) the Upper Tier Partnership to own a 5%
interest as a limited partner in the Lower Tier Partnership, and (iv) JMB
LP to own a 99% interest as a limited partner in the Upper Tier
Partnership;

WHEREAS, the Trustee and the holders of the Existing Notes were
willing to forbear from exercising their rights to pursue an action to
foreclose the Indenture and to proceed with the transactions contemplated
by the Plan only if the Indemnitors execute and deliver this
Indemnification Agreement to the Indemnitee and the Plan and the Agreements
of Limited Partnership of the Upper Tier Partnership and the Lower Tier
Partnership require that JMB LP cause the Indemnitors to execute and
deliver this Indemnity Agreement to the Indemnitee;

WHEREAS, the Plan was filed with the Bankruptcy Court on April 23,
1996 and became effective pursuant to an order of the Bankruptcy Court
entered on September 20, 1996 and, pursuant to the terms thereof;

WHEREAS, the Indemnitors will materially benefit from the
consummation of the transactions provided for in the Plan and described
above;

NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, and in
order to induce the Trustee and the holders of the Existing Notes to
forbear from exercising their rights as hereinbefore stated and such
parties and the Indemnitee to proceed with the transactions contemplated by
the Plan, the Indemnitors hereby covenant and agree with the Indemnitee as
follows:

1. Capitalized terms used but not defined herein shall have the
meanings provided in the Plan.

2. The Indemnitors absolutely and unconditionally agree to indemnify
and to hold Indemnitee harmless from and against any and all losses,
claims, liabilities, damages, costs or expenses (including, without
limitation, reasonable counsel fees) of any nature whatsoever, contingent
or otherwise, foreseen or unforeseen, which Indemnitee may or shall incur
as a result of any of JMB LP, its officers, directors, partners (including
without limitation any Indemnitor), stockholders, agents or affiliates
(collectively, the "Controlled Entities") intentionally interfering with,
impeding or preventing (including, without limitation, the filing by JMB LP
of a voluntary petition under the Bankruptcy Code or any other federal or
state bankruptcy or insolvency statute or any Controlled Entity joining in
an involuntary petition against JMB LP under the Bankruptcy Code or such
other statute) (x) the exercise by the Indemnitee of the Purchase Right (as
defined in Section 12.2A of the Lower Tier Partnership Agreement) or (y)
any disposition, mortgage, pledge, encumbrance, hypothecation or exchange
of the Properties by the Property Owning Partnerships or the Property
Owning Partnership Interests (as defined in Lower Tier Partnership
Agreement) by the Lower Tier Partnership or the merger or other combination
of the Property Owning Partnerships or the Lower Tier Partnership with or
into another entity, in accordance with the terms of the Lower Tier
Partnership Agreement, provided that such disposition, mortgage, pledge,
encumbrance, hypothecation, exchange, merger or other combination does not
constitute an Adverse Transaction as defined in the agreement of limited
partnership of the Lower Tier Partnership ("Prohibited Actions"), and
provided that any such Prohibited Action is not revoked or rescinded within
the time period provided in paragraph 3 below.

3. In the event that any Indemnitor or Controlled Entity takes any
Prohibited Action (including, without limitation, the filing by or against
JMB LP of a petition under the Bankruptcy Code or any other federal or
state bankruptcy or insolvency statute), the Indemnitors (x) acknowledge
(and Indemnitee, by its acceptance of this Indemnification Agreement,
acknowledges) that the damage to be suffered by Indemnitee shall be
difficult or impossible to ascertain and (y) if the Prohibited Action is
not revoked or rescinded within sixty (60) days after notice by Indemnitee
to Indemnitors so as to permit the consummation of the transaction
described in clause (x) or (y) of paragraph 2 above unimpeded by any
actions by JMB LP or any of the Controlled Entities, absolutely and
unconditionally agree to pay to Indemnitee upon demand the Maximum
Indemnitors' Liability Amount (as hereinafter defined) as full liquidated
damages for, and in satisfaction of, the undersigned's obligations under
this Indemnification Agreement, including but not limited to the
Indemnitors' obligations under paragraph 2 hereof. The Indemnitor
acknowledges and agrees that (and Indemnitee, by its acceptance of this
Indemnification Agreement, acknowledges and agrees that) the payment of the
Maximum Indemnitors' Liability Amount is a fair and reasonable remedy for
Indemnitee if any of the events set forth in paragraph 2 of this
Indemnification Agreement shall occur, as any such event will result in
Indemnitee incurring damages which cannot now be determined with any degree
of certainty. The foregoing shall not limit the remedies Indemnitee may
have against any other party, including without limitation, JMB LP and the
right of the Indemnitors to seek injunctive relief with respect to the
Prohibited Action or specific performance of the underlying obligation.

4. The term "Maximum Indemnitors' Liability Amount" as used in this
Indemnification Agreement shall mean an amount equal to $25,000,000,
provided that the Maximum Indemnitors' Liability Amount shall be reduced on
a dollar for dollar basis for each dollar actually received by Indemnitee
in respect of the JMB Collateral (as defined in the Lower Tier Partnership
Agreement).

5. The Indemnitors hereby consent that from time to time, before or
after the taking of any Prohibited Action by any Indemnitor or Controlled
Party, with or without further notice to or assent from the Indemnitors,
any security at any time held by or available to Indemnitee with respect to
any obligation of JMB LP, or any security at any time held by or available
to Indemnitee for any obligation of any other person or party secondarily
or otherwise responsible for the compliance by JMB LP of its obligations
under the Upper Tier and Lower Tier Partnership Agreements (hereinafter
referred to as the "Obligations"), may be exchanged, surrendered or
released and any obligation JMB LP, or of any such other person or party,
may be changed, altered, renewed, extended, continued, surrendered,
compromised, waived or released in whole or in part, or any default with
respect thereto waived, and Indemnitee may release, in whole or in part,
the JMB Collateral or any balance of any deposit account or credit on its
books in favor of JMB LP, or of any such other person or party, and may
generally deal with JMB LP or any such security or other person or party as
Indemnitee may see fit; and the Indemnitors shall remain bound under this
Indemnification Agreement notwithstanding any such exchange, surrender,
release, change, alteration, renewal, extension, continuance, compromise,
waiver, inaction or other dealing.

6. This is an agreement to pay liquidated damages and not an
agreement of collection and Indemnitor further waives any right to require
that any action be brought against JMB LP or any other person or party or
to require that resort be had to any security or to any balance of any
deposit account or credit on the books of Indemnitee in favor of JMB LP or
any other person or party.

7. Each reference herein to Indemnitee shall be deemed to include
its successors and assigns in whose favor the provisions of this
Indemnification Agreement shall also inure. This Indemnification Agreement
shall be binding upon, and shall inure to the benefit of, Indemnitee and
each Indemnitor and the respective heirs, executors, administrators, legal
representatives, successors and assigns of Indemnitee and each Indemnitor;
provided, however, that the Indemnitors shall in no event or under any
circumstance have the right without obtaining the prior written consent of
Indemnitee to assign or transfer the Indemnitors' obligations and
liabilities under this Indemnification Agreement, in whole or in part, to
any other person, party or entity.

8. The term "Indemnitor" as used herein shall, if this
Indemnification Agreement is signed by more than one party, mean the
"Indemnitors and each of them" and each undertaking herein contained shall
be their joint and several undertaking, provided, however, that in the next
succeeding paragraph hereof the term "Indemnitor" shall mean the
"Indemnitors or any of them".

9. No delay on the part of Indemnitee in exercising any right or
remedy under this Indemnification Agreement or failure to exercise the same
shall operate as a waiver in whole or in part of any such right or remedy.
No notice to or demand on the Indemnitor shall be deemed to be a waiver of
the obligation of the Indemnitor or of the right of Indemnitee to take
further action without notice or demand as provided in this Indemnification
Agreement.

10. This Indemnification Agreement may only be modified, amended,
changed or terminated by an agreement in writing signed by Indemnitee and
the Indemnitors. No waiver of any term, covenant or provision of this
Indemnification Agreement shall be effective unless given in writing by
Indemnitee and if so given by Indemnitee shall only be effective in the
specific instance in which given.

11. The indemnitors acknowledge that this Indemnification Agreement
and the Indemnitors' obligations under this Indemnification Agreement are
and shall at all times continue to be absolute and unconditional in all
respects. This Indemnification Agreement sets forth the entire agreement
and understanding of Indemnitee and the Indemnitors, and, except as
otherwise herein set forth, the Indemnitors absolutely, unconditionally and
irrevocably waive any and all right to assert any offset, counterclaim or
crossclaim of any nature whatsoever with respect to this Indemnification
Agreement or the obligations of the Indemnitors under this Indemnification
Agreement or the obligations of any other person or party (including,
without limitation, JMB LP) relating to this Indemnification Agreement or
the obligations of the Indemnitors hereunder in any action or proceeding
brought by Indemnitee to enforce the obligations of the Indemnitors under
this Indemnification Agreement. Nothing contained in this paragraph 11
shall limit the right of the Indemnitors to assert a defense or maintain a
separate action against Indemnitee with respect to any matter irrespective
of whether it relates to this Indemnification Agreement or the obligations
of the Indemnitors under this Indemnification Agreement. The Indemnitors
acknowledge and Indemnitee, by its acceptance hereof, acknowledges that no
oral or other agreements, understandings, representations or warranties
exist with respect to this Indemnification Agreement or with respect to the
obligations of the Indemnitors under this Indemnification Agreement except
as specifically set forth in this Indemnification Agreement or otherwise in
writing by Indemnitee and the Indemnitors.

12. THE INDEMNITORS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE,
AND INDEMNITEE BY ITS ACCEPTANCE OF THIS INDEMNIFICATION AGREEMENT
IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHT TO TRIAL
BY JURY
IN ANY ACTION SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF
OR
OTHERWISE RELATING TO THIS INDEMNIFICATION AGREEMENT.

13. If at any time (i) any payment, or portion thereof, made by, or
for the account of, the Indemnitors on account of the obligations under
this Indemnification Agreement, or (ii) any transaction described in clause
(x) or (y) of paragraph 2 hereof, or (iii) the consummation of the transfer
of the interest of JMB LP in the Upper Tier Partnership pursuant to the JMB
Put Right under Section 7.7 of the partnership agreement of the Upper Tier
Partnership or of the interest of the Upper Tier Partnership in the Lower
Tier Partnership pursuant to the Put Right under Section 12.2C of the
partnership agreement of the Lower Tier Partnership, is set aside by any
court or trustee having jurisdiction as a voidable preference, fraudulent
transfer or otherwise as being subject to avoidance or recovery under the
provisions of the Bankruptcy Code or under any other applicable Federal or
state bankruptcy law or similar law, the Indemnitor hereby agrees that this
Indemnification Agreement (x) shall continue and remain in full force and
effect, or (y) if previously terminated as a result of the Indemnitors
having fulfilled its obligations hereunder in full or as a result of
Indemnitee having released the Indemnitors from their obligations and
liabilities hereunder, shall without further act or instrument be
reinstated and shall thereafter remain in full force and effect, in either
case with the same force and effect as though such payment or transaction
had not been made, and if applicable, as if such previous termination had
not occurred.

14. The Indemnitor hereby waives all defenses it may have based upon
any election of remedies by Indemnitee which destroys or impairs the
Indemnitors' subrogation rights or the Indemnitors' right to proceed
against JMB LP or any other person for reimbursement. The foregoing
waivers include any requirement of law that Indemnitee exhaust any security
for the Obligations before proceeding under this Indemnification Agreement.

In addition to the foregoing, the Indemnitors hereby waive and relinquish
the following rights and remedies accorded by applicable law to
Indenmnitors and agree not to assert or take advantage of any such rights
or remedies: (a) any defense that may arise by reason of the incapacity,
lack of authority, death or disability of any other person or persons; (b)
demand, protest and, except as set forth therein, notice of any kind; (c)
any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal; and (d) any duty on
the part of Indemnitee to disclose to the Indemnitors any facts Indemnitee
may now or hereafter know about JMB LP, regardless of whether Indemnitee
has reason to believe that any such facts materially increase the risk
beyond that which the Indemnitor intends to assume or has reason to believe
that such facts are unknown to Indemnitors or has a reasonable opportunity
to communicate such facts to Indemnitors.

15. Any notice, request or demand given or made under this
Indemnification Agreement shall be in writing and shall be hand delivered
or sent by Federal Express or other reputable overnight national courier
service, and shall be deemed given when received at the following address
whether hand delivered or sent by Federal Express or other reputable
overnight national courier service:

If to Indemnitee:

c/o Victor Capital Group, L.P.
885 Third Avenue - 12th Floor
New York, New York 10022

Attention: John Klopp

With a copy to:

Battle Fowler LLP
75 East 55th Street
New York, New York 10022

Attention: Kenneth Friedman

If to the Indemnitors:

900 North Michigan Avenue - 19th Floor
Chicago, IL 60611

Attention: Stuart C. Nathan
Gary Nickele

With a copy to:

Pircher, Nichols & Meeks
1999 Avenue of the Americas
Los Angeles, California 90067

Attention: Leo Pircher

Each party to this Indemnification Agreement may designate a change of
address
by notice given to the other party fifteen (15) days prior to the date such
change of address is to become effective.

16. This Indemnification Agreement is, and shall be deemed to be,
a contract entered into under and pursuant to the laws of the State of New
York and shall be in all respects governed, construed, applied and enforced
in
accordance with the laws of the State of New York. No defense given or
allowed by laws of any other state or country shall be interposed in any
action or proceeding hereon unless such defense is also given or allowed by
the laws of the State of New York.

17. The Indemnitor agrees to submit to personal jurisdiction in the
State of New York in any action or proceeding arising out of this
Indemnification Agreement and, furtherance of such agreement, the
Indemnitor hereby agrees and consents that without limiting other methods
of obtaining jurisdiction, personal jurisdiction over the Indemnitor in any
such action or proceeding may be obtained within or without the
jurisdiction of any federal court located in New York (and any such court
shall have jurisdiction over the subject matter hereof) and tat any process
or notice of motion or other application to any such court in connection
with any such action or proceeding may be served upon the Indemnitor, by
registered or certified mail to or by personal service at the last known
address of the Indemnitor, whether such address be within or without the
jurisdiction of any such court. In addition to and in furtherance of the
foregoing, the foregoing, the Indemnitor hereby consents to venue being
held in either of the Southern District of New York.

18. This Indemnification Agreement may be executed in one or more
counterparts by some or all of the parties hereto, each of which
counterparts shall be an original and all of which together shall
constitute a single indemnification agreement. The failure of any party
listed below to execute this Indemnification Agreement, or any counterpart
hereof, shall not relieve the other signatories from their obligations
hereunder.

19. Except as set forth in paragraph 13 of this Indemnification
Agreement, the obligations and liabilities of the Indemnitors under this
Indemnification Agreement shall terminate on the earlier to occur of (i)
the date upon which the transactions described in clause (x) of paragraph 2
hereof have been consummated, (ii) the date upon which the Properties have
been sold or transferred by the Property Owning Partnerships or the
Property Owning Partnership Interests have been sold or transferred by the
Lower Tier Partnership in accordance with the provisions of the Lower Tier
Partnership Agreement, or (iii) the date upon which the interest of JMB LP
in the Upper Tier Partnership or of the Upper Tier Partnership in the Lower
Tier Partnership has been transferred pursuant to the JMB Put Right under
Section 7.7 of the partnership agreement of the Upper Tier Partnership or
the Put Right under Section 12.2C of the partnership agreement of the Lower
Tier Partnership.

20. If any term, covenant, condition or provision of this
Indemnification Agreement or the application thereof to any circumstance or
to the Indemnitors shall be invalid or unenforceable to any extent, the
remaining terms, covenants, conditions and provisions of this
Indemnification Agreement shall not be effected thereby and shall remain
valid and enforceable to the fullest extent permitted by law.

21. Notwithstanding any provision in this Indemnification Agreement,
no present or future partner, officer, director or shareholder of the
Indemnitors shall have any personal liability under this Indemnification
Agreement, provided, however, that the foregoing shall not limit or impair
any rights of Indemnitee (i) to enforce this Indemnification Agreement
against the Indemnitors and any assets of the Indemnitors, (ii) to seek and
enforce other equitable relief against the Indemnitors or against any such
partner, officer, director or shareholder, or (iii) to initiate proceedings
at law or in equity for the purpose of determining any rights of the
Indemnitee hereunder, so long as, in each such case, the same cannot result
in in personal liability of any present or future partner, officer,
director or shareholder of Indemnitors.

IN WITNESS WHEREOF, the Indemnitors have duly executed this
Indemnification Agreement the day and year first above set forth.

PROPERTY PARTNERS, L.P.
By: CARLYLE INVESTORS, INC.
as its general partner

By: ____________________
Name: Stuart C. Nathan
Title: President

CARLYLE - XIII ASSOCIATES, L.P.

By: CARLYLE INVESTORS, INC.
as its general partner

By: ______________________________
Name: Stuart C. Nathan
Title: President

CARLYLE - XIV ASSOCIATES, L.P.

By: CARLYLE INVESTORS, INC.
as its general partner

By: ______________________________
Name: Stuart C. Nathan
Title: President

EXHIBIT 10-AA
- -------------
(Manhattan)

FILED ON PAPER IN ACCORDANCE WITH RULE 201 OF REGULATION S-T,
THESE AGREEMENTS ARE BEING FILED IN PAPER PURSUANT TO A
TEMPORARY HARDSHIP EXEMPTION.

EXHIBIT 10-BB
- -------------
(Manhattan)

FILED ON PAPER IN ACCORDANCE WITH RULE 201 OF REGULATION S-T,
THESE AGREEMENTS ARE BEING FILED IN PAPER PURSUANT TO A
TEMPORARY HARDSHIP EXEMPTION.

EXHIBIT 21

LIST OF SUBSIDIARIES

The Partnership is a partner of Property Partners, L.P. which is a
partner of JMB/NYC Office Building Associates, L.P., a limited partnership,
which has an indirect limited partnership interest which equals
approximately 4.9% of the reorganized and restructured ventures owning 237
Park Avenue and 1290 Avenue of the Americas (the "Properties"). The new
ownership structure gives control of the Properties to a newly-organized
real estate investment trust which is owned primarily by holders of the
first mortgage debt which encumbered the Properties prior to the
bankruptcy. Prior to the restructuring, JMB/NYC was a member or partner in
(i) 237 Park Avenue Associates, L.L.C., a New York limited liability
company, (formerly 237 Park Avenue Associates, a New York general
partnership) which holds title to the 237 Park Avenue Building, (ii) 1290
Associates, L.L.C., a New York limited liability company, (formerly 1290
Associates, a New York general partnership) which holds title to the 1290
Avenue of the Americas Building, (all of these office buildings are in New
York, New York). The partners in the JMB/NYC Office Building Associates,
L.P. are affiliates of the General Partners of the Partnership. Reference
is made to the Notes for a description of the terms of such joint venture
partnerships. The Partnership is a 20% shareholder in Carlyle Managers,
Inc. and a 20% shareholder in Carlyle Investors, Inc., both of which are
Illinois corporations.

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996

<CASH> 1,679
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,679
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,679
<CURRENT-LIABILITIES> 1,206,604
<BONDS> 536,685
<COMMON> 0
0
0
<OTHER-SE> (5,606,448)
<TOTAL-LIABILITY-AND-EQUITY> 1,679
<SALES> 0
<TOTAL-REVENUES> 120,331
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 163,855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 123,461
<INCOME-PRETAX> (166,985)
<INCOME-TAX> 0
<INCOME-CONTINUING> 72,092,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,092,809
<EPS-PRIMARY> 69,209
<EPS-DILUTED> 69,209

</TABLE>