CARLYLE REAL ESTATE LTD PARTNERSHIP XVI, 10-K405, 1996-04-01

CARLYLE REAL ESTATE LTD PARTNERSHIP XVI
10-K405, 1996-04-01
REAL ESTATE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year
ended December 31, 1995 Commission file number 0-16516

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(Exact name of registrant as specified in its charter)

Illinois 36-3437938
(State of organization)(IRS Employer Identification No.)

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

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

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

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

None None

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

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

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

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

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

Documents incorporated by reference: None

TABLE OF CONTENTS

Page
----
PART I

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

Item 2. Properties. . . . . . . . . . . . . . . 6

Item 3. Legal Proceedings . . . . . . . . . . . 8

Item 4. Submission of Matters to a
Vote of Security Holders. . . . . . . . 8

PART II

Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters . . . . 8

Item 6. Selected Financial Data . . . . . . . . 9

Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations . . . . . . . . . 13

Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . 18

Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . 66

PART III

Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . 66

Item 11. Executive Compensation. . . . . . . . . 69

Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . 71

Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . 72

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . 72

SIGNATURES . . . . . . . . . . . . . . . . . . . . 75

PART I

ITEM 1. BUSINESS

Unless otherwise indicated all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report.

The registrant, Carlyle Real Estate Limited Partnership-XVI (the
"Partnership"), is a limited partnership formed in December of 1985 and
currently governed by the Revised Uniform Limited Partnership Act of the
State of Illinois to invest in income-producing commercial and residential
real property. On August 27, 1986, the Partnership commenced an offering
to the public of $250,000,000 (subject to increase by up to $250,000,000)
of Limited Partnership Interests (and assignee interests therein)
("Interests") pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (No. 33-3567). A total of 140,342.82534 Interests
were sold to the public at $1,000 per Interest. The holders of 76,819.23
Interests were admitted to the Partnership in 1986 and the holders of
63,523.59534 Interests were admitted to the Partnership in 1987. The
offering closed on December 31, 1987. Subsequent to admittance to the
Partnership, no holder of Interests (hereinafter, a "Holder" or "Holder of
Interests") has made any additional capital contribution. The Holders of
Interests of the Partnership share in their portion of the benefits of
ownership of the Partnership's real property investments according to the
number of Interests held.

The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or joint
venture partnership interests. The Partnership's real property investments
are located throughout the nation, and it has no real estate investments
located outside of the United States. A presentation of information about
industry segments, geographic regions, raw materials or seasonality is not
applicable and would not be material to an understanding of the
Partnership's business taken as a whole. Pursuant to the Partnership
Agreement, the Partnership is required to terminate no later than December
31, 2036. The Partnership is self-liquidating in nature. At sale of a
particular property, the net proceeds, if any, are generally distributed or
reinvested in existing properties rather than invested in acquiring
additional properties. The Partnership currently expects to conduct an
orderly liquidation of its remaining investment portfolio as quickly as
practicable and to wind up its affairs not later than December 31, 1999,
barring any unforeseen economic developments. (Reference is also made to
Note 1.)

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

SALE DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASECAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
- ---------------------- ---------- ------------------------------ ---------------------
<S> <C> <C> <C> <C>
1. Owings Mills Shopping
Center
Owings Mills
(Baltimore County),
Maryland . . . . 325,000 12/31/85 6/30/93 fee ownership of land
sq.ft. and improvements
g.l.a. (through joint venture
partnerships) (c)(g)
2. 125 Broad Street
Building
New York, New York 1,336,000 12/31/85 11/15/94 fee ownership of
sq.ft. improvements and
n.r.a. ground leasehold
interest in land
(through joint venture
partnerships)
(c)(d)(g)
3. 260 Franklin Street
Building
Boston,
Massachusetts. . 348,901 5/21/86 12% fee ownership of land
sq.ft. and improvements
n.r.a. (through joint venture
partnership) (b)(c)
4. Dunwoody Crossing
Apartments
(Phase I, II and III)
DeKalb County (Atlanta),
Georgia . . . . . 810 units 9/18/86 5% fee ownership of land
and improvements
(through joint venture
partnerships) (c)
5. NewPark Mall
Newark (Alameda County),
California . . . 423,748 12/2/86 2% fee ownership of land
sq.ft. and improvements
g.l.a. (through joint venture
partnerships) (c)

6. Blue Cross Building
Woodland Hills
(Los Angeles),
California . . . 421,716 12/18/87 11/2/93 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(g)
7. Palm Desert Town
Center
Palm Desert
(Palm Springs),
California . . . 373,000 12/23/88 20% fee ownership of
sq.ft. improvements and
g.l.a. ground leasehold
interest in land
(through joint venture
partnership) (b)(c)(d)(f)

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

(a) The computation of this percentage for properties held at
December 31, 1995 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.

(b) Reference is made to Note 3 of Notes to the 260 Franklin
Associates Statements, Note 4 and the Schedule III's to the financial
statements of 260 Franklin Associates and Consolidated Financial Statements
filed with this annual report for the current outstanding principal
balances and a description of the long-term mortgage indebtedness secured
by certain of the Partnership's real property investments.

(c) Reference is made to Note 3 for a description of the joint
venture partnership or partnerships through which the Partnership has made
this real property investment.

(d) Reference is made to Notes 3(b) and 3(h) for a description of
the leasehold interests, under ground leases, in the land on which these
real property investments are situated.

(e) Reference is made to Item 8 - Schedule III to the
Consolidated Financial Statements and the 260 Franklin Associates Financial
Statements filed with this annual report for further information concerning
real estate taxes and depreciation.

(f) Reference is made to Item 6 - Selected Financial Data for
additional operating and lease expiration data concerning this investment
property.

(g) This property has been sold. Reference is made to Note 3 for
further discussion of such sale.

</TABLE>

The Partnership's real property investments are subject to competition
from similar types of properties (including, in certain areas, properties
owned or advised by affiliates of the General Partners) in the respective
vicinities in which they are located. Such competition is generally for
the retention of existing tenants. Additionally, the Partnership is in
competition for new tenants in markets where significant vacancies are
present. Reference is made to Item 7 below for a discussion of competitive
conditions of the Partnership and certain of its significant investment
properties. Approximate occupancy levels for the properties are set forth
in the table in Item 2 below to which reference is hereby made. The
Partnership maintains the suitability and competitiveness of its properties
in its markets primarily on the basis of effective rents, tenant allowances
and service provided to tenants. In the opinion of the Corporate General
Partner of the Partnership, all the investment properties held at December
31, 1995 are adequately insured. Although there is earthquake insurance
coverage for a portion of the value of the Partnership's investment
properties, the Corporate General Partner does not believe that such
coverage for the entire replacement cost of the investment properties is
available on economic terms.

Reference is made to Note 6 and to Note 4 of Notes to 260 Franklin
Street Associates statements for a schedule of minimum lease payments to be
received in each of the next five years, and in the aggregate thereafter,
under leases in effect at certain of the Partnership's properties as of
December 31, 1995.

In November 1994, effective as of October 31, 1994, JMB/125 Broad
Building Associates, L.P. ("JMB/125"), an Illinois limited partnership,
made an agreement with its venture partners in the 125 Broad Street Company
("125 Broad") to settle their dispute regarding 125 Broad and its property.

Pursuant to the agreement, JMB/125 assigned its approximate 48.25% interest
in 125 Broad, which owns the 125 Broad Street Building and a leasehold
interest in the underlying land located in New York, New York to an
affiliate of the venture partners and released the venture partners from
any claims of JMB/125 related to 125 Broad. The Partnership owns
indirectly an approximate 40% limited partnership interest in JMB/125. An
affiliate of the Partnership owns indirectly substantially all of the
remaining interest in JMB/125. In return for the assignment, JMB/125
received an unsecured promissory note in the principal amount of $5 million
bearing simple interest at 4.5% per annum with all principal and accrued
interest due at maturity in October 1999, subject to mandatory prepayments
of principal and interest or acceleration of the maturity date under
certain circumstances. In addition, JMB/125 received a release from any
claims of certain affiliates of the venture partners and generally was to
be indemnified against any liability as a general partner of 125 Broad.
JMB/125 was also relieved of any obligation to contribute cash to 125 Broad
in the amount of its deficit capital account balance. The venture partners
subsequently filed a pre-arranged bankruptcy plan for reorganization of 125
Broad under Chapter 11 of the Bankruptcy Code in order to facilitate 125
Broad's transfer of the office building to the mortgage lender in
satisfaction of the mortgage debt and other claims. In January 1995, the
plan for reorganization was approved by the bankruptcy court, was
consummated, and the bankruptcy case was concluded. In October 1995, the
makers of the $5 million promissory note payable to JMB/125 filed for
protection from creditors under Chapter 11 of the Bankruptcy Code. JMB/125
expects to file a claim in the bankruptcy action as an unsecured creditor.
There is no assurance that JMB/125 will recover any amounts payable under
the promissory note. Reference is made to Item 7 and Note 3(b) for a
further discussion of this property.

The Partnership has no employees.

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

ITEM 2. PROPERTIES

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

The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1995 and 1994 for the Partnership's investment properties owned
during 1995:

<TABLE>
<CAPTION>
1994 1995
--------------------------------------------------
At At At At At At At At
Principal Business3/31 6/30 9/3012/31 3/31 6/30 9/30 12/31
---------------------- ---- --------- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

1. 260 Franklin Street
Building
Boston, Massachusetts Financial 99% 99% 99% 99% 99% 99% 99% 98%

2. Dunwoody Crossing
(Phase I, II and III)
Apartments
DeKalb County
(Atlanta), Georgia . Residential 91% 93% 91% 88% 93% 93% 93% 91%

3. NewPark Mall
Newark (Alameda County),
California . . . . . Retail 80% 80% 80% 81% 80% 80% 80% 80%

4. Palm Desert Town Center
Palm Desert
(Palm Springs),
California . . . . . Retail 97% 95% 96% 97% 97% 96% 93% 93%

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

Reference is made to Item 6, Item 7, Note 6 and Note 4 of Notes to 260 Franklin Street Associates statements
for further information regarding property occupancy, competitive conditions and tenant leases at the
Partnership's investment properties.

</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 1994 and 1995.

PART II

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

As of December 31, 1995, there were 16,213 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. Upon request,
the Corporate General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspects of the transaction, will be subject to negotiation by the
investor. There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Corporate General
Partner. 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. 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 distribu-
tions made to the Holders of Interests.

Reference is made to Note 5 for a discussion of the provisions of the
Partnership Agreement relating to cash distributions.

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

DECEMBER 31, 1995, 1994, 1993, 1992 AND 1991
(not covered by Independent Auditors' Report)

<CAPTION>
1995 1994 1993 1992 1991
-------------------------- ----------------------- ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . $11,621,375 11,512,558 18,822,328 20,753,488 20,600,655
======================= =========== =========== ===========
Operating loss . . . . $(1,504,289) (1,337,005) (547,401) (1,207,558) (1,909,707)
Partnership's share of
loss from operations
of unconsolidated
ventures. . . . . . . (871,169) (8,305,706) (4,852,148)(14,384,114) (8,086,449)
Venture partners' share
of ventures' operations 600,814 844,213 1,228,201 37,306 306,058
----------------------- ----------- ----------- -----------
Net operating loss . . (1,774,644) (8,798,498) (4,171,348)(15,554,366) (9,690,098)
Gain on sale or
disposition of
Partnership's
investment in
unconsolidated venture 856,750 20,162,696 2,627,427 -- --
Loss on sale of
investment property,
net of venture partner's
share . . . . . . . . -- -- (299,039) -- --
----------------------- ----------- ----------- -----------
Net earnings (loss). . $ (917,894) 11,364,198 (1,842,960) (15,554,366)(9,690,098)
======================= =========== =========== ===========
Net earnings (loss)
per interest(b):
Net operating loss . $ (12.14) (60.18) (28.53) (106.39) (66.28)
Gain on sale or
disposition of Part-
nership's investment
in unconsolidated
venture . . . . . . 6.04 142.23 18.53 -- --
Loss on sale of in-
vestment property,
net of venture
partner's share . . -- -- (2.10) -- --
----------------------- ----------- ----------- -----------
Net earnings (loss). . $ (6.10) 82.05 (12.10) (106.39) (66.28)
======================= =========== =========== ===========

1995 1994 1993 1992 1991
-------------------------- ----------------------- ------------

Total assets . . . . . $66,226,833 69,624,085 89,829,751 154,176,204 166,584,090
Long-term debt . . . . $41,485,363 41,845,394 42,164,903 96,057,742 101,538,250
Cash distributions
per Interest (d) . . $ 17.25 116.00 34.00 34.00 32.54(c)
======================= =========== =========== ===========

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

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

(b) The net earnings (loss) per Interest is based upon the limited partnership interests outstanding at the
end of each period.

(c) Pursuant to the Partnership Agreement, certain Holders of Interests received preferred distributions in
an aggregate amount per Limited Partnership Interest equal to 25% of the Excess Suspended Loss (as defined), for
such Holder's Interests. In February 1991, the remaining preferred distributions were made on such Interests of
either $2.96, $.82, $.07, or $0 per Interest to Holders of Interests. Such preferred distributions are not
included in cash distributions per Interest for the year ended December 31, 1991.

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

</TABLE>

<TABLE>

SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1995

Property
- --------

Palm Desert
Town Center a) The gross leasable area ("GLA") occupancy
rate and average base rent per square foot
as of December 31 for each of the last five
years were as follows:

GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>

1991. . . . . 97% 19.21
1992. . . . . 92% 19.51
1993. . . . . 97% 18.90
1994. . . . . 97% 19.66
1995. . . . . 93% 21.39
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square FeetPer Annum Expiration DateRenewal Option
------------------- -------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
None - No single tenant
occupies more than 10% of
the total gross leasable
area of the building.
</TABLE>

<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Palm Desert Town Center:

Annualized Percent of
Number of Approx. Total Base Rent Total 1995
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>

1996 4 6,510 147,809 2.07%
1997 13 27,595 663,660 9.30%
1998 20 40,928 1,069,858 14.99%
1999 10 29,242 622,270 8.72%
2000 5 10,164 306,648 4.30%
2001 7 22,246 642,687 9.01%
2002 5 4,857 203,120 2.85%
2003 13 22,406 793,172 11.11%
2004 15 45,480 860,424 12.06%
2005 2 10,716 405,699 5.69%
<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases with
replacement tenants have been executed as of March 25, 1996.
</TABLE>

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

LIQUIDITY AND CAPITAL RESOURCES

Capitalized terms used but not defined in this section have the same
meaning as used in the notes.

On August 27, 1986, the Partnership commenced an offering of
$250,000,000 (subject to increase by up to $250,000,000) of limited
partnership interests (and assignee interests therein) pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933. The
offering terminated on December 31, 1987. A total of 140,342.82534
Interests were issued by the Partnership and assigned to the public at
$1,000 per Interest (fractional interests are due to a Distribution
Reinvestment Program).

After deducting selling expenses and other offering costs, the
Partnership had approximately $120,541,000 with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such invest-
ments and for working capital reserves. A portion of the proceeds was
utilized to acquire the properties described in Item 1 above.

At December 31, 1995, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $13,734,000. Such cash and
cash equivalents are available for distributions to partners, capital
improvements and working capital requirements. Anticipated operating
deficits at the 260 Franklin Street office building are expected to be paid
out of the unconsolidated joint venture's restricted reserve account (with
a balance of approximately $4,992,000 at December 31, 1995). The
Partnership and its consolidated ventures have currently budgeted in 1996
approximately $475,000 for tenant improvements and other capital
expenditures. The Partnership's share of such items, including its share
of such items for its unconsolidated ventures is currently budgeted to be
approximately $665,000 inclusive of 260 Franklin. Actual amounts expended
may vary depending on a number of factors including actual leasing
activity, results of operations, liquidity considerations and other market
conditions over the course of the year. The source of capital for such
items and for both short-term and long-term future liquidity and
distributions is expected to be through net cash generated by the
investment properties, escrowed funds for 260 Franklin, the Partnership's
working capital reserve and from the sale and refinancing of such
properties. The Partnership's investment in 260 Franklin is not expected
to be a source of future liquidity. In such regard, reference is made to
the Partnership's property specific discussions below and also to the
Partnership's disclosure of certain property lease expirations in Item 6.

The Partnership's and its ventures' mortgage obligations are separate
non-recourse loans secured individually by the investment properties and
are not obligations of the entire investment portfolio, and the Partnership
and its ventures are not personally liable for the payment of the mortgage
indebtedness. For any particular investment property that is incurring
deficits, or for which the mortgage indebtedness has matured or will mature
in the near future the Partnership or its ventures may seek a modification
of the mortgage indebtedness and, in the absence of a satisfactory debt
modification, may decide, in light of the then existing and expected future
market conditions for such investment property, not to commit additional
funds to such investment property. This would result in the Partnership no
longer having an ownership interest in such property and generally would
result in taxable income to the Partnership with no corresponding
distributable proceeds.

The first mortgage loan secured by the Dunwoody Crossing Phase I and
III Apartments was scheduled to mature in October 1994. The joint venture
owning the property negotiated an extension of the mortgage loan until
November 15, 1997.

In January 1996, the venture obtained a non-binding letter of intent
to sell the Dunwoody Crossing apartment complex to an unaffiliated
prospective buyer. The agreement is subject to certain conditions
including the waiver by the Partnership's unaffiliated venture partner to
exercise its right of first opportunity to acquire the Partnership's
interest in the Dunwoody Crossing apartment complex. In March 1996, the
unaffiliated venture partner notified the Partnership of its intent to
acquire the property in accordance with the Partnership agreement and the
letter of intent of the unaffiliated prospective buyer. Although there can
be no assurance the sale will be consummated, such sale is required to
occur within 60 days of the receipt of the unaffiliated Venture Partner's
notification. If the sale is consummated in the proposed terms, the
Partnership would recognize in 1996 a gain for financial reporting and
Federal income tax purposes.

In November 1994, JMB/125 and certain affiliates of Olympia & York
Developments, Ltd. ("O&Y") reached an agreement to settle their dispute
regarding 125 Broad and its property. Under the terms of the agreement,
JMB/125 assigned its interest in 125 Broad to an affiliate of O&Y and
released its venture partners (the "O&Y partners") from any claims related
to 125 Broad. In return, JMB/125 received an unsecured promissory note in
the principal amount of $5 million bearing simple interest at 4.5% per
annum with all principal and accrued interest due at maturity in October
1999, subject to mandatory prepayments of principal and interest or
acceleration of the maturity date under certain circumstances. In
addition, JMB/125 received a release from any claims of certain O&Y
affiliates and generally was to be indemnified against any liability as a
general partner of 125 Broad. JMB/125 was also relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance. Affiliates of O&Y subsequently filed a pre-arranged
bankruptcy plan for reorganization of 125 Broad under Chapter 11 of the
Bankruptcy Code in order to facilitate 125 Broad's transfer of the office
building to the mortgage lender in satisfaction of the mortgage debt and
other claims. In January 1995, the plan for reorganization was approved by
the bankruptcy court, was consummated, and the bankruptcy was concluded.
In October 1995, the makers of the $5 million promissory note payable to
JMB/125 filed for protection from creditors under Chapter 11 of the
Bankruptcy Code. JMB/125 expects to file a claim in the bankruptcy action
as an unsecured creditor. There is no assurance that JMB/125 will recover
any amounts payable under the promissory note. The promissory note has
been fully reserved due to the uncertainty of the collectibility of the
note.

Vacancy rates in the downtown Manhattan office market have increased
significantly over the last few years. The Partnership believed that these
adverse market conditions and the negative impact on effective rental rates
would continue over the next several years. The depressed market in
downtown Manhattan had significantly affected the 125 Broad Street Building
as the occupancy had decreased to 66% at the date of assignment.
Additionally, in October 1993, 125 Broad entered into an agreement with
Salomon Brothers, Inc. to terminate its lease covering approximately
231,000 square feet (17% of the building) at the property on December 31,
1993 rather than its scheduled termination in January 1997. The low
effective rental rates expected to be achieved upon re-leasing of the space
coupled with the lower occupancy during the re-leasing period were expected
to result in the property operating at a significant deficit in 1995 and
for the next several years.

The office market in the Financial District of Boston remains
competitive due to new office building developments and layoffs, cutbacks
and consolidations by financial service companies. The effective rental
rates achieved upon re-leasing have been substantially below the rates
which were received under the previous leases for the same space. The
property is currently expected to operate at a deficit for 1996 and for
several years thereafter. In December 1991, 260 Franklin, the affiliated
joint venture, reached an agreement with the lender to modify the long-term
mortgage note secured by the 260 Franklin Street Building. The loan
modification required that the affiliated joint venture establish an escrow
account for excess cash flow from the property's operations (computed
without a deduction for property management fees and leasing commissions)
to be used to cover the cost of capital and tenant improvements and lease
inducements, which are the primary components of the anticipated operating
deficits noted above, with the balance, if any, of such escrowed funds
available at the scheduled or accelerated maturity to be used for the
payment of principal and interest due to the lender. Beginning January 1,
1992, 260 Franklin began escrowing the payment of property management fees
and lease commissions owed to an affiliate of the Corporate General Partner
pursuant to the terms of the debt modification, which is more fully
described in Note 3(d), and accordingly, such fees and commissions remained
unpaid. In 1996, the leases of tenants occupying approximately 93,000
square feet (approximately 27% of the property) at the 260 Franklin Street
Building expire. It is anticipated that there will be significant costs
related to re-leasing this space. In addition, as the long-term mortgage
loan in the principal amount of approximately $75,000,000 matured January
1, 1996, 260 Franklin as of such date began resubmitting the net operating
cash flow of the property to the lender while seeking an extension or
refinancing of the loan. Concurrent with such lender negotiations, 260
Franklin is also marketing the property for sale. However, there can be no
assurance that the joint venture will be able to sell the property or to
obtain any modification or refinancing. If 260 Franklin is unable to sell
the property or to refinance or extend the mortgage loan, the Partnership
may decide not to commit any significant additional funds. This may result
in 260 Franklin and the Partnership no longer having an ownership interest
in the property. In such event, 260 Franklin and the Partnership would
recognize a net gain for financial reporting and Federal income tax
purposes with no distributable proceeds.

In June 1993, JMB/Owings sold its interest in the Owings Mills
Shopping Center for $9,416,000 represented by a purchase price note which
requires principal and interest payments of approximately $109,000 per
month with the remaining principal balance of approximately $5,500,000 due
and payable on June 30, 1998. Reference is made to Note 3(c).

The Partnership received (through a joint venture with an affiliate)
its specified cash return relating to Palm Desert Town Center, which was
being funded in part by the unaffiliated venture partner through December
31, 1994 pursuant to the terms of the applicable joint venture agreement.
Since the unaffiliated venture partner's funding obligation has expired at
the end of 1994, the Partnership's share of cash is dependent upon the
operations of the property. During 1995 the operations of the property
were negatively affected by lower occupancy as well as decreased sales
resulting from new competition in the Center's trade area. The Center will
continue to be subject to increased competition from new developments that
are expected to be opening in the vicinity in the near future. The
Partnership is receiving cash distributions from operations of the Dunwoody
Crossings Apartments and NewPark Mall.

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

As a result of the real estate market conditions discussed above, the
Partnership continues to conserve its working capital. All expenditures
are carefully analyzed and certain capital projects are deferred when
appropriate. In an effort to reduce partnership operating expenses, the
Partnership expects to make semi-annual rather than quarterly distributions
of available operating cash flow commencing with the 1996 distributions.
The Partnership has also sought or is seeking additional loan modifications
where appropriate. By conserving working capital, the Partnership will be
in a better position to meet the future needs of its properties since the
availability of satisfactory outside sources of capital may be limited
given the portfolio's current debt levels.

Due to the real estate market conditions experienced over the past
several years, the Partnership has held its remaining investment properties
longer than originally anticipated in an effort to maximize the return of
their investment to the Limited Partners. However, after reviewing the
remaining properties and the marketplaces in which they operate, the
General Partners of the Partnership expect to be able to conduct an orderly
liquidation of its remaining investment portfolio as quickly as
practicable. As a result, the affairs of the Partnership are expected to
be wound up no later than December 31, 1999 (sooner if the properties are
sold in the near term), barring unforeseen economic developments.

However, the Partnership's goal of capital appreciation will not be
achieved. Moreover, although the Partnership expects to distribute from
sale proceeds some additional portion of the Limited Partners' original
capital, without a dramatic improvement in market conditions, the Limited
Partners will receive significantly less than their original investment.

RESULTS OF OPERATIONS

The increase in deferred expenses at December 31, 1995 as compared to
December 31, 1994 is due to the capitalization of certain leasing costs at
Palm Desert Town Center.

The decrease in security deposits at December 31, 1995 as compared to
December 31, 1994 is due to a decrease in occupancy at Palm Desert Town
Center.

The decrease in rental income, mortgage and other interest and
depreciation for the years ended December 31, 1995 and 1994 as compared to
the year ended December 31, 1993 is primarily due to the sale of the Blue
Cross Building in November 1993.

The decrease in management fees to the Corporate General Partner for
the years ended December 31, 1995 and 1994 as compared to the years ended
December 31, 1993 primarily is due to a decrease in the operating
distributions paid to the partners, a portion of which is in the form of a
management fee to the Corporate General Partner.

The increase in general and administrative expenses for the year ended
December 31, 1995 as compared to the years ended December 31, 1994 and 1993
is attributable primarily to an increase in reimbursable costs to
affiliates of the General Partners in 1995 and the recognition of certain
additional prior year reimbursable costs to such affiliates. Reference is
made to Note 7.

The decrease in Partnership's share of loss from operations of
unconsolidated ventures for the year ended December 31, 1995 as compared to
the year ended December 31, 1994 is primarily due to the assignment of the
Partnership's interest in the 125 Broad Street Building in November 1994.
(Reference is made to Note 3 (b)). The decrease is also due to the
recognition of interest income beginning the first quarter of 1995 on the
promissory note from the sale of the JMB/Owing's interest in Owings Mills.
(Reference is made to Note 3(c)).

The decrease in venture partners' share of venture operations for the
year ended December 31, 1995 as compared to the year ended December 31,
1994 is primarily due to the change in the allocation of the losses under
the venture agreement for Palm Desert commencing in January 1995.
(Reference is made to Note 3(h)).

The gain on sale of Partnership's investment in unconsolidated venture
for the year ended December 31, 1995 is due to the recognition of gain on
sale of JMB/Owing's interest in Owings Mills. (Reference is made to Note 3
(c)).

The loss on sale of investment property for the year ended December
31, 1993 is due to the sale of the Blue Cross Building in November 1993.

INFLATION

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

Inflation is not expected to significantly impact future operations
due to the expected liquidation of the Partnership by 1999. However, to
the extent that inflation in future periods would have an adverse impact on
property operating expenses, the effect would generally be offset by
amounts recovered from tenants as many of the long-term leases at the
Partnership's commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes. Therefore, the effect on operating earnings
generally will depend upon whether the properties are substantially
occupied. In addition, substantially all of the leases at the Partner-
ship's shopping center investments contain provisions which entitle the
property owner to participate in gross receipts of tenants above fixed
minimum amounts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

INDEX

Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1995 and 1994
Consolidated Statements of Operations, Years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Partners' Capital Accounts (Deficits),
Years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows, Years ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements

SCHEDULE
--------

Consolidated Real Estate and Accumulated
Depreciation . . . . . . . . . . . . . III

Schedules not filed:

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

260 FRANKLIN STREET ASSOCIATES

AN UNCONSOLIDATED VENTURE OF
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI

INDEX

Independent Auditors' Report
Balance Sheets, December 31, 1995 and 1994
Statements of Operations, Years ended December 31,
1995, 1994 and 1993
Statements of Partners' Capital Accounts (Deficits),
Years ended December 31, 1995, 1994 and 1993
Statements of Cash Flows, Years ended December 31,
1995, 1994 and 1993
Notes to Financial Statements

SCHEDULE
--------

Real Estate and Accumulated Depreciation III

Schedules not filed:

All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the combined financial statements or related notes.

INDEPENDENT AUDITORS' REPORT

The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI:

We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XVI (a limited partnership) and Consolidated
Ventures as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XVI and Consolidated Ventures at
December 31, 1995 and 1994, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1995, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.

KPMG PEAT MARWICK LLP

Chicago, Illinois
March 25, 1996

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

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1995 AND 1994

ASSETS
------
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . $ 13,734,366 14,266,786
Short-term investments (note 1). . . . . . . . . . . . . . -- 783,716
Interest, rents and other receivables, net of allowances
for doubtful accounts of approximately $619,000 and
$585,000 at December 31, 1995 and 1994, respectively . . 629,945 594,170
Prepaid expenses and other assets. . . . . . . . . . . . . 178,944 156,909
------------ ------------
Total current assets . . . . . . . . . . . . . . . 14,543,255 15,801,581
------------ ------------

Investment property, at cost (notes 2, 3 and 6(b)) - Schedule III:
Buildings and improvements . . . . . . . . . . . . . . . . 60,100,323 60,061,137
Less accumulated depreciation. . . . . . . . . . . . . . . 14,023,956 12,018,826
------------ ------------
Total investment property,
net of accumulated depreciation. . . . . . . . . 46,076,367 48,042,311

Investment in unconsolidated ventures,
at equity (notes 1, 3 and 8) . . . . . . . . . . . . . . . 2,723,887 3,318,589
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . 559,909 434,303
Notes receivable . . . . . . . . . . . . . . . . . . . . . . 205,418 247,850
Accrued rents receivable (note 1). . . . . . . . . . . . . . 2,117,997 1,779,451
------------ ------------

$ 66,226,833 69,624,085
============ ============

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

CONSOLIDATED BALANCE SHEETS - CONTINUED

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

1995 1994
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . $ 360,031 319,509
Accounts payable . . . . . . . . . . . . . . . . . . . . . 526,743 478,173
Accrued interest . . . . . . . . . . . . . . . . . . . . . 511,832 464,383
------------ ------------
Total current liabilities. . . . . . . . . . . . . 1,398,606 1,262,065
Tenant security deposits . . . . . . . . . . . . . . . . . . 47,950 78,406
Ground rent payable (note 6(b)). . . . . . . . . . . . . . . 1,059,000 889,727
Investment in unconsolidated ventures, at equity
(notes 1, 3 and 8) . . . . . . . . . . . . . . . . . . . . 6,274,627 5,669,281
Long-term debt, less current portion (note 4). . . . . . . . 41,485,363 41,845,394
------------ ------------
Commitments and contingencies (notes 3, 4, 6 and 7)
Total liabilities. . . . . . . . . . . . . . . . . 50,265,546 49,744,873
Venture partners' subordinated equity in ventures. . . . . . 4,190,839 4,676,235
Partners' capital accounts (deficits) (note 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net losses. . . . . . . . . . . . . . . . . (3,191,849) (3,129,431)
Cash distributions (note 7). . . . . . . . . . . . . . (1,394,169) (1,300,486)
------------ ------------
(4,566,018) (4,409,917)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . 120,541,353 120,541,353
Cumulative net losses. . . . . . . . . . . . . . . . . (59,093,511) (58,238,035)
Cash distributions . . . . . . . . . . . . . . . . . . (45,111,376) (42,690,424)
------------ ------------
16,336,466 19,612,894
------------ ------------
Total partners' capital accounts . . . . . . . . . 11,770,448 15,202,977
------------ ------------
$ 66,226,833 69,624,085
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . $10,812,438 10,747,381 18,045,896
Interest income. . . . . . . . . . . . . . 808,937 765,177 776,432
----------- ----------- -----------
11,621,375 11,512,558 18,822,328
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . 5,100,070 5,101,979 9,469,227
Depreciation . . . . . . . . . . . . . . . 2,005,130 2,006,856 4,021,646
Property operating expenses. . . . . . . . 5,123,395 4,913,419 4,873,173
Professional services. . . . . . . . . . . 302,029 281,667 291,195
Amortization of deferred expenses. . . . . 101,973 122,800 105,969
Management fees to corporate general
partner (note 7) . . . . . . . . . . . . 112,427 155,942 331,376
General and administrative . . . . . . . . 380,640 266,900 277,143
----------- ----------- -----------
13,125,664 12,849,563 19,369,729
----------- ----------- -----------
Operating loss. . . . . . . . . . . . (1,504,289) (1,337,005) (547,401)
Partnership's share of loss from operations
of unconsolidated ventures (notes 3 and 8) (871,169) (8,305,706) (4,852,148)
Venture partners' share of ventures' operations
(note 3) . . . . . . . . . . . . . . . . 600,814 844,213 1,228,201
----------- ----------- -----------
Net operating loss. . . . . . . . . . (1,774,644) (8,798,498) (4,171,348)
Gain on sale or disposition of Partnership's
investment in unconsolidated venture
(note 3(c) and (b)). . . . . . . . . . . . 856,750 20,162,696 2,627,427
Loss on sale of investment property,
net of venture partner's share of gain of
$261,656 (note 3(g)) . . . . . . . . . . . -- -- (299,039)
----------- ----------- -----------
Net earnings (loss) . . . . . . . . . $ (917,894) 11,364,198 (1,842,960)
=========== =========== ===========

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

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

1995 1994 1993
------------ ------------ ------------

Net earnings (loss) per limited
partnership interest (note 1):
Net operating loss. . . . . . . . . $ (12.14) (60.18) (28.53)
Gain on sale or disposition of
Partnership's investment in
unconsolidated venture. . . . . . 6.04 142.23 18.53
Loss on sale of investment property -- -- (2.10)
----------- ----------- -----------
Net earnings (loss) . . . . . $ (6.10) 82.05 (12.10)
=========== =========== ===========

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

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

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ ------------------------------------------------------
CONTRIBU-
TIONS, NET
OF OFFERING
COSTS AND NET
CONTRI- CASH PURCHASE INCOME CASH
BUTIONS NET LOSS DISTRIBUTIONS TOTAL DISCOUNTS (LOSS) DISTRIBUTIONS TOTAL
-------- ----------------------- -------- ----------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
Decem-
ber 31,
1992. . . $20,000(2,835,548) (26,517) (2,842,065)120,541,353 (68,053,156)(21,638,273)30,849,924
Net loss .-- (143,570) -- (143,570) -- (1,699,390) -- (1,699,390)
Cash distri-
butions
($34.00 per
limited
partnership
interest
(note 1))-- -- (149,119) (149,119) -- -- (4,771,830) (4,771,830)
------- ---------- ------- --------------------- ---------------------- ----------
Balance
(deficit)
Decem-
ber 31,
1993. . .20,000(2,979,118) (175,636) (3,134,754)120,541,353 (69,752,546)(26,410,103)24,378,704

Net earnings
(loss). . -- (150,313) -- (150,313) -- 11,514,511 -- 11,514,511
Cash distri-
butions
($116.00 per
limited
partnership
interest
(note 1)) -- -- (1,124,850) (1,124,850) -- -- (16,280,321)(16,280,321)
------- ---------- ---------- --------------------- ---------------------- ----------

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

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

GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ ------------------------------------------------------
CONTRIBU-
TIONS, NET
OF OFFERING
COSTS AND NET
CONTRI- CASH PURCHASE INCOME CASH
BUTIONS NET LOSS DISTRIBUTIONS TOTAL DISCOUNTS (LOSS) DISTRIBUTIONS TOTAL
-------- ----------------------- -------- ----------- ----------------------------------
Balance
(deficit)
Decem-
ber 31,
1994. . .20,000(3,129,431) (1,300,486) (4,409,917)120,541,353 (58,238,035)(42,690,424)19,612,894

Net earnings
(loss). . -- (62,418) -- (62,418) -- (855,476) -- (855,476)
Cash distri-
butions
($17.25 per
limited
partnership
interest
(note 1)) -- -- (93,683) (93,683) -- -- (2,420,952) (2,420,952)
------- ---------- ---------- --------------------- ---------------------- ----------
Balance
(deficit)
Decem-
ber 31,
1995. . .$20,000(3,191,849)(1,394,169) (4,566,018)120,541,353 (59,093,511)(45,111,376)16,336,466
======= ========== ========== ===================== ====================== ==========

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

<TABLE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . $ (917,894) 11,364,198 (1,842,960)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . 2,005,130 2,006,856 4,021,646
Amortization of deferred expenses. . . . 101,973 122,800 105,969
Partnership's share of loss from operations
of unconsolidated ventures . . . . . . 871,169 8,305,706 4,852,148
Venture partners' share of ventures'
operations and gain on sale. . . . . . (600,814) (844,213) (966,545)
Loss on sale of investment property. . . -- -- 37,383
Gain on sale or disposition of Partner-
ship's investment in unconsolidated
venture. . . . . . . . . . . . . . . . (856,750) (20,162,696) (2,627,427)
Changes in:
Interest, rents and other receivables. (35,775) 416,123 (60,188)
Prepaid expenses and other assets. . . (22,035) 45,617 (26,009)
Notes receivable . . . . . . . . . . . 42,432 44,274 120,897
Accrued rents receivable . . . . . . . (338,546) (593,954) (231,937)
Accounts payable . . . . . . . . . . . 48,570 (1,597,627) (20,698)
Accrued interest . . . . . . . . . . . 47,449 20,168 (522,672)
Tenant security deposits . . . . . . . (30,456) (770) (9,644)
Ground rent payable. . . . . . . . . . 169,273 296,979 115,968
----------- ----------- ----------
Net cash provided by
(used in) operating
activities . . . . . . . . . . . 483,726 (576,539) 2,945,931
----------- ----------- ----------

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
------------ ----------- -----------
Cash flows from investing activities:
Cash proceeds from sale of investment
property, net of selling expenses
(note 3(g)). . . . . . . . . . . . . . . -- -- 22,424,531
Net sales and maturities (purchases)
of short-term investments. . . . . . . . 783,716 31,834,767 (16,317,252)
Additions to investment properties . . . . (39,186) (580) (263,742)
Payment of deferred expenses . . . . . . . (227,579) (221,427) (158,786)
Partnership's distributions from
unconsolidated ventures. . . . . . . . . 1,320,630 1,187,740 1,097,566
Partnership's contributions to
unconsolidated ventures. . . . . . . . . (135,000) (250,250) (30,990)
----------- ----------- ----------
Net cash provided by
investing activities . . . . . . 1,702,581 32,550,250 6,751,327
----------- ----------- ----------
Cash flows from financing activities:
Principal payments on long-term debt . . . (319,509) (283,548) (5,480,508)
Venture partners' distributions from venture (21,679) (1,176,151) (5,652,116)
Venture partners' contributions to venture 137,096 871,808 6,056,277
Distributions to limited partners. . . . . (2,420,952) (16,280,321) (4,771,830)
Distributions to general partners. . . . . (93,683) (1,124,850) (149,119)
----------- ----------- ----------
Net cash used in financing activities (2,718,727) (17,993,062) (9,997,296)
----------- ----------- ----------
Net increase (decrease) in cash
and cash equivalents . . . . . . (532,420) 13,980,649 (300,038)
Cash and cash equivalents,
beginning of the year. . . . . . 14,266,786 286,137 586,175
----------- ----------- ----------
Cash and cash equivalents,
end of the year. . . . . . . . . $13,734,366 14,266,786 286,137
=========== =========== ==========

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
------------ ----------- -----------
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest. $ 5,052,621 5,081,811 9,991,899
=========== =========== ==========

Non-cash investing and financing activities:
Total sales price of investment property,
net of selling expenses. . . . . . . . $ -- -- 76,033,823
Mortgage loan payable assumed by buyer . -- -- (53,609,292)
----------- ----------- ----------
Cash proceeds from sale of
investment property,
net of selling expenses. . . . . $ -- -- 22,424,531
=========== =========== ==========

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

(1) OPERATIONS AND BASIS OF ACCOUNTING

The Partnership holds (through joint ventures) an equity investment
portfolio of United States real estate. Business activities consist of
rentals to a wide variety of commercial and retail companies, and the
ultimate sale or disposition of such real estate. The Partnership
currently expects to conduct an orderly liquidation of its remaining
investment portfolio and wind up its affairs not later than December 31,
1999.

The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated ventures, JMB/Warner
Center Associates ("JMB/Warner") (note 3(g)) and JMB/Hahn PDTC Associates,
L.P. ("Palm Desert") (note 3(h)). The effect of all transactions between
the Partnership and its ventures has been eliminated. The Partnership,
through JMB/Warner, sold the Blue Cross Building in November 1993.

The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interests (notes 3 and 8) in JMB/Owings Mills Associates ("JMB/Owings");
260 Franklin Street Associates ("260 Franklin"); Villages Northeast
Associates ("Villages Northeast"); JMB/NewPark Associates ("JMB/NewPark");
and its indirect ownership of JMB/125 Broad Building Associates, L.P.
("JMB/125"). The Partnership through JMB/Owings, sold its interest in
Owings Mills Mall in June 1993. In November 1994, the Partnership through
its indirect ownership of JMB/125 assigned its interest in the 125 Broad
Street Building.

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 reflect the Partnership's accounts
in accordance with generally accepted accounting principles ("GAAP") and to
consolidate the accounts of the ventures as described above. 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, 1995 and 1994 is summarized as follows:

1995 1994
--------------------------------------------------------------
TAX BASIS
GAAP BASIS (Unaudited) GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . $66,226,833 77,844,338 69,624,085 83,120,637

Partners' capital accounts
(deficits):
General partners . . . . . (4,566,018) (2,739,422) (4,409,917) (2,701,818)
Limited partners . . . . . 16,336,466 32,851,602 19,612,894 37,383,376

Net earnings (loss):
General partners . . . . . (62,418) 56,080 (150,313) 2,683,078
Limited partners . . . . . (855,476) (2,110,821) 11,514,511 9,409,237

Net earnings (loss) per
limited partnership
interest . . . . . . . . . . (6.10) (15.04) 82.05 67.04
=========== ========== =========== ===========

</TABLE>

The net loss per limited partnership interest is based upon the number
of limited partnership interests outstanding at the end of the period.
Deficit capital accounts will result, through the duration of the
Partnership, in net gain for financial reporting and income tax purposes.

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.

Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations at cost, which approximates
market. For the purposes of these statements, the Partnership's policy is
to consider all such amounts held with original maturities of three months
or less ($13,734,000 and $14,137,500 at December 31, 1995 and 1994,
respectively) as cash equivalents with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.

Deferred expenses are comprised of loan fees which are amortized over
the term of the related loan and lease commissions which are amortized over
the terms of the related leases using the straight-line method.

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

Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires all
entities to disclose the SFAS 107 value of all financial assets and
liabilities for which it is practicable to estimate. Value is defined in
the Statement as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes the carrying amount of its
financial instruments classified as current assets and liabilities
(excluding current portion of long-term debt) approximates SFAS 107 value
due to the relatively short maturity of these instruments. There is no
quoted market value available for any of the Partnership's other
instruments. The debt, with a carrying balance of $41,845,394, has been
calculated to have an SFAS 107 value of $58,104,098 by discounting the
scheduled loan payments to maturity. Due to restrictions on
transferability and prepayment and the inability to obtain comparable
financing due to current levels of debt, previously modified debt terms or
other property specific competitive conditions, the Partnership would be
unable to refinance these properties to obtain such calculated debt amounts
reported. (See note 4.) The Partnership has no other significant
financial instruments.

Certain amounts in the 1994 and 1993 consolidated financial statements
have been reclassified to conform to the 1995 presentation.

No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been or
may be required under applicable law to remit directly to the tax
authorities amounts representing withholding from distributions paid to
partners.

(2) INVESTMENT PROPERTIES

The Partnership acquired, through joint ventures, interests in three
contiguous apartment complexes, three office buildings and three shopping
centers. During 1993, the Partnership, through JMB /Warner, sold its
interest in the Blue Cross Building and, through JMB/Owings, its interest
in Owings Mills Mall (notes 3(g) and (c)). During 1994, the Partnership,
through its indirect ownership of JMB/125, assigned its interest in the 125
Broad Street Building (note 3(b)). All of the properties owned at December
31, 1995 were in operation. The cost of the investment properties
represents the total cost to the Partnership or its ventures plus
miscellaneous acquisition costs.

Depreciation on the consolidated investment property has been provided
over the estimated useful lives of 5 to 30 years using the straight-line
method.

Maintenance and repair expenses are charged to operations as incurred.

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

During March 1995, Statement of Financial Accounting Standards No. 121
("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued. SFAS 121, when effective,
will require that the Partnership record an impairment loss on its long-
lived assets to be held and used whenever their carrying value cannot be
fully recovered through estimated undiscounted future cash flows from
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the long-lived asset's carrying value and
the asset's estimated fair value. Any long-lived assets identified as "to
be disposed of" would no longer be depreciated. Adjustments for impairment
loss would be made in each period as necessary to report these assets at
the lower of carrying value and fair value less costs to sell. In certain
situations, such estimated fair value could be less than the existing non-
recourse debt which is secured by the property. There would be no
assurance that any estimated fair value of these assets would ultimately be
obtained by the Partnership in any future sale or disposition transaction.

Under the current impairment policy, provisions for value impairment
are recorded with respect to investment properties whenever the estimated
future cash flows from a property's operations and projected sale are less
than the property's net carrying value. The amount of any such impairment
loss recognized by the Partnership is limited to the excess, if any, of the
property's carrying value over the outstanding balance of the property's
non-recourse indebtedness. An impairment loss under SFAS 121 would be
determined without regard to the nature or the balance of such non-recourse
indebtedness. Upon the disposition of a property with the related
extinguishment of the long-term debt for which an impairment loss has been
recognized under SFAS 121, the Partnership would recognize, at a minimum, a
net gain (comprised of gain on extinguishment of debt and gain or loss on
sale or disposition of property) for financial reporting purposes to the
extent of any excess of the then outstanding balance of the property's non-
recourse indebtedness over the then carrying value of the property,
including the effect of any reduction for impairment loss under SFAS 121.

The Partnership will adopt SFAS 121 as required in the first quarter
of 1996. Based upon the Partnership's current assessment of the full
impact of adopting SFAS 121, it is anticipated that a provision for value
impairment would be required for 260 Franklin Street Associates. Such
provision, would be approximately $17,400,000 in the first period of
implementation of SFAS 121. In addition, upon the disposition of an
impaired property, the Partnership would generally recognize more net gain
under SFAS 121 than it would have under the Partnership's current
impairment policy, without regard to the amount, if any, of cash proceeds
received by the Partnership in connection with the disposition. Although
implementation of this new accounting statement could significantly impact

the Partnership's reported earnings, there would be no impact on cash
flows. Further, any such impairment loss would not be recognized for
Federal income tax purposes. 260 Franklin Street and the Dunwoody
properties have been identified as properties to be disposed of and may not
be depreciated in future years.

The investment properties are pledged as security for the long-term
debt, for which generally there is no recourse to the Partnership.

(3) VENTURE AGREEMENTS

(a) General

The Partnership entered into five joint venture agreements
(JMB/Owings, JMB/125, 260 Franklin, Villages Northeast and JMB/NewPark)
directly or indirectly with Carlyle Real Estate Limited Partnership - XV
("Carlyle-XV") (and for JMB/125, Carlyle Advisors, Inc.), and one (Palm
Desert) with Carlyle Real Estate Limited Partnership-XVII ("Carlyle-XVII"),
Carlyle-XV and Carlyle-XVII are each sponsored by the Corporate General
Partner. The terms of these affiliated joint venture agreements provide,
in general, that the benefits and obligations of ownership, including tax
effects, net cash receipts and net sale and refinancing proceeds and
capital contribution obligations, are allocated or distributed, as the case
may be, between the Partnership and the affiliated partner in proportion to
their respective capital contributions to the affiliated venture. Pursuant
to such agreements, the Partnership made capital contributions aggregating
$137,940,218 through December 31, 1995.

Certain of these affiliated partnerships have entered into joint
venture agreements with unaffiliated joint venture partners. In general,
the unaffiliated joint venture partners, who are either the sellers (or
their affiliates) of the property investments acquired or parties which
have contributed an interest in the property developed, or were
subsequently admitted to the ventures, made no cash contributions to the
ventures, but their retention of an interest in the property, through the
joint venture, is taken into account in determining the purchase price of
the Partnership's interest, which was determined by arm's-length
negotiations. Under certain circumstances, either pursuant to the venture
agreements or due to the Partnership's obligations as general partner, the
Partnership may be required to make additional cash contributions to the
ventures.

The Partnership acquired, through the above ventures, three apartment
complexes, three office buildings and three shopping centers. In 1993, the
Partnership through JMB/Owings sold its interest in Owings Mills Mall and
through JMB/Warner sold the Blue Cross Building (notes c and g below). In
1994, the Partnership through its indirect ownership of JMB/125 assigned
its interest in the 125 Broad Street Building (note b below). Certain of
the ventures' properties have been financed under various long-term debt
arrangements as described in note 4 and in note 3 of Notes to Financial
Statements of 260 Franklin Street Associates filed with this report.

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

(b) JMB/125

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

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

JMB/125 was a joint venture between Carlyle-XVI Associates, L.P. (in
which the Partnership held a 99% limited partnership interest), Carlyle-XV
Associates, L.P. and Carlyle Advisors, Inc. The Partnership held,
indirectly through Carlyle-XVI Associates, L.P., an approximate 40% limited
partnership interest in JMB/125. The general partner in each of JMB/125
and Carlyle-XVI Associates, L.P. is an affiliate of the Partnership. For
financial reporting purposes, profits and losses of JMB/125 are generally
allocated 40% to the Partnership. The terms of the JMB/125 venture
agreement generally provide that JMB/125's share of 125 Broad's annual cash
flow and sale or refinancing proceeds would be distributed or allocated to
the Partnership in proportion to its (indirect) approximate 40% share of
capital contributions to JMB/125.

JMB/125 acquired an approximately 48.25% interest in 125 Broad for a
purchase price of $16,000,000, subject to a first mortgage loan. The first
mortgage loan (in the principal amount of $277,410,516) bore interest at a
rate of 10-1/8% per annum payable in semi-annual interest only payments and
was to mature on December 27, 1995. JMB/125 also contributed $14,055,500
to 125 Broad to be used for working capital purposes and to pay an
affiliate of O&Y for its assumption of JMB/125's share of the obligations
incurred by 125 Broad under the "takeover space" agreement described below.

In addition, JMB/125 contributed $24,222,042, plus interest thereon of
approximately $1,089,992, on June 30, 1986 for working capital purposes.
Thus, JMB/125's original cash investment (exclusive of acquisition costs)
was $55,367,534, of which the Partnership's share was approximately
$22,147,000. The land underlying the office building was subject to a
ground lease which has a term through June 2067 and provided for annual
rental payments of $1,075,000.

The partnership agreement of 125 Broad, as amended, provided that the
O&Y partners were obligated to make advances to pay operating deficits
incurred by 125 Broad from the earlier of 1991 or the achievement of a 95%
occupancy rate of the office building through 1995. In addition, from
closing through 1995, the O&Y partners were required to make capital
contributions to 125 Broad for the cost of tenant improvements and leasing
expenses up to certain specified amounts and to make advances to 125 Broad
to the extent such costs exceed such specified amounts and such costs are
not paid for by the working capital provided by JMB/125 or the cash flow of
125 Broad. The amount of all costs for such tenant improvements and
leasing expenses over the specified amounts and the advances for operating
deficits from the earlier of the achievement of a 95% occupancy rate of the
office building or 1991 were treated by 125 Broad as non-recourse loans
bearing interest, payable monthly, at the floating prime rate of an
institutional lender. Due to a major tenant vacating in 1991 and the O&Y
affiliates' default under the "takeover space" agreement, the property
operated at a deficit in 1994 and was expected to operate at a deficit for
the next several years. Such deficits were required to be funded by
additional loans from the O&Y partners, although as discussed below the O&Y
partners had been in default of such funding obligation since June 1992.
The outstanding principal balance and any accrued and unpaid interest on
such loans were to be payable from 125 Broad's annual cash flow or net sale

or refinancing proceeds, as described below. Any unpaid principal of such
loans and any accrued and unpaid interest thereon were to be due and
payable on December 31, 2000. JMB/125 and the O&Y partners were obligated
to make capital contributions, in proportion to their respective interests
in 125 Broad, in amounts sufficient to enable 125 Broad to pay any excess
expenditures not covered by the capital contributions or advances of the
O&Y partners described above.

On November 15, 1994, effective as of October 31, 1994, JMB/125 and
certain affiliates of O&Y reached an agreement to settle their disputes
regarding 125 Broad and its property. Under the terms of the agreement,
JMB/125 assigned its interest in 125 Broad to an affiliate of O&Y and
released the O&Y partners from any claims related to 125 Broad. In return,
JMB/125 received an unsecured promissory note in the principal amount of $5
million bearing simple interest at 4.5% per annum with all principal and
accrued interest due at maturity in October 1999, subject to mandatory
prepayments of principal and interest or acceleration of the maturity date
under certain circumstances. As of December 31, 1994, the note has been
fully reserved for by JMB/125. In addition, JMB/125 received a release
from any claims of certain O&Y affiliates and will generally be indemnified
against any liability as a general partner of 125 Broad. JMB/125 was also
relieved of any obligation to contribute cash to 125 Broad in the amount of
its deficit capital account balance. Affiliates of O&Y subsequently filed
a prearranged bankruptcy plan for reorganization of 125 Broad under Chapter
11 of the Bankruptcy Code in order to facilitate 125 Broad's transfer of
the office building to the mortgage lender in satisfaction of the mortgage
debt and other claims. In January 1995, the plan for reorganization was
approved by the bankruptcy court, was consummated, and the bankruptcy case
was concluded. As a result of the assignment of its interest, JMB/125 no
longer has an ownership interest in the office building and recognized in
1994 gains of $53,412,105 and $49,616,240 for financial reporting and
Federal income tax purposes, respectively. The Partnership's share of such
gains was $20,162,696 and $17,786,455 for financial reporting and Federal
income tax purposes, respectively. In October 1995, the makers of the $5
million promissory note payable to JMB/125 filed for protection from
creditors under Chapter 11 of the Bankruptcy Code. JMB/125 expects to file
a claim in the bankruptcy action as an unsecured creditor. There is no
assurance that JMB/125 will recover any amounts payable under the
promissory note.

In October 1993, 125 Broad entered into an agreement with Salomon
Brothers, Inc. to terminate its lease covering approximately 231,000 square
feet (17% of the building) at the property on December 31, 1993 rather than
its scheduled termination in January 1997. In consideration for the early
termination of the lease, Salomon Brothers, Inc. paid 125 Broad
approximately $26,500,000, plus interest thereon of approximately $200,000,
which 125 Broad in turn paid its lender to reduce amounts outstanding under
the mortgage loan. In addition, Salomon Brothers, Inc. paid JMB/125
$1,000,000 in consideration of JMB/125's consent to the lease termination.

Due to the O&Y partners' previous failure to advance necessary funds
to 125 Broad as required under the joint venture agreement, 125 Broad in
June 1992 defaulted on its mortgage loan by failing to pay approximately
$4,722,000 of the semi-annual interest payment due on the loan. As a
result of this default, the loan agreement provided for a default interest
rate of 13-1/8% per annum on the unpaid principal amount. In addition,
during 1992 affiliates of O&Y defaulted on a "takeover space" agreement
with Johnson & Higgins, Inc. ("J&H"), one of the major tenants at the 125
Broad Street Building, whereby such affiliates of O&Y agreed to assume
certain lease obligations of J&H at another office building in
consideration of J&H's leasing space in the 125 Broad Street Building. As
a result of this default, J&H offset rent payable to 125 Broad for its
lease at the 125 Broad Street Building in the amount of approximately
$43,500,000 through the date of JMB/125's assignment of its interest in 125
Broad, and it was expected that J&H would continue to offset amounts due
under its lease corresponding to amounts by which the affiliates of O&Y

were in default under the "takeover space" agreement. As a result of the
O&Y affiliates' default under the "takeover space" agreement and the
continuing defaults of the O&Y partners to advance funds to cover operating
deficits, as of the date of assignment, the arrearage under the mortgage
loan had increased to approximately $69,447,000. As discussed above,
approximately $26,700,000 was remitted to the lender in October 1993 in
connection with the early termination of the Salomon Brothers lease, and
was applied towards mortgage principal for financial reporting purposes.
Due to their obligations relating to the "takeover space" agreement, the
affiliates of O&Y were obligated for the payment of the rent receivable
associated with the J&H lease at the 125 Broad Street Building. Based on
the continuing defaults of the O&Y partners, 125 Broad provided loss
reserves for the entire rent offset by J&H, $14,900,000, $19,300,000 and
$9,300,000 in 1994, 1993 and 1992, respectively, and also reserved
approximately $32,600,000 in 1992 of accrued rents receivable relating to
such J&H lease, since the ultimate collectability of such amounts depends
upon the O&Y partners' and the O&Y affiliates' performance of their
obligations. The Partnership's share of such losses was approximately
$2,875,000, $3,725,000 and $8,106,000 for the years ended December 31,
1994, 1993 and 1992, respectively, and was included in the Partnership's
share of loss from operations of unconsolidated venture.

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

Operating profits and losses of Owings Mills, in general, were
allocable 40% to JMB/Owings and 60% to the unaffiliated joint venture
partners. JMB/Owings had a cumulative preferred interest in net cash
receipts (as defined) from the property. After JMB/Owings received its
preferential return, the unaffiliated joint venture partners were entitled
to a non-cumulative return on their interest in Owings Mills; additional
net cash receipts were to be shared in a ratio relating to the various
ownership interests of JMB/Owings and its unaffiliated joint venture
partners. JMB/Owings also had preferred positions (related to JMB/Owings's
cash investment in Owings Mills) with respect to distribution of net sale
or refinancing proceeds from Owings Mills.

On June 30, 1993, JMB/Owings sold its partnership interest in Owings
Mills to an affiliate of the Partnership's unaffiliated joint venture
partners. The sale price of the interest was $9,416,000, all of which was
received in the form of a promissory note. In addition, the Partnership
and Carlyle-XV were relieved of their allocated portion of the debt secured
by the property. The promissory note (which is secured by a guaranty from
an affiliate of the purchaser and of the Partnership's unaffiliated joint
venture partner) bears interest at a rate of 7% per annum subject to
increase to 8% per annum for the remainder of the term of the note. The
promissory note requires principal and interest payments of approximately
$109,000 per month with the remaining principal balance of approximately
$5,500,000 due and payable on June 30, 1998. The monthly installment of
principal and interest would be adjusted for the increase in the interest
rate if applicable. Early prepayment of the promissory note may be
required under certain circumstances including the sale or further
encumbrance of Owings Mills Mall.

The net cash proceeds and gain from sale of the interest was allocated
50% to the Partnership and 50% to Carlyle-XV in accordance to the
JMB/Owings partnership agreement. For financial reporting purposes,
JMB/Owings recognized, on the date of sale, gain of $5,254,855, of which
the Partnership's share was $2,627,427, attributable to JMB/Owings being
relieved of its obligations under the Owings Mills partnership agreement

pursuant to the terms of the sale agreement. JMB/Owings adopted the cost
recovery method until such time as the purchaser's initial investment was
sufficient in order to recognize additional gain under Statement of
Financial Accounting Standards No. 66 ("SFAS 66"). At December 31, 1994,
the total deferred gain of JMB/Owings including principal and interest
payments of $1,858,572 received and distributed through December 31, 1994
was $10,305,310 of which the Partnership's share was $5,152,655. As
JMB/Owings collected a sufficient amount of the purchaser's initial
investment, at March 31, 1995, the joint venture adopted the installment
method for the recognition of the remaining deferred gain. JMB/Owings
recognized $1,713,501 of deferred gain and $1,501,936 of interest income
for the year ended December 31, 1995, of which the Partnership's share was
$856,750 and $750,968, respectively.

The shopping center was managed by an affiliate of the developer under
a long-term agreement for a fee equal to 3-1/2% of the gross receipts of
the property.

(d) 260 Franklin

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

The property is currently subject to a first mortgage loan in the
original principal amount of $75,000,000. 260 Franklin's original cash
investment (exclusive of acquisition costs) was approximately $35,000,000
of which the Partnership's share was approximately $10,500,000.

An affiliate of the General Partner managed the property until
December 1994 for a fee computed at 3% of the property's gross receipts.
Beginning January 1, 1992, 260 Franklin Street is escrowing the payment of
property management fees and leasing commissions to the affiliate pursuant
to the terms of the debt modification described below. The property is
currently managed by the purchaser of the affiliate's assets on the same
terms provided in the property management agreement, with the payment of
the management fees guaranteed by an affiliate of the General Partners.
Reference is made to Note 7.

The office market in the Financial District of downtown Boston remains
competitive due to new office building developments and layoffs, cutbacks
and consolidations by many of the financial service companies which, along
with related businesses, dominate this sub-market. Due to the competitive
nature of the Boston office market, various rental concessions and lower
effective rates have been required to facilitate leasing at the property.
The property is currently expected to operate at a deficit for 1996 and for
several years thereafter. The effective rental rates achieved on renewals
and expansions of leases and those achieved or to be achieved on re-leasing
of vacant space are substantially below the rates received under previous
leases for the same space. In 1996, the leases of tenants occupying
approximately 93,000 square feet (approximately 27% of the property) at the
260 Franklin Street Building expire. It is anticipated that there will be
significant cost related to re-leasing this space.

The long-term mortgage loan in the original principal amount of
approximately $75,000,000 matured January 1, 1996. 260 Franklin, as of
such date, began submitting the net operating cash flow of the property to
the lender while seeking an extension or refinancing of the loan.
Concurrent with such lender negotiations, 260 Franklin is also marketing
the property for sale. However, there can be no assurance that the joint
venture will be able to sell the property or to obtain any such
modification or extension. If 260 Franklin is unable to sell the property
or to refinance or extend the mortgage loan, the Partnership may decide not
to commit any significant additional funds. This may result in 260
Franklin and the Partnership no longer having an ownership interest in the
property. This would result in 260 Franklin and the Partnership
recognizing a gain for financial reporting and Federal income tax purposes
with no distributable proceeds.

The long-term mortgage note secured by the 260 Franklin Street
Building, as modified in December 1991, provided for monthly payments of
interest only based upon the then outstanding balance at a rate of 8% per
annum. Upon maturity, 260 Franklin was obligated to pay an amount
sufficient to provide the lender with an 11% per annum yield on the
mortgage note from January 1, 1991. In addition, upon maturity, 260
Franklin was obligated to pay to the lender a residual interest amount
equal to 60% of the highest amount, if any, of (i) net sales proceeds, (ii)
net refinancing proceeds, or (iii) net appraisal value, as defined. 260
Franklin has been required to (i) escrow excess cash flow from operations
(computed without a deduction for property management fees and leasing
commissions to an affiliate), beginning in 1991, to cover future cash flow
deficits, (ii) make an initial contribution to the escrow account of
$250,000, of which the Partnership's share was $75,000, and (iii) make
annual escrow contributions, through January 1995, of $150,000, of which
the Partnership's share is $45,000. The escrow account ($4,991,910 at
December 31, 1995 including accrued interest) was to be used to cover the
cost of capital and tenant improvements and lease inducements
(approximately $3,083,000 used as of December 31, 1995) as defined, with
the balance, if any, of such escrowed funds available at the scheduled or
accelerated maturity to be used for the payment of principal and interest
due to the lender as described above.

(e) Villages Northeast

In September 1986, the Partnership, through the Villages Northeast
joint venture partnership, acquired through a joint venture ("Post
Associates") with an affiliate of the developer, an interest in three
apartment complexes known as the Dunwoody Crossing (Phase I, II and III)
Apartments, respectively, located near Atlanta, Georgia.

Villages Northeast acquired its interest in the apartment complexes
from an affiliate of the developer subject to an existing first mortgage
loan secured by the Dunwoody Crossing (Phase II).

As contemplated at the time of acquisition, in September 1987 an
additional mortgage loan funded in the amount of $21,000,000 secured by the
Dunwoody (Phase I and III) Apartments. After such financing, Villages
Northeast's cash investment was approximately $15,398,000, of which the
Partnership's share was approximately $4,619,000. The Phase I and III note
bore interest at a rate of 9.75% and required monthly debt service payments
of $180,425 representing principal and interest until October 1, 1994, when
the entire outstanding balance of principal of $20,692,324 and any unpaid
interest was due. Villages Northeast negotiated an extension of the
mortgage loan until December 15, 1994 and then reached an agreement with
the existing lender for a new loan, which requires monthly payments of
principal and interest (8.65% per annum) of $171,737 beginning February 15,
1995 and continuing through November 15, 1997, when the remaining balance
will be payable. The Dunwoody (Phase II) Apartments currently secure a
$9,800,000 first mortgage loan, bearing interest of 7.64% per annum,
requiring monthly payments of principal and interest of $73,316 through
November 1, 1997, when the remaining balance is payable.

Villages Northeast is entitled to a cumulative preferred return of
annual net cash receipts (as defined) from the properties. Villages
Northeast has received cash distributions from property operations through
December 31, 1995. After Villages Northeast receives its preferential
return, the unaffiliated venture partner is entitled to a non-cumulative
return on its interest in the venture; additional net cash receipts are
shared in a ratio relating to the various ownership interests of Villages
Northeast (90%) and its unaffiliated venture partner (10%). Villages
Northeast also has preferred positions (related to Villages Northeast's
investment in Post Associates) with respect to distribution of net sale or
refinancing proceeds from Post Associates. Operating profits and losses,
in general, are allocable 90% to Villages Northeast and 10% to the
unaffiliated venture partner, except that certain expenses paid for out of

Villages Northeast's cash payments are to be allocated solely to Villages
Northeast and certain costs of operations paid for out of capital
contributions, if any, of the unaffiliated venture partner are allocable
solely to it.

In January 1996, the venture obtained a non-binding letter of intent
to sell the Dunwoody Crossing apartment complex to an unaffiliated
prospective buyer. The agreement is subject to certain conditions
including the waiver by the Partnership's unaffiliated venture partner to
exercise its right of first opportunity to acquire the Partnership's
interest in the Dunwoody Crossing apartment complex. In March 1996, the
unaffiliated venture partner notified the Partnership of its intent to
acquire the property in accordance with the Partnership agreement and the
letter of intent of the unaffiliated prospective buyer. Although there can
be no assurance the sale will be consummated, such sale is required to
occur within 60 days of the receipt of the unaffiliated Venture Partner's
notification. If the sale is consummated on the proposed terms, the
Partnership would recognize in 1996 a gain for financial reporting and
Federal income tax purposes.

An affiliate of the unaffiliated venture partner entered into an
agreement to manage the complexes through December 31, 2002 (subject to
earlier termination by either party upon 60 days' prior written notice) for
a fee equal to 5% of the gross revenues of the complexes. In August 1993,
an affiliate of the General Partners assumed management of the property
until December 1994 for a fee equal to 5% of the gross revenues of the
complexes. The property is currently being managed by the purchaser of the
affiliate's assets on the same terms. Reference is made to Note 7.

(f) JMB/NewPark

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

The NewPark Mall secures a mortgage note payable in the principal
amount of $50,620,219 that was originally due on November 1, 1995. Monthly
payments of interest only of $369,106 were due through November 30, 1993.
Commencing on December 1, 1993 through October 30, 1995, principal and
interest were due in monthly payments of $416,351 with a final balloon
payment due November 1, 1995. In October 1995, JMB/NewPark was granted a
loan extension until December 15, 1995. Interest on the note payable
accrued at 8.75% per annum. On December 21, 1995, NewPark Associates
obtained a new mortgage loan with an institutional lender. The new
mortgage loan in the principal amount of $60,000,000 is due on December 31,
2000. The loan provides for monthly interest-only payments of $357,500.
Interest on the non-recourse loan accrues at 7.15% per annum.

A portion of the proceeds from the note payable was used to pay the
outstanding balance, including accrued interest, under the previous
mortgage note payable. The Partnership's share of net refinancing proceeds
(after payment of the previous mortgage note payable and costs and fees
relating to the refinancing) was $535,000.

The NewPark Associates partnership agreement provides that JMB/NewPark
and the joint venture partner are each entitled to receive 50% of profits
and losses, net cash flow and net sale or refinancing proceeds of NewPark
Associates and are each obligated to advance 50% of any additional funds
required under the terms of the NewPark Associates partnership agreement.
In December 1995, the joint venture partner sold and assigned its interest
in NewPark Associates to a third party, who was admitted as the new venture
partner.

The portion of the shopping center owned by NewPark Associates was
managed by the former joint venture partner under a long-term agreement
pursuant to which it was obligated to manage the property and collect all
receipts from operations of the property. In December 1995, the former
joint venture partner assigned its interest in the management agreement to
the new venture partner. The manager is paid a management fee equal to 4%
of the fixed and percentage rent. An amendment to the management agreement
provides that the new manager will pay to an affiliate of the General
Partner of the Partnership an annual consulting fee in the amount of
$100,000 in consideration for assisting NewPark Associates and the new
venture partner in the evaluation of property budgets, and leasing and
long-term strategies for NewPark Mall. Such consulting fee is paid out of
the management fee noted above.

(g) JMB/Warner

In December 1987, the Partnership, through a joint venture partnership
(JMB/Warner), (with Carlyle-XVII) acquired an interest in the Blue Cross
Building. JMB/Warner's cash investment in the property was approximately
$35,000,000, of which the Partnership's share was $25,967,742 (or approxi-
mately 74%). The JMB/Warner venture agreement generally provided that any
allocation of profits or losses and distributions of cash flow, net sale
proceeds or net financing proceeds were to be distributed or allocated, as
the case may be, to the Partnership in proportion to its capital
contributions.

On November 2, 1993, JMB/Warner sold the Blue Cross Building to an
unaffiliated buyer for a sales price of $76,909,292 of which the
Partnership's share was $57,061,733. The sales price consisted of
$23,300,000 (before costs of sale) paid in cash at closing and the
assumption by the purchaser of the existing mortgage note having an unpaid
amount of $53,609,292. For financial reporting purposes, the Partnership
allocated approximately $735,000 of prorations to the purchase price. The
Partnership's share of net cash proceeds (before costs of sale and after
consideration of the prorations) was approximately $17,833,000. In 1994,
the Partnership distributed $1,078,168 to Carlyle-XVII. As a result of the
sale, the Partnership recognized in 1993 a loss of $299,039 and a gain of
$1,837,983 for financial reporting and Federal income tax purposes,
respectively.

In connection with the original sale of the property to JMB/Warner,
the seller had entered into a long-term triple net lease of the entire
office complex, which the seller has occupied since its construction. The
lease provided for an initial annual base rent of $7,947,000 with periodic
increases in the annual base rent equal to the lesser of (i) the periodic
increase in a consumer price index, or (ii) 5% per annum compounded over
the period. In general, the tenant was also obligated to pay the cost of
property taxes and operating and maintenance expenses (other than the cost
of flood or earthquake insurance) during the initial lease term and any
renewal period. Commencing in 1993, JMB/Warner was obligated to pay the
cost of any structural maintenance and repairs and any expenses for changes
in the office complex attributable to governmental compliance. As a result
of the sale of its interest, JMB/Warner was relieved of such obligations.

(h) Palm Desert

In December 1988, the Partnership, Carlyle-XVII, and an affiliate of
the seller acquired through Palm Desert an interest in an existing,
enclosed regional shopping center known as Palm Desert Town Center in Palm
Desert, California and a leasehold interest in the underlying land.

The Partnership and Carlyle-XVII acquired their interests in Palm
Desert, subject to a first mortgage loan with an outstanding principal
balance of approximately $43,500,000 (note 4), for an initial aggregate
contribution of approximately $17,400,000, all of which was paid in cash at
closing, of which the Partnership's share was approximately $14,925,000.
The Partnership and Carlyle-XVII's initial aggregate contribution was used
to make the distribution to the joint venture partner as described below
and to pay a portion of the closing costs. Except for amounts to be
contributed to Palm Desert to pay certain closing costs, the joint venture
partner was not required to make any capital contributions to Palm Desert
at closing. However, in consideration of a distribution from Palm Desert
at closing, the joint venture partner was obligated to make contributions
to Palm Desert to pay the $13,752,746 purchase price obligation of Palm
Desert to the seller of the shopping center, of which the final $4,826,906
was paid in January 1993. In addition, the joint venture partner was
obligated to make contributions to Palm Desert through December 1994 to pay
any operating deficits and to pay a portion of the returns to the
Partnership and Carlyle-XVII as described below. Amounts required to pay
the cost of tenant improvements and allowances (the "Tenant Improvement
Costs") and other capital expenditures, as well as any operating deficits
of Palm Desert after December 1994, have been and are expected to be
contributed to Palm Desert 25% by the joint venture partner and 75% by the
Partnership and Carlyle-XVII in the aggregate.

The terms of the Palm Desert agreement provide that the Partnership
and Carlyle-XVII are entitled to receive out of net cash flow a current
preferred return and a cumulative preferred return, each based on a
negotiated rate of return on their respective initial capital contributions
(other than those used to pay closing costs). Such current preferred
return, which the Partnership was entitled to receive through December 31,
1994 (as defined) was received. The Partnership, Carlyle-XVII and the
joint venture partner are entitled to a cumulative preferred return, based
on a negotiated rate of return on their respective contributions to pay the
Tenant Improvement Costs through December 1994 (the "Tenant Improvement
Cost Contributions"). All cumulative preferred returns are distributable
on an equal priority level; however, they are subordinate to the receipt by
the Partnership and Carlyle-XVII of their respective current year preferred
return. Any remaining annual cash flow will be distributable 75% to the
Partnership and Carlyle-XVII and 25% to the joint venture partner until the
Partnership and Carlyle-XVII have received an amount equal to their initial
capital contributions (other than those used to pay closing costs) plus a
negotiated annual internal rate of return thereon and an amount equal to
their Tenant Improvement Cost contributions, and thereafter any remaining
annual cash flow shall be distributable 50% to the Partnership and Carlyle-
XVII and 50% to the joint venture partner.

The Palm Desert agreement also provides that upon sale or refinancing
of the property, net sale or refinancing proceeds will be distributable
first to the Partnership, Carlyle-XVII and the joint venture partner to the
extent of any deficiencies in the receipt of their respective cumulative
preferred returns; second, to the Partnership and Carlyle-XVII in an amount
equal to their initial capital contributions (other than those used to pay
closing costs) and their Tenant Improvement Cost contributions and, as an
equal priority, to the joint venture partner in an amount equal to its
Tenant Improvement Cost contributions; third, to the joint venture partner
in an amount equal to the amount contributed by it to pay operating
deficits through December 1994 and to provide a portion of the
Partnership's and Carlyle-XVII's current and cumulative preferred return
described above (not to exceed $1,700,000); fourth, 75% to the Partnership
and Carlyle-XVII and 25% to the joint venture partner until the Partnership
and Carlyle-XVII have received a negotiated annual internal rate of return
on their respective initial capital contributions (other than those used to
pay closing costs), and any remaining proceeds will be distributable 50% to
the Partnership and Carlyle-XVII and 50% to the joint venture partner.

The portion of the shopping center owned by Palm Desert is currently
subject to a first mortgage loan from an institutional lender with an
outstanding principal balance of approximately $41,845,000 and $42,165,000
at December 31, 1995 and 1994, respectively. The loan provides for fixed
interest at the rate of 12% per annum and monthly payments of principal and
interest of $446,842 until January 1, 2019, when the loan will have been
fully amortized.

The land underlying the shopping center is owned by the lender under
the first mortgage loan. Palm Desert leases the land by assignment of an
existing ground lease which has a term through December 2038 and provides
for minimum annual rental payments of $900,000, as well as for additional
rental payments for each calendar year equal to 50% of the amount by which
certain of the ground lessee's gross receipts from the shopping center
exceed $6,738,256. Total ground rent expense for the years ended December
31, 1995, 1994 and 1993 was $1,261,322, $1,347,204 and $1,015,968,
respectively. The ground lease provides for two 10-year extensions at the
option of the lessee. The ground lease does not provide for any option on
the part of Palm Desert to purchase the land. Reference is also made to
note 6(b).

Operating profits and losses, in general, are allocable in proportion
to the amount of net cash flow distributed to the partners of Palm Desert,
or, if there are no distributions of net cash flow, generally 75% to the
Partnership and Carlyle-XVII and 25% to the joint venture partner, except
that the deductions allocable with respect to certain expenses are
allocable to the partner whose contributions are used to pay such expenses.

For 1994 and 1993, in accordance with the Palm Desert partnership
agreement, losses were allocated to the joint venture partner to the extent
that it had cumulatively contributed capital to fund the Partnership's and
Carlyle-XVII's preferred return less any losses previously allocated to the
joint venture partner as discussed above. The remainder of the loss was
allocated 75% to the Partnership and Carlyle-XVII and 25% to the joint
venture partner. For 1995, losses were allocated 75% to the Partnership
and Carlyle-XVII and 25% to the joint venture partner as there were no
distributions made to the partner in 1995.

The Palm Desert agreement also provides that the annual cash flow, net
sale or refinancing proceeds and tax items distributed or allocated
collectively to the Partnership and Carlyle-XVII generally are
distributable or allocable between them based upon their respective capital
contributions. Such capital contributions are generally in the percentages
of approximately 85.8% for the Partnership and approximately 14.2% for
Carlyle-XVII.

The shopping center is being managed pursuant to a long-term agreement
with an affiliate of the joint venture partner. The manager is paid a fee
equal to 3% of the base and percentage rents collected under tenant leases,
increasing to 4% of the base and percentage rents for those years that the
Partnership and Carlyle-XVII have received their current preferred return
and all of their cumulative preferred return for current and previous
periods. In addition, under the terms of the management agreement, the
manager or an affiliate will be entitled to receive compensation for
leasing services.

(4) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995 and
1994:

1995 1994
------------------------
12% per annum mortgage note; secured by
the Palm Desert Town Center; payable
in monthly installments of principal
and interest of $446,842 until paid
in full in January 2019. . . . . . . $41,845,394 42,164,903
----------- -----------

Total debt . . . . . . . . . . 41,845,394 42,164,903
Less current portion of
long-term debt . . . . . . . 360,031 319,509
----------- -----------

Total long-term debt . . . . . $41,485,363 41,845,394
=========== ===========

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

1996. . . . . . . $360,031
1997. . . . . . . 405,692
1998. . . . . . . 457,143
1999. . . . . . . 515,121
2000. . . . . . . 580,451
========

(5) PARTNERSHIP AGREEMENT

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

The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership or the General Partners' interests in
the Partnership. "Net cash receipts" from operations of the Partnership
will be allocated 90% to the Holders of Interests and 10% to the General
Partners (of which 6.25% constitutes a management fee to the Corporate
General Partner for services in managing the Partnership). However, for
the five year period through the end of 1992, the General Partners deferred
their allocation of "net cash receipts" to a stipulated return on capital
for the Holders of Interests (note 7). The deferred amounts are payable
out of any "net cash receipts" and "sales or refinancing proceeds" of the
Partnership, without interest at such times as the General Partners may
determine.

The Partnership Agreement provides that, subject to certain
conditions, the General Partners shall receive as a distribution of the
proceeds (net after expenses and liabilities and retained working capital)
from the sale or refinancing of a real property up to 3% of the selling
price for any property sold, and that the remaining net proceeds be
distributed 85% to the holders of Interest and 15% to the General Partners.

However, prior to such distributions the Holders of Interests are entitled
to receive 99% and the General Partners 1% of net sale or refinancing
proceeds until the Holders of Interest (i) have received cumulative cash
distributions from the Partnership's operations which, when combined with
net sale or refinancing proceeds previously distributed, equal a 6% annual
non-compound return on the Holders' of Interests average capital investment
for each year (their initial capital investment as reduced by net sale or
refinancing proceeds previously distributed) commencing with the third
fiscal quarter of 1987 and (ii) have received cash distributions of net
sale or refinancing proceeds in an amount equal to the Holders' of
Interests aggregate initial capital investment in the Partnership. The
General Partners have elected to waive their right to receive their
distributive share of up to 3% of the sale price of the Blue Cross
Building.

(6) LEASES

(a) As Property Lessor

At December 31, 1995, the Partnership and its consolidated venture's
principal asset is a shopping center. The Partnership has determined that
all leases are properly classified as operating leases; therefore rental
income is reported when earned and the cost of the property, excluding the
cost of land, is depreciated over the estimated useful lives. Leases with
tenants at Palm Desert Town Center range in term from one to twenty-five
years and provide for fixed minimum rent and partial reimbursement of
operating costs. In addition, leases with shopping center tenants
generally provide for additional rent based upon percentages of tenants'
sales volumes over certain specified amounts. A substantial portion of the
ability of the retail tenants at Palm Desert Town Center to honor their
leases is dependent upon the retail economic sector.

Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit in excess of
specific reimbursements, to be received in the future under the above
operating commercial lease agreements are as follows:

1996. . . . . . . . . . . . . . $ 7,053,695
1997. . . . . . . . . . . . . . 6,773,298
1998. . . . . . . . . . . . . . 6,220,007
1999. . . . . . . . . . . . . . 5,184,121
2000. . . . . . . . . . . . . . 4,793,987
Thereafter. . . . . . . . . . . 17,957,964
-----------
$47,983,072
===========

(b) As Property Lessee

The following lease agreement has been determined to be an operating
lease:

The Partnership owns, through Palm Desert, a leasehold interest which
expires in December 2038 in the land underlying the Palm Desert Town
Center. The ground lease provides for annual rental payments of $900,000
plus 50% of certain gross receipts of the shopping center above $6,738,256.

In addition to cash payments due, periodic ground rent expense also
reflects an adjustment equal to 50% of the net change in accrued rents
receivable. Total ground rent expense for the years ended December 31,
1995, 1994 and 1993 was $1,261,322, $1,347,204 and $1,015,968,
respectively. Actual cash payments for 1995, 1994 and 1993 were
$1,092,049, $1,050,000 and $900,000, respectively.

Future minimum rental commitments under the lease are as follows:

1996 . . . . . . . . . .$ 900,000
1997 . . . . . . . . . . 900,000
1998 . . . . . . . . . . 900,000
1999 . . . . . . . . . . 900,000
2000 . . . . . . . . . . 900,000
Thereafter . . . . . . . 34,200,000
-----------
$38,700,000
===========

(7) TRANSACTIONS WITH AFFILIATES

The General Partners deferred their share of net cash flow of the
Partnership due to them over a five-year period ended December 1992, to the
receipt by the Holders of Interests of a 5% per annum cumulative non-
compounded return on their Current Capital Accounts (as defined) for such
five-year period. These deferred amounts consist of the Corporate General
Partner's management fees and the General Partners' distributive share of
net cash flow (see note 5). The cumulative combined amount of such
deferred distributions and management fees aggregated $2,372,056 at
December 31, 1993. In July 1994, the Partnership paid the cumulative
combined amount of such deferred distributions and management fees to the
General Partners. All amounts deferred did not bear interest and were paid
in full.

Certain of the Partnership's properties have been managed by an
affiliate of the General Partners for fees computed as a percentage of
certain rents received by the properties. In December 1994, the affiliated
property manager sold substantially all of its assets and assigned its
interest in its management contracts to an unaffiliated third party. In
addition, certain of the management personnel of the property manager
became management personnel of the purchaser and its affiliates. The
successor to the affiliated property manager's assets is acting as the
property manager of Dunwoody Crossing Apartments (Phases I, II and III) and
260 Franklin Office Building after the sale on the same terms that existed
prior to the sale.

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates for the years ending December 31, 1995, 1994 and 1993 are
as follows:

<TABLE>

<CAPTION>
UNPAID AT
DECEMBER 31,
1995 1994 1993 1995
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Management fees to
Corporate General Partners . . $112,427 155,942 331,376 --
Insurance commissions. . . . . . 28,811 24,307 28,810 --
Reimbursement (at cost) for
accounting services. . . . . . 93,892 98,129 76,669 --
Reimbursement (at cost) for
portfolio management
services . . . . . . . . . . . 31,844 33,490 -- --
Reimbursement (at cost) for
legal services . . . . . . . . 7,213 3,224 6,775 --
Reimbursement (at cost) for
administrative charges and
other out-of-pocket expenses . 110,709 4,050 29,407 59,288
-------- ------- ------- ------

$384,896 319,142 473,037 59,288
======== ======= ======= ======
<FN>

The above table reflects that during 1995, the Partnership recognized and paid certain 1994 administrative
charges of approximately $40,612 that had not previously been reimbursed.

</TABLE>

Effective October 1, 1995, the Corporate General Partner of the
Partnership engaged independent third parties to perform certain
administrative services for the Partnership which were previously performed
by, and partially reimbursed to, affiliates of the General Partners. Use
of such third parties is not expected to have a material effect on the
operations of the Partnership.

(8) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION

Summary combined financial information for JMB/125 (through the
effective date of assignment - October 31, 1994), JMB/Owings, 260 Franklin,
Villages Northeast and JMB/NewPark are as follows:

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

Current assets . . . . . . . $ 10,073,925 8,923,337
Current liabilities. . . . . (90,693,683) (3,031,777)
------------ ------------
Working capital. . . . . (80,619,758) 5,891,560
------------ ------------
Deferred expenses and accrued
rents receivable. . . . . . 2,193,737 1,407,694
Ventures partners' equity. . (18,749,959) (33,657,364)
Investment properties, net . 184,112,280 192,034,618
Other liabilities. . . . . . (230,522) (2,017,084)
Long-term debt . . . . . . . (90,256,644) (166,010,116)
------------ ------------
Partnership's capital
(deficit) . . . . . . . $ (3,550,866) (2,350,692)
============ ============
Represented by:
Invested capital . . . . . $ 58,008,483 57,873,483
Cumulative cash distributions (21,783,531) (20,462,902)
Cumulative losses. . . . . (39,775,818) (39,761,273)
------------ ------------
$ (3,550,866) (2,350,692)
============ ============
Total income . . . . . . . . $ 32,780,960 61,459,559
Expenses applicable to
operating loss . . . . . . 37,312,297 103,034,572
------------ ------------
Net operating loss . . . . . (4,531,337) (41,575,013)
Gain on sale or disposition
of investment in uncon-
solidated ventures
(note 3) . . . . . . . . . 1,713,501 52,412,102
------------ ------------
Net (loss) income (see
note 3(b)) . . . . . . $ (2,817,836) 10,837,089
============ ============
Partnership's share of
(loss) income. . . . . . . $ (14,545) 11,856,990
============ ============

Additionally, for the year ended December 31, 1993, total income was
$104,538,897, expenses applicable to operating loss were $134,358,616 and
the net loss was $29,819,719 for the unconsolidated ventures listed above.

<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

COST
CAPITALIZED
INITIAL COST TO SUBSEQUENT GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
-----------------------------------------------------------------------------
BUILDINGS LAND, BUILDINGS
AND BUILDINGS AND AND
ENCUMBRANCE LAND IMPROVEMENTSIMPROVEMENTS LAND IMPROVEMENTS TOTAL (D)
---------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING
CENTER:
Palm Desert
Town Center
Palm Desert
(Palm Springs),
California . .$41,845,394 -- (C) 59,184,329 915,994 -- 60,100,323 60,100,323
=========== ========== ========== ================= ========== ==========

</TABLE>

<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

LIVES ON WHICH
DEPRECIATION
IN LATEST
INCOME 1995
ACCUMULATED DATE OF DATE STATEMENT IS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED COMPUTED TAXES
---------------- ------------ ------------------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Palm Desert Town
Center
Palm Desert
(Palm Springs),
California . . . . . 14,023,956 1983 12/23/88 5-30 YEARS 743,746
========== =======

<FN>
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the property, including
amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.

(B) The aggregate cost of real estate owned at December 31, 1995 for Federal income tax purposes was
$59,921,351.

</TABLE>

<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

(D) Reconciliation of real estate owned:
<CAPTION>
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
Balance at beginning of period . . . $60,061,137 60,060,557 153,042,114
Additions during period. . . . . . . 39,186 -- 263,742
Sale of investment property. . . . . -- 580 (93,245,299)
----------- ----------- -----------
Balance at end of period . . . . . . $60,100,323 60,061,137 60,060,557
=========== =========== ===========

(E) Reconciliation of accumulated depreciation:

Balance at beginning of period . . . $12,018,826 10,011,970 23,729,463
Depreciation expense . . . . . . . . 2,005,130 2,006,856 4,021,646
Sale of investment property. . . . . -- -- (17,739,139)
----------- ----------- -----------

Balance at end of period . . . . . . $14,023,956 12,018,826 10,011,970
=========== =========== ===========

</TABLE>

INDEPENDENT AUDITORS' REPORT

The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVI:

We have audited the financial statements of 260 Franklin Street
Associates, an unconsolidated joint venture of Carlyle Real Estate Limited
Partnership-XVI (note 1) as listed in the accompanying index. In
connection with our audits of the financial statements, we also have
audited the financial statement schedule as listed in the accompanying
index. These financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of 260 Franklin
Street Associates, an unconsolidated joint venture of Carlyle Real Estate
Limited Partnership-XVI at December 31, 1995 and 1994, and the results of
its operations and its cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

The accompanying financial statements and financial statement schedule
have been prepared assuming that the 260 Franklin Street Associates Venture
("Venture") will continue as going concern. As discussed in Note 3(d) of
the Partnership's notes to consolidated financial statements, incorporated
by reference in Note 2 of the Venture's financial statements, the 260
Franklin Street Building is expected to operate at a deficit for 1996 and
several years thereafter. In addition, the mortgage loan matured January
1, 1996. The Venture is attempting to refinance the loan, but there can be
no assurance that such efforts will be successful. If the Venture is
unable to refinance or extend the mortgage loan, the venture partners may
decide not to commit additional funds to the property. This may result in
the Venture no longer having an ownership interest in the property. These
circumstances raise substantial doubt about the Venture's ability to retain
its ownership interest in the 260 Franklin Street Building and continue as
a going concern. The venture partners' plans with regard to this matter
are also described in Note 3(d) of the Partnership's Notes to Consolidated
Financial Statements. The accompanying financial statements and financial
statement schedule do not include any adjustments that might result from
the outcome of this uncertainty.

KPMG PEAT MARWICK LLP
Chicago, Illinois
March 25, 1996

<TABLE> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
260 FRANKLIN STREET ASSOCIATES

BALANCE SHEETS

DECEMBER 31, 1995 AND 1994

ASSETS
------

<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . $ 212,769 150,454
Rents and other receivables. . . . . . . . . . . . . . . . 117,595 77,085
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 27,547 27,547
Escrow deposits (note 2) . . . . . . . . . . . . . . . . . 4,991,910 5,209,282
------------ ------------

Total current assets . . . . . . . . . . . . . . . 5,349,821 5,464,368
------------ ------------

Investment property, at cost (notes 1 and 2) - Schedule III:
Land and leasehold interests . . . . . . . . . . . . . . . 6,662,200 6,662,200
Buildings and improvements . . . . . . . . . . . . . . . . 85,304,098 85,235,428
------------ ------------

91,966,298 91,897,628
Less accumulated depreciation. . . . . . . . . . . . . . . 29,218,490 26,377,605
------------ ------------

Total investment property,
net of accumulated depreciation. . . . . . . . . 62,747,808 65,520,023
------------ ------------

Deferred expenses. . . . . . . . . . . . . . . . . . . . . . 906,207 597,877
Accrued rents receivable . . . . . . . . . . . . . . . . . . 340,115 81,044
------------ ------------

$ 69,343,951 71,663,312
============ ============

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
260 FRANKLIN STREET ASSOCIATES

BALANCE SHEETS - CONTINUED

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

1995 1994
------------ ------------
Current liabilities:
Current portion of long-term debt, including accrued interest
(notes 2 and 3). . . . . . . . . . . . . . . . . . . . . $ 87,623,625 --
Accounts payable . . . . . . . . . . . . . . . . . . . . . 344,179 158,665
Unearned rents . . . . . . . . . . . . . . . . . . . . . . 19,984 45,808
Amounts due to affiliates (note 5) . . . . . . . . . . . . 2,179,300 1,756,321
------------ ------------
Total current liabilities. . . . . . . . . . . . . 90,167,088 1,960,794

Tenant security deposits . . . . . . . . . . . . . . . . . . 62,585 62,585
Long-term debt, less current portion (note 3). . . . . . . . -- 85,376,895
------------ ------------
Commitments and contingencies (notes 1, 2, 3, 4 and 5)

Total liabilities. . . . . . . . . . . . . . . . . 90,229,673 87,400,274

Partners' capital accounts (deficits) (note 2):
Carlyle-XVI:
Capital contributions. . . . . . . . . . . . . . . . . . 14,260,140 14,215,140
Cumulative net losses. . . . . . . . . . . . . . . . . . (18,135,456) (16,577,328)
Cumulative cash distributions. . . . . . . . . . . . . . (2,379,238) (2,379,238)
------------ ------------
(6,254,554) (4,741,426)
------------ ------------
Venture Partners:
Capital contributions. . . . . . . . . . . . . . . . . . 32,401,274 32,401,274
Cumulative net losses. . . . . . . . . . . . . . . . . . (41,410,888) (37,775,256)
Cumulative distributions . . . . . . . . . . . . . . . . (5,621,554) (5,621,554)
------------ ------------
(14,631,168) (10,995,536)
------------ ------------
Total partners' capital accounts (deficits). . . . (20,885,722) (15,736,962)
------------ ------------
$ 69,343,951 71,663,312
============ ============

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

<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
260 FRANKLIN STREET ASSOCIATES

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . $ 10,951,926 11,387,175 10,923,738
Interest income. . . . . . . . . . . . . . 337,967 180,353 135,316
------------ ----------- -----------
11,289,893 11,567,528 11,059,054
------------ ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . 8,238,011 8,238,012 8,238,011
Depreciation . . . . . . . . . . . . . . . 2,840,885 2,838,252 2,833,898
Property operating expenses. . . . . . . . 5,120,754 5,068,653 4,729,649
Professional services. . . . . . . . . . . 21,706 25,043 68,434
Amortization of deferred expenses. . . . . 262,297 241,574 225,055
------------ ----------- -----------
16,483,653 16,411,534 16,095,047
------------ ----------- -----------

Net earnings (loss). . . . . . . . $ (5,193,760) (4,844,006) (5,035,993)
============ =========== ===========

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

<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
260 FRANKLIN STREET ASSOCIATES

STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
VENTURE
CARLYLE-XVI PARTNER TOTAL
------------ ------------ ------------
<S> <C> <C> <C>

Balance (deficit) at December 31, 1992 . . . . . $ (1,822,428) (4,289,535) (6,111,963)

Capital contributions . . . . . . . . . . . . . -- -- --
Cash distributions . . . . . . . . . . . . . . . -- -- --
Net loss . . . . . . . . . . . . . . . . . . . . (1,510,797) (3,525,196) (5,035,993)
------------ ----------- -----------

Balance (deficit) at December 31, 1993 . . . . . (3,333,225) (7,814,731) (11,147,956)

Capital contributions . . . . . . . . . . . . . 45,000 210,000 255,000
Cash distributions . . . . . . . . . . . . . . . -- -- --
Net operating loss . . . . . . . . . . . . . . . (1,453,201) (3,390,805) (4,844,006)
------------ ----------- -----------

Balance (deficit) at December 31, 1994 . . . . . (4,741,426) (10,995,536) (15,736,962)

Capital contributions . . . . . . . . . . . . . 45,000 -- 45,000
Cash distributions . . . . . . . . . . . . . . . -- -- --
Net operating loss . . . . . . . . . . . . . . . (1,558,128) (3,635,632) (5,193,760)
------------ ----------- -----------

Balance (deficit) at December 31, 1995 . . . . . $(6,254,554) (14,631,168) (20,885,722)
============ =========== ===========

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

<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
260 FRANKLIN STREET ASSOCIATES

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . $ (5,193,760) (4,844,006) (5,035,993)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . 2,840,885 2,838,252 2,833,898
Amortization of deferred expenses. . . . 262,297 241,574 225,055
Long-term debt-deferred accrued interest 2,246,730 1,747,457 2,746,003
Accrued rents receivable . . . . . . . . (259,071) 344,433 393,890
Changes in:
Rents and other receivables. . . . . . . . (40,510) (12,148) (14,310)
Prepaid expenses . . . . . . . . . . . . . -- 672 3,377
Escrow deposits. . . . . . . . . . . . . . 217,372 (317,786) (1,327,631)
Accounts payable . . . . . . . . . . . . . 185,514 (23,098) (372,237)
Unearned rents . . . . . . . . . . . . . . (25,824) 45,808 --
Tenant security deposits . . . . . . . . . -- (13,029) 6,113
Amounts due to affiliates. . . . . . . . . 422,979 (359,862) 825,541
------------ ------------ ------------
Net cash provided by (used in)
operating activities . . . . . . 656,612 (351,733) 283,706
------------ ------------ ------------
Cash flows from investing activities:
Additions to investment properties . . . . (68,670) (122,073) (273,264)
Payment of deferred expenses . . . . . . . (570,627) (193,007) (50,639)
------------ ------------ ------------
Net cash used in investing activities (639,297) (315,080) (323,903)
------------ ------------ ------------

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
260 FRANKLIN STREET ASSOCIATES

STATEMENTS OF CASH FLOWS - CONTINUED

1995 1994 1993
------------- ----------- -----------

Cash flows from financing activities:
Cash contributions from Partnership. . . . 45,000 45,000 --
Cash contributions from venture partners . -- 210,000 --
------------- ------------ ------------
Net cash provided by financing activities 45,000 255,000 --
------------- ------------ ------------

Net increase (decrease) in cash . 62,315 (411,813) (40,197)
Cash and cash equivalents,
beginning of year. . . . . . . . 150,454 562,267 602,464
------------- ------------ ------------
Cash and cash equivalents,
end of year. . . . . . . . . . . $ 212,769 150,454 562,267
============= ============ ============

Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. $ 5,991,281 5,991,281 5,991,281
============= ============ ============

Non-Cash investing and financing activities. $ -- -- --
============= ============ ============

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
260 FRANKLIN STREET ASSOCIATES

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

(1) OPERATIONS AND BASIS OF ACCOUNTING

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.

260 Franklin holds an equity investment in an office building in
Boston, Massachusetts. Business activities consist of rentals to a wide
variety of commercial companies, and the ultimate sale or disposition of
such real estate.

The records of 260 Franklin 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 reflect the 260 Franklin accounts
in accordance with generally accepted accounting principles. Such
adjustments are not recorded on the records of 260 Franklin.

The preparation of financial statements in accordance with GAAP
requires 260 Franklin 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.

Statement of Financial Accounting Standards No. 95 requires 260
Franklin to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement. 260
Franklin records amounts held in U.S. Government obligations at cost which
approximates market. For the purposes of these statements, 260 Franklin's
policy is to consider all such amounts held with original maturities of
three months or less ($162,000 and none at December 31, 1995 and 1994,
respectively) as cash equivalents with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.

Deferred expenses are comprised of deferred leasing costs, which are
amortized using the straight-line method over the terms of the related
leases and financing costs which are amortized over the term of the related
debt.

Depreciation on the investment property has been provided over the
estimated useful lives of 5 to 30 years using the straight-line method.

During March 1995, Statement of Financial Accounting Standards No. 121
("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued. SFAS 121, when effective,
will require that 260 Franklin record of an impairment loss on long-lived
assets to be held and used whenever their carrying value cannot be fully
recovered through estimated undiscounted future cash flows from operations
and sale. The amount of the impairment loss to be recognized would be the
difference between the long-lived asset's carrying value and the asset's
estimated fair value. Any long-lived assets identified as "to be disposed
of" would no longer be depreciated. Adjustments for impairment loss would
be made in each period as necessary to report these assets at the lower of
carrying value and fair value less costs to sell. In certain situations,
such estimated fair value could be less than the existing non-recourse debt
which is secured by the property. There would be no assurance that any
estimated fair value of these assets would ultimately be obtained in any
future sale or disposition transaction.

Under the current impairment policy, provisions for value impairment
are recorded with respect to an investment property whenever the estimated
future cash flows from a property's operations and projected sale are less
than the property's net carrying value. The amount of any such impairment
loss recognized by 260 Franklin is limited to the excess, if any, of the
property's carrying value over the outstanding balance of the property's
non-recourse indebtedness. An impairment loss under SFAS 121 would be
determined without regard to the nature or the balance of such non-recourse
indebtedness. Upon the disposition of a property with the related
extinguishment of the long-term debt for which an impairment loss has been
recognized under SFAS 121, 260 Franklin would recognize, at a minimum, a
net gain (comprised of gain on extinguishment of debt and gain or loss on
sale or disposition of property) for financial reporting purposes to the
extent of any excess of the then outstanding balance of the property's non-
recourse indebtedness over the then carrying value of the property,
including the effect of any reduction for impairment loss under SFAS 121.

260 Franklin will adopt SFAS 121 as required in the first quarter of
1996. Based upon 260 Franklin's current assessment of the full impact of
adopting SFAS 121, it is anticipated a provision for value impairment would
be required for approximately $17,400,000. In addition, should the lender
realize upon its security and take title to the property, 260 Franklin
would recognize an extraordinary gain from extinguishment of indebtedness.
Although implementation of this new accounting statement could
significantly impact 260 Franklin's reported earnings, there would be no
impact on cash flows. Further, any such impairment loss would not be
recognized for Federal income tax purposes. The 260 Franklin Street
property has been identified as a property to be disposed of and may not be
depreciated in future years.

Investment property is pledged as security for the long-term debt, for
which there is no recourse to the venture.

Maintenance and repair expenses are charged to operations as incurred.

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

Amounts in the 1993 and 1994 260 Franklin financial statements have
been reclassified to conform to the 1995 presentation.

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

liquidation sale. 260 Franklin believes the carrying amount of its
financial instruments classified as current assets and liabilities
(excluding current portion of long-term debt) approximates SFAS 107 value
due to the relatively short maturity of these instruments. There is no
quoted market value available for any of 260 Franklin's other instruments.
As the debt secured by the 260 Franklin building has been reclassified as
current liabilities at December 31, 1995 as a result of default (see Note
3(d)) and because resolution of such default is uncertain, 260 Franklin
considers the disclosure of the SFAS 107 value of such debt to be
impracticable. Due to maturity of the loan and the inability to obtain
comparable financing due to current levels of debt, previously modified
debt terms or other property specific competitive conditions, 260 Franklin
would be unable to refinance the property to obtain such calculated debt
amounts reported. (See Note 3.) The Partnership has no other significant
financial instruments.

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.

(2) VENTURE AGREEMENTS

A description of the venture agreement is contained in Note 3(a) of
Notes to Consolidated Financial Statements of Carlyle-XVI. Such note is
hereby incorporated herein by reference.

<TABLE>
(3) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995 and 1994:

<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
11.0% per annum mortgage note in default; secured by the 260 Franklin
Street Building; monthly payments of interest only (6% per annum)
of $374,455 through January 1, 1992, monthly payments of
interest only (8% per annum) of $499,273 from February 1,
1992 through December 1, 1995, with the unpaid balance of
principal of $74,891,013 plus accrued unpaid interest
due on January 1, 1996. Additional interest payable upon
maturity to provide an 11% per annum return to lender and
60% of the greater of net sales or refinancing proceeds or
the net appraised value, as defined. Reference is made to
Note 3(d) of Notes to Consolidated Financial Statements of
Carlyle-XVI. . . . . . . . . . . . . . . . . . . . . . . . . . $87,623,625 85,376,895
----------- ------------

Total debt . . . . . . . . . . . . . . . . . . . . . . 87,623,625 85,376,895
Less current portion of long-term debt . . . . . . . . 87,623,625 --
----------- ------------

Total long-term debt . . . . . . . . . . . . . . . . . $ -- 85,376,895
=========== ============

</TABLE>

Included in the above debt is $12,732,612 and $10,485,882 for 1995 and
1994, respectively, which represents mortgage interest accrued pursuant to
the terms of the 260 Franklin mortgage note.

(4) LEASES

(a) As Property Lessor

At December 31, 1995, 260 Franklin's primary leased asset was an
office building. 260 Franklin has determined that all leases relating to
the property are properly classified as operating leases; therefore, rental
income is reported when earned and the cost of the property, excluding cost
of land, is depreciated over the estimated useful lives. Leases range in
term from one to 25 years and provide for fixed minimum rent and partial to
full reimbursement of operating costs.

Minimum lease payments including amounts representing executory costs
(e.g., taxes, maintenance, insurance), to be received in the future under
the above operating commercial lease agreements, are as follows:

1996. . . . . . . . . $ 8,102,216
1997. . . . . . . . . 6,702,045
1998. . . . . . . . . 6,697,220
1999. . . . . . . . . 6,621,358
2000. . . . . . . . . 6,050,481
Thereafter. . . . . . 19,119,419
-----------
$53,292,739
===========

(5) TRANSACTIONS WITH AFFILIATES

During 1994 and 1993, an affiliate of the Corporate General Partner
provided management and leasing services. In December 1994, the affiliate
sold substantially all of its assets and assigned its interest in its
management contracts, including the one for 260 Franklin Street, to an
unaffiliated third party. (See Note 7 of Notes to Consolidated Financial
Statements of Carlyle-XVI). In connection with such sale, an affiliate of
the General Partners guaranteed payment to the unaffiliated third party of
the property management fees for the 260 Franklin property. As a result of
the affiliate's payment of management fees for 1995 to the unaffiliated
third party manager pursuant to the guarantee, the amount of such
management fees is reflected as payable to an affiliate in the
unconsolidated financial statements. Pursuant to the terms of the loan
modification for 260 Franklin, cash flow from the property in an amount
equal to all management fees and leasing fees have been escrowed by 260
Franklin and are reported as escrow deposits in the accompanying financial
statements. Such affiliate is entitled to property management fees of
$331,811, $320,385 and $340,753 in 1995, 1994 and 1993, respectively. Such
affiliate also is entitled to leasing fees of none, $100,855 and $6,789 for
1995, 1994 and 1993, respectively. As of December 31, 1995, $1,320,185 of
management and leasing fees were unpaid. Remaining amounts due to
affiliates at December 31, 1995 represents advances from Carlyle-XV and
Carlyle-XVI of $468,686 and $200,482, respectively, which can be repaid
pursuant to the reserve escrow agreement.

<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI

260 FRANKLIN STREET ASSOCIATES

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

<CAPTION>
COST
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
UNCONSOLIDATED VENTURES(A)ACQUISITION AT CLOSE OF PERIOD (B)
-------------------------- ----------- --------------------------------------
LAND BUILDINGS BUILDINGS PROVISION LAND AND BUILDINGS
LEASEHOLD AND AND FOR VALUE LEASEHOLD AND
ENCUMBRANCE INTERESTSIMPROVEMENTSIMPROVEMENTSIMPAIRMENT(C)INTERESTIMPROVEMENTS TOTAL (D)
--------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OFFICE
BUILDING:
Boston,
Massachu-
setts . .$87,623,6258,169,209 97,607,593 3,310,230 17,120,734 6,662,200 85,304,098 91,966,298
=========== ========= ========== ========= ========== ========= ========== ==========

</TABLE>

<TABLE>

SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI

260 FRANKLIN STREET ASSOCIATES

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ------------------------- -----------
<S> <C> <C> <C> <C> <C>
OFFICE BUILDINGS:
Boston, Massachusetts. $29,218,490 1985 05/21/86 5-30 years $2,011,836
=========== ==========

<FN>
- -----------------
Notes:
(A) The initial cost represents the original purchase price of the property, including amounts incurred
subsequent to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1995 for Federal income tax purposes was
approximately $107,700,000.
(C) In 1990, 260 Franklin recorded a provision for value impairment totalling $17,120,734.

</TABLE>

<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI

260 FRANKLIN STREET ASSOCIATES

REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1995

(D) Reconciliation of real estate owned as of December 31, 1995, 1994 and 1993:

<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . . $ 91,897,628 91,775,556 91,502,291
Additions during period . . . . . . . . . . 68,670 122,072 273,265
------------ ------------ ------------

Balance at end of period. . . . . . . . . . $ 91,966,298 91,897,628 91,775,556
============ ============ ============

(E) Reconciliation of accumulated depreciation:

Balance at beginning of period. . . . . . . $ 26,377,605 23,539,353 20,705,455
Depreciation expense. . . . . . . . . . . . 2,840,885 2,838,252 2,833,898
------------ ------------ ------------

Balance at end of period. . . . . . . . . . $ 29,218,490 26,377,605 23,539,353
============ ============ ============

</TABLE>

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

There were no changes in or disagreements with the accountants during
fiscal year 1994 and 1995.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. Substantially all of the
outstanding shares of JMB are owed by certain of its officers, directors,
members of their families and affiliates. JMB has responsibility for all
aspects of the Partnership's operations, subject to the requirement that
sales of real property must be approved by the Associate General Partner of
the Partnership, ABPP Associates, L.P. Effective December 31, 1995, ABPP
Associates, L.P. acquired all of the partnership interests in Realty
Associates - XVI, L.P., the Associate General Partner, and elected to
continue the business of Realty Associates - XVI, L.P. ABPP Associates,
L.P., an Illinois limited partnership with JMB as its sole general partner,
continues as the Associate General Partner. The Associate General Partner
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 sale of real property (or any
interest therein) 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 or its investment properties
by affiliates of the General Partners, including property management
services and insurance brokerage services. In general, such services are
to be provided on terms no less favorable to the Partnership than could be
obtained from independent third parties and are otherwise subject to
conditions and restrictions contained in the Partnership Agreement. The
Partnership Agreement permits the General Partners and their affiliates to
provide services to, and otherwise deal and do business with, persons who
may be engaged in transactions with the Partnership, and permits the
Partnership to borrow from, purchase goods and services from, and otherwise
to do business with, persons doing business with the General Partners or
their affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.

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

Served in
Name Office Office Since
---- ------ ------------

Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91

There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 5, 1996. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 5,
1996. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.

JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
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-XVII ("Carlyle-
XVII"), JMB Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage
Partners, Ltd.-II ("Mortgage Partners-II"), 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.-IX ("JMB Income-IX"), 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 partner of most of the foregoing partnerships.

Most of the foregoing directors and officers are also officers and/or
directors of various affiliated companies of JMB including Arvida/JMB
Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.
("Arvida")), Arvida/JMB Managers-II, Inc. (the general partner of
Arvida/JMB Partners, L.P.-II ("Arvida-II")) and Income Growth Managers,
Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd.

("IDS/BIG")). Most of such directors and officers are also partners of
certain partnerships which are associate general partners in the following

real estate limited partnerships: the Partnership, Carlyle-VII, Carlyle-
IX, Carlyle-X, Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-
XV, Carlyle-XVII, JMB Income-VI, JMB Income-VII, JMB Income-IX, JMB
Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage
Partners, Mortgage Partners-II, 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
Advisors, Inc., the general partner of JMB/125. Reference is made to Note
3(b).

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 58) is 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.,
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 58) is 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 Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.

Burton E. Glazov (age 57) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.

Stuart C. Nathan (age 54) 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.

A. Lee Sacks (age 62) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.

John G. Schreiber (age 49) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. He is also a director of Urban
Shopping Centers, Inc., an affiliate of JMB that is a real estate
investment trust in the business of owning, managing and developing
shopping centers as well as a director of a number of investment companies
advised or managed by T. Rowe Price Associates with its affiliates. Since
1994, Mr. Schreiber has also served as a Trustee of Amli Residential
Property Trust, a publicly-traded real estate investment trust that invests
in multi-family properties. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.

H. Rigel Barber (age 46) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.

Glenn E. Emig (age 48) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.

Gary Nickele (age 43) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.

Gailen J. Hull (age 47) 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.

Howard Kogen (age 60) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.

ITEM 11. EXECUTIVE COMPENSATION

Officers and directors of the Corporate General Partner receive no
direct remuneration in such capacities from the Partnership. The
Partnership is required to pay a management fee to the Corporate General
Partner and the General Partners are entitled to receive a share of cash
distributions, when and as cash distributions are made to the Limited
Partners, and a share of profits or losses. Reference is made to Notes 5
and 9 for a description of such distributions and allocations. In 1995,
the General Partners received $93,683 of distributions and the Corporate
General Partner received management fees of $112,427. The General Partners
received a share of Partnership income for tax purposes aggregating $56,080
in 1995.

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

An affiliate of the Corporate General Partner provided property
management and services for the 260 Franklin Street Building in Boston,
Massachusetts in 1994 and prior years. As required by the terms of a
modification for the mortgage loan secured by the 260 Franklin Street
Building, property management and leasing fees payable to the affiliate
since January 1992 have been escrowed. Pursuant to the affiliate selling
its interest in the management contracts at 260 Franklin Street, the
General Partner has guaranteed payment of the management fees to the
unaffiliated third party. As a result of the affiliate paying the
management fees to the unaffiliated third party manager, the affiliate is
entitled to reimbursement of current year fees of $331,811. As of December
31, 1995, the affiliate is entitled to property and management fees of
$1,320,185 by 260 Franklin Street Associates. Such amount does not bear
interest. See Note 3(d).

As set forth in the Prospectus of the Partnership, the Corporate
General Partner must negotiate such agreements on terms no less favorable
to the Partnership than those customarily charged for similar services in
the relevant geographical area (but in no event at rates greater than 6% of
the gross income from the property), and such agreements must be terminated
by either party thereto, without penalty, upon 60 days notice.

In December 1995, the joint venture partner in NewPark Associates, a
joint venture that owns NewPark Mall, agreed to pay to an affiliate of the
Corporate General Partner an annual consulting fee of $100,000 in
consideration of such affiliate's assisting NewPark Associates and the
joint venture partner in the evaluation of property budgets and leasing and
long-term strategies for NewPark Mall. Such consulting fee does not
increase the management fee payable by NewPark Associates under the
management agreement with the joint venture partner.

JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1995
aggregating $28,811 in connection with the provision of insurance coverage
for certain of the real property investments of the Partnership. Such
commissions are at rates set by insurance companies for the classes of
coverage provided.

The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses relating to
the administration of the Partnership and the acquisition and operation of
the Partnership's real property investments. In 1995, the Corporate
General Partner of the Partnership was due reimbursement for such
out-of-pocket expenses in the amount of $110,709 of which $59,288 was
unpaid as of December 31, 1995.

Additionally, the General Partners or their affiliates are also
entitled to reimbursements for administrative, legal, accounting and data
processing services. Such costs for 1995 were $132,949, all which was paid
as of December 31, 1995. Amounts of these reimbursements may not exceed
cost or 90% of what an independent party would charge. (Reference is made
to Note 7).

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 directors and the Associate General Partner 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 JMB Realty Corporation 5 Interests (1) Less than 1%
Interests indirectly

Limited Partnership Corporate General Partner, 5 Interests (1) Less than 1%
Interests its officers and indirectly
directors and the
Associate General
Partner as a group
- -----------------
<FN>
(1) Includes 5 Interests owned by the Initial Limited Partner of the Partnership, for which JMB, as its
indirect majority shareholder, is deemed to have sole voting and investment power.

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

Reference is made to Item 10 for information concerning 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 and 11 above.

PART IV

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

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

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

(2) Exhibits.

3. Amended and Restated Agreement of Limited
Partnership, which is incorporated by reference to Exhibit 3 to the
Partnership's Report on Form 10-K for December 31, 1992 (File No. 0-16516)
dated March 19, 1993.

4-A. Assignment Agreement set forth as Exhibit B to
the Prospectus, a copy of which is incorporated by reference to Exhibit 4-A
to the Partnership's Report on Form 10-K for December 31, 1992 (File No. 0-
16516) dated March 19, 1993.

4-B. Documents relating to the loan modification of
the mortgage loan secured by the 260 Franklin Street Building is hereby
incorporated by reference to Exhibit 4-B to the Partnership's Form 10-K for
December 31, 1992 (File No. 0-16516) dated March 27, 1992.

4-C. First Amendment to Loan Documents relating to the
mortgage loan secured by Dunwoody Crossing Apartments (Phases I and III) is
hereby incorporated by reference to the Partnership's Form 10-Q for
September 30, 1994 (File No. 0-16516) dated November 10, 1994.

4-D. Documents relating to the modification of the
mortgage loan secured by Dunwoody Crossing Apartments (Phases I and III)
are hereby incorporated by reference to the Partnership's Form 10-K for
December 31, 1994 (File No. 0-16516) dated March 27, 1995.

4-E. Forbearance agreement relating to the
modification of the mortgage loan secured by NewPark Mall dated October,
1995 is hereby incorporated by reference to the Partnership's Report on
Form 10-Q for September 30, 1995 (File No. 0-16516) dated November 9, 1995.

4-F. Documents relating to the Promissory Note secured
by NewPark Mall dated December 19, 1995 are filed herewith.

10-A.Escrow Deposit Agreement is hereby incorporated
by reference to Exhibit 10.1 to the Partnership's Amendment No. 1 to Form
S-11 (File No. 33-3567) Registration Statement dated May 14, 1986.

10-B.Acquisition documents relating to the purchase of
an interest in the 260 Franklin Street Building, Boston, Massachusetts, are
hereby incorporated herein by reference to Exhibit 10.4 to the
Partnership's Amendment No. 2 to Form S-11 (File No. 33-3567) dated July
25, 1986.

10-C.Additional acquisition documents relating to the
purchase of an interest in the 260 Franklin Street Building, Boston,
Massachusetts, are hereby incorporated herein by reference to Exhibit
10.4.1 to the Partnership's Post-Effective Amendment No. 1 to Form S-11
(File No. 33-3567) dated September 30, 1986.

10-D.Acquisition documents relating to the purchase by
the Partnership of an interest in the Post Crest Apartments, Post Terrace
Apartments, and Post Crossing Apartments in DeKalb County (Atlanta),
Georgia, are hereby incorporated herein by reference to Exhibit 10.5 to the
Partnership's Post-Effective Amendment No. 2 to Form S-11 (File No. 33-
3567) dated September 30, 1986.

10-E.Acquisition documents relating to the purchase by
the Partnership of an interest in NewPark Mall in Newark (Alameda County),
California, are hereby incorporated herein by reference to Exhibit 10.6 to
the Partnership's Post-Effective Amendment No. 2 to Form S-11 (File No. 33-
3567) dated December 30, 1986.

10-F.Acquisition documents relating to the acquisition
by the Partnership of an interest in the Palm Desert Town Center in Palm
Desert, California, dated December 23, 1988 are hereby incorporated by
reference to Exhibit 1 to the Partnership's Form 8-K (File No. 0-16516)
dated January 6, 1989.

10-G.Sale documents and exhibits thereto relating to
the Partnership's contract of sale of the Blue Cross Building, Woodland
Hills (Los Angeles), California are hereby incorporated by reference to
Exhibit 10-N to the Partnership's Report on Form 10-Q for September 30,
1993 (File No. 0-16516) dated November 11, 1993.

10-H.Takeover Agreement relating to the Johnson &
Higgins space at the 125 Broad Building is hereby
incorporated by reference to the Partnership's Form 10-Q for March 31, 1994
(File No. 0-16516) dated May 11, 1994.

10-I.Documents relating to the assignment of JMB/125's
interest in 125 Broad Street Company are hereby incorporated by reference
to the Partnership's Form 10-K for December 31, 1994 (File No. 0-16516)
dated March 27, 1995.

10-J.Modification to Reserve Escrow Agreement relating
to the 260 Franklin Street Building is hereby incorporated by reference to
the Partnership's Form 10-Q for March 31, 1995 (File No. 0-16516) dated May
11, 1995.

21. List of Subsidiaries

24. Powers of Attorney

27. Financial Data Schedule

Although certain additional long-term debt instruments of the
Registrant have been excluded from Item 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such to the
Securities and Exchange Commission upon request.

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

No annual report or proxy material for the fiscal year 1995 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.

SIGNATURES

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

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI

By: JMB Realty Corporation
Corporate General Partner

GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 25, 1996

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

By: JMB Realty Corporation
Corporate General Partner

JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 25, 1996

NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1996

H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1996

GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1996

GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1996

A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 25, 1996

STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 25, 1996

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

GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1996

CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI

EXHIBIT INDEX
-------------

DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
- ------- ------- ------------ -------------

3. Amended and Restated Agree-
ment of Limited Partnership
of the Partnership Yes

4-A. Assignment Agreement Yes

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

4-C. First Amendment to Loan
Documents relating to the
mortgage loan secured by
Dunwoody Crossing Apartments
(Phases I and III) Yes

4-D. Documents relating to the
modification of the mortgage
loan secured by Dunwoody
Crossing Apartments (Phases I
and III) Yes

4-E. Forbearance agreement relating to
the modification of the mortgage
loan secured by New Park Mall Yes

4-F. Documents relating to the Promissory
Note secured by New Park Mall No

10-A. Escrow Deposit Agreement Yes

10-B. Acquisition documents relating
to the purchase of an interest
in the 260 Franklin Street
Building, Boston, MassachusettsYes

10-C. Additional acquisition documents
relating to the purchase of an
interest in the 260 Franklin
Street Building, Boston,
Massachusetts Yes

10-D. Acquisition documents relating
to the purchase by the Part-
nership of an interest in the
Post Crest Apartments, Post
Terrace Apartments, and Post
Crossing Apartments in DeKalb
County (Atlanta), Georgia Yes

10-E. Acquisition documents relating
to the purchase by the Partnership
of an interest in NewPark Mall
in Newark (Alameda County),
California Yes

10-F. Acquisition documents
relating to the acquisition
by the Partnership of an
interest in the Palm Desert
Town Center in Palm Desert,
California, dated Decem-
ber 23, 1988 Yes

10-G. Sale documents and exhibits
thereto relating to the
Partnership's contract of sale
of the Blue Cross Building,
Woodland Hills (Los Angeles),
California Yes

10-H. Takeover Agreement relating
to the Johnson & Higgins space
at the 125 Broad Building Yes

10-I. Documents relating to the
assignment of JMB/125's interest
in 125 Broad Street Company Yes

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

21. List of Subsidiaries No

24. Powers of Attorney No

27. Financial Data Schedule No

PROMISSORY NOTE
(CALIFORNIA)

$60,000,000.00 December 19, 1995

FOR VALUE RECEIVED, NEWPARK ASSOCIATES, a California general
partnership (hereinafter referred to as "Maker"), promises to pay to the
order of CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a Connecticut
corporation, having its principal office at 900 Cottage Grove Road,
Bloomfield, Connecticut (the "Payee"), at such principal address or at such
other place as the Holder hereof may designate in writing (the legal holder
from time to time of this Note, including Payee as the initial holder,
hereinafter referred to as "Holder"), the principal sum of Sixty Million
and No/100 Dollars ($60,000,000.00), or so much thereof as may be advanced
to or for the benefit to Maker by Holder (hereinafter referred to as
"Principal Indebtedness"), together with interest thereon at an annual rate
of Seven and Fifteen One Hundredths percent (7.15%) (the "Interest Rate"),
in accordance with the provisions hereinafter set forth.

1. TERMS OF PAYMENT. Maker shall pay to Holder on the first day
of the second calendar month after the date hereof and on the first day of
each calendar month thereafter to and including the Maturity Date
(hereinafter defined) (such payment dates being hereinafter referred to as
"monthly payment dates") interest on the Principal Indebtedness from time
to time outstanding, at the Interest Rate, for the immediately preceding
calendar month. Interest shall be calculated and applied on the basis of a
360-day year consisting of twelve 30-day months, except that interest for
any partial month shall be calculated and applied on the basis of a 365-day
year and the actual number of days in such partial month during which the
Principal Indebtedness is outstanding. On December 31, 2000 (the "Maturity
Date"), Maker shall pay to Holder the entire Principal Indebtedness then
remaining unpaid, together with accrued and unpaid interest thereon at the
Interest Rate and any other charges due under this Note, the Deed of Trust
(hereinafter defined) and any other documents evidencing or securing or
pertaining to the advancement or disbursement of the Principal Indebtedness
including, without limitation the Environmental Indemnification Agreement
of even date herewith (the "Environmental Indemnity") from Maker, among
others, to Payee (collectively, the "Loan Documents"). The period from and
including the date hereof to the Maturity Date will be referred to
hereinafter as the "Term".

MAKER HEREBY ACKNOWLEDGES AND AGREES THAT THE ENTIRE PRINCIPAL
BALANCE OF THIS PROMISSORY NOTE, LESS ANY PREPAYMENTS MAKE PURSUANT TO
SECTION 2 BELOW, SHALL BE UNPAID AND DUE AND PAYABLE ON THE MATURITY DATE.

2. PREPAYMENT. Maker, whether or not a debtor in a proceeding
under Title 11, United States Code, may prepay the Principal Indebtedness
in full, but not in part, on any monthly payment date, provided Maker gives
Holder forty-five (45) days prior written notice and pays, along with all
accrued, unpaid interest and all other sums then under any of the Loan
Documents, a prepayment fee as described below.

The prepayment fee shall be the greater of:

(a) One percent (1%) of the then-existing Principal Indebtedness,
or

(b) Yield Maintenance as defined below.

The Principal Indebtedness may be prepaid at par during the last
ninety (90) days of the Term. The foregoing prepayment fee will be due
when the loan is prepaid prior to the Maturity Date, whether such
prepayment is voluntary or results from default, acceleration or any other
cause except for any mandatory prepayment of the Principal Indebtedness by
reason of the application of insurance proceeds or condemnation awards to
the Principal Indebtedness as required by the Loan Documents.

YIELD MAINTENANCE: Yield Maintenance is defined as the sum of
present values on the date of prepayment of each of the Monthly Interest
Shortfalls for the remaining Term of the loan discounted at the monthly
Treasury Yield plus 50 basis points.

The Monthly Interest Shortfall is the product of (i) the positive
difference, if any, of the Semi-Annual Equivalent Rate less an amount equal
to the sum of the Treasury Yield plus 50 basis points, divided by 12, times
(ii) the outstanding Principal Indebtedness, on each monthly payment date
for each full and partial month remaining in the Term.

The present value is then determined by discounting each Monthly
Interest Shortfall at a discount rate equal to the sum of the Treasury
Yield plus 50 basis points, divided by twelve.

The "Semi-Annual Equivalent Rate" for this loan is 7.26%

The "Treasury Yield" will be determined by reference to the Federal
Reserve Statistical Release H.15 (519) of Selected Interest Rates (or any
similar successor publication of the Federal Reserve) for the first week
ending not less than two full weeks prior to the prepayment date. If the
remaining Term is less than one year, the Treasury Yield will equal the
yield for 1-year Treasury Constant Maturities. If the remaining Term is
equal to one of the maturities of the Treasury Constant Maturities (e.g.,
1-year, 2-year, etc.), then the Treasury Yield will equal the yield for the
Treasury Constant Maturity with a maturity equalling the remaining Term.
If the remaining Term is longer than one year, but does not equal one of
the maturities of the Treasury Constant Maturities, then the Treasury Yield
will equal the yield for the Treasury Constant Maturity closest to, but not
exceeding, the remaining Term.

MAKER HEREBY EXPRESSLY (A) WAIVES ANY RIGHTS IT MAY HAVE UNDER
CALIFORNIA CIVIL CODE SECTION 2954.10 TO PREPAY THIS NOTE, IN WHOLE OR IN
PART, WITHOUT PENALTY, UPON ACCELERATION OF THE MATURITY DATE OF THIS NOTE
AND (B) AGREES THAT IF, FOR ANY REASON, A PREPAYMENT OF ANY OR ALL OF THIS
NOTE IS MADE, UPON OR FOLLOWING ANY ACCELERATION OF THE MATURITY DATE OF
THIS NOTE BY HOLDER ON ACCOUNT OF ANY DEFAULT BY MAKER, INCLUDING, BUT NOT
LIMITED TO, ANY TRANSFER, DISPOSITION OR FURTHER ENCUMBRANCE AS PROHIBITED
OR RESTRICTED BY THE DEED OF TRUST, THEN MAKER SHALL BE OBLIGATED TO PAY
CONCURRENTLY THEREWITH, AS A PREPAYMENT FEE, THE APPLICABLE SUM SPECIFIED
IN THIS SECTION EXCEPT IN THE CASE OF MANDATORY PREPAYMENTS OF INSURANCE
PROCEEDS OR CONDEMNATION AWARDS. BY INITIALLING THIS PROVISION IN THE
SPACE PROVIDED BELOW, MAKER HEREBY DECLARES THAT PAYEE'S AGREEMENT TO MAKE
THE LOAN EVIDENCED BY THIS NOTE AT THE INTEREST RATE AND FOR THE TERM SET
FORTH IN THIS NOTE CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL
WEIGHT BY MAKER, FOR THIS WAVER AND AGREEMENT.

[Signatures begin on the next page.]

NEWPARK ASSOCIATES, a California general
partnership

By: HOMART DEVELOPMENT CO., a Delaware

Corporation, managing general partner

By:
Its: First Vice President

By: JMB/NEWPARK ASSOCIATES, and Illinois
general partnership, a general partner

By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois
limited partnership

By: JMB REALTY CORPORATION, a
Delaware Corporation a
general partner

By:
Its: Vice President

By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XVI, an Illinois
limited partnership

By: JMB REALTY CORPORATION, a
Delaware corporation, a
general partner

By:
Its: Vice President

The aforesaid prepayment fees do not constitute a penalty, but rather
represent the reasonable estimate, agreed to between Maker and Holder, of a
fair compensation for the loss that may be sustained by Holder due to
prepayment of the Loan prior to the Maturity Date. Any prepayment fee
required pursuant to the preceding paragraphs shall be paid without
prejudice to the right of Holder to collect any of the amounts owing under
this Note or the Deed of Trust or otherwise to enforce any of its rights or
remedies arising out of an Event of Default hereunder.

3. SECURITY. This Note is secured by, among other things, a Deed
of Trust, Security Agreement with Assignment of Rents and Fixture Filing
(hereinafter referred to as the "Deed of Trust") given by Maker to Payee,
of even date herewith, constituting a first lien on Maker's fee interest in
certain real estate and a first priority security interest in personal
property and an assignment of rents and leases (such real and personal
property hereinafter referred to as the "Security"), in the County of
Alameda, State of California.

4. LOCATION AND MEDIUM OF PAYMENTS. The sums payable under this
Note or under the Deed of Trust shall be paid to Holder at its principal
address hereinabove set forth, or at such other place as Holder may from
time to time hereafter designate to Maker in writing, in legal tender of
the United States of America.

5. ACCELERATION OF MATURITY. At the option of Holder, which may
be exercised at any time after one or more of the following events (each
being an "Event of Default") shall have occurred, the whole of the
Principal Indebtedness, together with all interest, applicable prepayment
fees, and other charges due under any of the Loan Documents, shall
immediately become due and payable ("Acceleration of Maturity"): (a) if
any payment of any installment of the Principal Indebtedness, interest and
/or any other sum due hereunder is not received by Holder within five (5)
business days following the date when such payment was due; or (b) if a
default or an Event of Default shall occur under the Deed of Trust or any
other of the Loan Documents which is not cured within any applicable grace
period afforded therein, if any.

6. LATE CHARGES; INTEREST FOLLOWING EVENT OF DEFAULT. If any
payment due under this Note, the Deed of Trust or any other Loan Document,
is not paid within five (5) business days of when due, without regard to
any cure or grace period, Maker shall pay and Holder shall be entitled to
collect a late payment

charge for each month or fraction thereof during which such payment is not
make when due and for each month thereafter that such sum remains unpaid,
equal to the lesser of four percent (4%) of such late payment or the
maximum amount that the parties may contract for under applicable law, as
the reasonable estimate by Holder and Maker of a fair average compensation
for the loss that may be sustained by Holder due to the failure of Maker to
make timely payments, and such amount shall be secured by the Deed of Trust
and the other Loan Documents. Such late charge shall be paid without
prejudice to the right of Holder to collect any other amounts provided to
be paid or to declare an Event of Default under this Note or the Deed of
Trust.

In addition to any late payment charge which may be due under this
Note, Maker shall pay interest on all sums due hereunder at a rate (the
"Default Rate") equal to the lesser of (i) the Interest Rate plus four
percent (4%) per annum, or (ii) the maximum rate that the parties may
contract for under applicable law, from and after the first to occur of the
following events: if Holder elects to cause the Acceleration of Maturity;
if a petition under Title 11, United States Code, shall be filed by Maker
or if Maker shall seek or consent to the appointment of a receiver or
trustee for itself or for any of the Security, file a petition seeking
relief under the bankruptcy or other similar laws of the United States, any
state or any jurisdiction, make a general assignment for the benefit of
creditors, or be unable to pay its material debts as they become due; if a
court shall enter an order, judgment or decree appointing, with or without
the consent of Maker, a receiver or trustee for it or for any of the
Security or approving a petition filed against Maker which seeks relief
under the bankruptcy or other similar laws of the United States, any state
or any jurisdiction, and any such order, judgment or decree shall remain in
force, undischarged or unstayed, sixty (60) days after it is entered; or if
all sums due hereunder are not paid on the Maturity Date.

7. COLLECTION AND ENFORCEMENT COSTS. Maker, upon demand, shall
pay Holder for all costs and expenses, including without limitation
attorneys' fees, paid or incurred by Holder in connection with the
collection of any sum due hereunder, or in connection with enforcement of
any of Holder's rights or Maker's obligations under this Note, the Deed of
Trust, or any of the other Loan Documents.

8. CONTINUING LIABILITY. Subject to Section 15, the obligation of
Maker to pay the Principal Indebtedness, interest and all other sums due
hereunder shall continue in full force and effect and in no way be
impaired, until the actual payment thereof to Holder, and in case of sale
or transfer of all or any part of the Security, or in case of any further
agreement given to secure the payment of this Note, or in

case of any agreement or stipulation extending the time or modifying the
terms of payment above recited, Maker shall nevertheless continue to be
liable on this Note, as extended or modified by any such agreement or
stipulation, unless released and discharged in writing by Holder.

9. [Intentionally Deleted].

10. NO ORAL CHANGES; WAIVERS. This Note may not be changed orally,
but only by an agreement in writing signed by the party against whom
enforcement of a charge is sought. The provisions of this Note shall
extend and be applicable to all renewals, amendments, extensions,
consolidation, and modifications of the other Loan Documents, and any and
all references herein to the Loan Documents shall be deemed to include any
such renewals, amendments, extensions, consolidations, or modifications
thereof.

Maker and any future indorsers, sureties, and guarantors hereof,
jointly and severally, waive presentment for payment, demand, notice of
nonpayment, notice of dishonor, protest of any dishonor, notice of protest,
and protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default (except notice of default
required hereby, if any), or enforcement of the payment of this note, and
they agree that the liability of each of them shall be unconditional
without regard to the liability of any other party and shall not be in any
manner affected by an indulgence, extension of time, renewal, waiver, or
modification granted or consented to by the Holder; and Maker and all
future indorsers, sureties and guarantors hereof, if any, consent to any
and all extensions of time, renewals, waivers, or modifications that may be
granted by the Holder hereof with respect to the payment or other
provisions of this Note, and to the release of the collateral, or any part
thereof, with or without substitution, and agree that additional makers,
indorsers, guarantors, or sureties may become parties hereto without notice
to them or affecting their liability hereunder. The parties hereto
recognize and acknowledge that no endorser, surety, guarantor, or
additional maker currently exists hereunder or is presently required under
the Loan Documents.

Holder shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in
writing and signed by Holder, and then only to the extent specifically set
forth therein; a waiver on one event shall not be construed as continuing
or as a bar to or waiver of such right or remedy on a subsequent event.
The acceptance by Holder of payment hereunder that is less than payment in
full of all amounts due at the time of such payment shall not without the
express written consent of Holder: (i) constitute a waiver of the right to
exercise any of Holder's remedies at

that time or at any subsequent time, (ii) constitute an accord and
satisfaction, or (iii) nullify any prior exercise of any remedy.

No failure to cause an Acceleration of Maturity hereof by reason of
an Event of Default hereunder, acceptance of a past due installment, or
indulgences granted from time to time shall be construed (i) as a novation
of this Note or as a reinstatement of the indebtedness evidenced hereby or
as a waiver of such right of acceleration or of the right of Holder
thereafter to insist upon strict compliance with the terms of this Note, or
(ii) to prevent the exercise of such right of acceleration or any other
right granted hereunder or by the laws of the State of California; and, to
the maximum extent permitted by law, Maker hereby expressly waives the
benefit of any statute or rule of law or equity now provided, or which may
hereafter be provided, which would produce a result contrary to or in
conflict with the foregoing.

To the maximum extent permitted by law, Maker hereby waives and
renounces for itself, its heirs, successors and assigns, all rights to the
benefits of any statute of limitations and any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption, and
appraisement, now provided, or which may hereafter be provided, by the
Constitution and laws of the United States of America and of any state
thereof, both as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the obligations
evidenced by this Note.

11. BIND AND INURE. This Note shall bind and inure to the benefit
of the parties hereto and their respective legal representatives, heirs,
successors and assigns.

12. APPLICABLE LAW. The provisions of this Note shall be construed
and enforceable in accordance with the laws of the State of California.

If any provision of this Note or the application hereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, neither the remainder of this Note nor the application of
such provision to any other person or circumstance shall be affected
thereby, but rather the same shall be enforced to the greatest extent
permitted by law, except that if such provision relates to the payment of a
monetary sum, then the Holder may, at its option, declare the entire
indebtedness evidenced hereby due and payable upon sixty (60) days prior
written notice to Maker and, provided no Event of Default is then
continuing, without prepayment fee or premium that in the event Maker
continues timely to

make all payment of principal and interest due to Holder in accordance with
the terms of this Note, whether or not any term or provision of this Note
shall become invalid or unenforceable, Holder agrees to extend the
aforementioned sixty (60) day period to one hundred eighty (180) days, or
such shorter period as may be required by applicable law.

13. USURY. It is hereby expressly agreed that if from any
circumstances whatsoever fulfillment of any provision of this Note, at the
time performance of such provision shall be due, shall involve transcending
the limit of validity presently prescribed by any applicable usury statute
or any other law, with regard to obligations of like character and amount,
then IPSO FACTO the obligation to be fulfilled shall be reduced to the
limit of such validity, so that in no event shall any exaction be possible
under this Note that is in excess of the limit of such validity. In no
event shall Maker be bound to pay for the use, forbearance or detention of
detention of the money loaned pursuant hereto, interest of more than the
current legal limit; the right to demand any such excess being hereby
expressly waived by Holder.

14. NOTICE. A
ny notice, request, demand, statement or consent made hereunder shall be in
writing signed by the party giving such notice, request, demand, statement
or consent, and shall be delivered personally, or delivered to a reputable
overnight delivery service providing a receipt, or deposited in the United
States Mail, postage prepaid and registered or certified mail, return
receipt requested, addressed as set forth below or to such other address
within the continental United States of America as may have theretofore
been designated in writing. The effective date of any notice given as
aforesaid shall be the of personal service, one (1) business day after
delivery to such overnight delivery service, or three (3) business days
after being deposited in the United States Mail, whichever is applicable.
For purposes hereof, the addresses are as follow:

If to Holder:

Connecticut General Life Insurance Company
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2319
Attn: Investment Services, S-319

With a courtesy copy to:
CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, CT 06152-2215
Attn: Real Estate Division, S-215A

If to Maker:
NewPark Associates
c/o Homart Development Co.
55 West Monroe, Suite 3100
Chicago, Illinois 60603-5060
Attn: Chief Financial Officer

With a courtesy copy to:
Carlyle Real Estate Limited Partnership-XV
900 North Michigan Avenue
Chicago, Illinois 60611
Attn: Stephen A. Lovelette

With a courtesy copy to:
Homart Development Co.
55 West Monroe, Suite 3100
Chicago, Illinois 60603-5060
Attn: General Counsel

With a courtesy copy to:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, California 90067
Attn: Real Estate Notices (EJML)

Notwithstanding the foregoing agreement to provide a courtesy
copy to Maker's attorneys, such copy shall be a courtesy copy only, and
failure to provide such courtesy copy shall have absolutely no effect or
entity Maker to any remedy whatsoever. Any notice duly given to Maker
shall be effective whether or not the courtesy copy was given to Maker's
attorneys.

15. NONRECOURSE. Except as hereinafter in this Section 15 and in
Section 37 of the Deed of Trust specifically provided, Maker (or any direct
or indirect partner of Maker, or shareholder of such partner) shall not be
personally liable for the payment of any sums due hereunder or under the
other Loan Documents or the performance of any obligations of Maker
hereunder or under any of the other Loan Documents. Without in any way
limiting the generality of the foregoing, no judgment for the repayment of
the Principal Indebtedness or interest thereon or the collection of any
amount due pursuant to the Loan Documents will be enforced against Maker
(or against any present or future, or direct or indirect partner of Maker
or shareholder

10.

of such partner) personally or any property of Maker (or against any
present or future, direct or indirect partner of Maker or shareholder of
such partner) other than the Security and other security furnished under
the Loan Documents in any action to foreclose the Deed of Trust or to
otherwise realize upon any security furnished under the Loan Documents or
to collect any payable hereunder. Notwithstanding the foregoing:

(a) Nothing herein contained shall be construed as
prohibiting Holder from exercising any and all remedies which the Loan
Documents permit, including the right to bring actions or proceedings
(including an action or suit for judicial foreclosure) against Maker (but
not any direct or indirect partner of Maker or shareholder of such partner)
and to enter a judgement against Maker, so long as, except as provided in
this Section 15 or in Section 37 of the Deed of Trust, the exercise of any
remedy does not extend to obtaining a judgment in the nature of a
deficiency judgment or to execution against or recovery out of any property
of Maker (or any direct or indirect partner of Maker or shareholder of such
partner) other than the Security and any other security furnished under the
Loan Documents on account of a judgment in the nature of a deficiency
judgment;

(b) The foregoing limitation shall not be construed to
relieve Maker or Homart Development Co., JMB/NewPark Associates ("JNA"),
Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"), or Carlyle Real
Estate Limited Partnership-XVI ("Carlyle-XVI") (but no other person or
entity) from being personally liable for Maker's (i) misapplication of any
condemnation awards or insurance awards attributable to the Security, to
the full extent of such misapplication, (ii) at the time of foreclosure or
the giving of a deed in lieu of foreclosure, failure to deliver to Holder
any security deposits attributable to the Security, to the full extent of
such failure to deliver such security, (iii) collection of any rents in
advance in violation of any covenant contained in the Loan Documents, to
the full extent of such rents so collected in advance that apply to the
period after the occurrence of all Events of Default, (iv) commission of
fraud, intentional misrepresentation or waste in connection with the
operation of the Security or the making of the loan evidenced hereby, to
the full extent of any loss, damage, expense or costs (including reasonable
attorneys' fees) incurred by Holder resulting from such fraud, intentional
misrepresentation or waste, (v) failure to pay debt service on the
Principal Indebtedness, operating and maintenance expenses, insurance
premiums, deposits into a reserve for taxes, insurance or replacements (if
any), and other sums required under the Loan Documents that become due and
payable without penalty or interest, but only if the gross revenues
actually collected from the

11.

operation of the Security from and after the earlier of (x) the non-payment
by Maker of any principal and interest due hereunder, or (y) receipt by
Maker of notice from Holder of the occurrence of an Event of Default, and
ending on the date Holder or a third party takes title to the security or
has a receiver appointed with respect to the Security (such period not to
exceed the twelve (12) months prior to such passage of title) were
sufficient to pay any portion of the Principal Indebtedness, operating and
maintenance expenses, insurance premiums, deposits into a reserve and/or
escrow account for taxes, insurance or replacements (if any), or other sums
required by the Loan Documents that became due and payable without penalty
or interest during the same period, and Maker fails to make such payments
or deposits when due, but only to the extent of any funds diverted from
such payments, expenses or deposits.

(c) There shall be no limitation on Maker's personal liability
under, nor on the exercise of any of Holder's rights (i) under any
indemnity from Maker to Holder including, but not limited to, the
Environmental Indemnity, except as may be expressly set forth in such
indemnity or the document in which it is contained; and (ii) in accordance
with Section 736 of the California Code of Civil Procedure, as such Section
may be amended from time to time ("Civil Procedure Code"), to recover any
costs, expenses or liabilities which Holder is permitted to recover under
Civil Procedure Code Section 736 for breach of any "environmental
provision" (as defined in Civil Procedure Code Section 736) contained in
the Environmental Indemnity;

(d) There shall be no limitation on or prejudice to the rights of
Holder to proceed personally against any entity or person whatsoever,
including Maker, with respect to the enforcement of any guarantees by such
entity or person of the Principal Indebtedness or other sums sue hereunder
or under any of the other Loan Documents or any part thereof, leases,
master leases, and indemnifications, or any similar rights of payment made
in connection with the indebtedness evidenced hereby (whether such
guaranty, lease, indemnifications or rights of payment are made at the time
of or subsequent to the disbursement of the Principal Indebtedness) except
as may be expressly set forth therein; and

(e) Holder shall be permitted to bring an action against Maker
personally and to execute against and recover out of any property of Maker,
for all sums due pursuant to the Loan Documents to the extent permitted by
the terms of Section 726.5 of the Civil Procedure Code as it may be amended
from time to time, and to have the rights and remedies of an unsecured
lender to the extent permitted thereunder. If

12.

Holder exercise the rights and remedies of an unsecured creditor in
accordance with this clause (e), Maker promises to pay to Holder, on demand
by Holder following such exercise, all amounts owed to Holder under any
Loan Document, and Maker agrees that it will be personally liable for the
payment of all such sums. Maker and Holder acknowledge that pursuant to
Civil Procedure Code Section 726.5, Holder's rights under this clause (e)
are limited to instances in which Maker or any affiliate, agent, cotenant,
partner, or joint venturer of Maker either (i) cause, contributed to,
permitted, or acquiesced in the release (as defined in Civil Procedure Code
Section 726.5) or threatened release of toxic or hazardous waste or waste
products or (ii) had actual knowledge or notice of such release or
threatened release prior to the execution and delivery of this Note and
failed to disclose such release or threatened release to Holder in writing
after Holder's written request for information concerning the environmental
condition of the Security, unless Holder otherwise obtained actual
knowledge of such release or threatened release prior to the execution and
delivery of this Note.

In the event of any personal liability for the foregoing acts or
omissions, Holder's recourse with respect to JNA and its partners and
constituent partners shall be limited to the assets of each Carlyle entity
(which, as of the date hereof, are Carlyle-XV and Carlyle-XVI), the general
partners of JNA. In no event shall any present or future, direct or
indirect partner, trustee, advisor, beneficiary, director, shareholder,
officer, or employee of Carlyle-XV, or Carlyle-XVI, or of any partner in
Carlyle-XV or Carlyle-XVI, or of JMB Realty Corporation ("JMB"), its
affiliates and subsidiaries, have any personal liability under the Loan
Documents, and including with respect to the foregoing exceptions to the
exculpatory provisions. For purposes hereof, an entity will be deemed to
be an affiliate of JMB if such entity controls, is under common control
with, or is controlled by JMB.

Additionally, and notwithstanding anything to the contrary contained
herein, no negative capital account of any partner of Carlyle-XV or
Carlyle-XVI, or any sub-tier entities of Carlyle-XV or Carlyle-XVI, or any
obligation of any such partner or sub-tier entity to restore a negative
capital account or to contribute capital to Carlyle-XV or Carlyle-XVI or to
any other direct or indirect partner therein, shall be deemed to be the
property or an asset of Carlyle-XV or Carlyle-XVI or any such partner or
sub-tier entity. Accordingly, neither Lender nor any of its successors or
assigns shall have any right to collect, enforce, or proceed against or
with respect to such negative capital account or obligation to restore or
contribute.

16. TIME OF THE ESSENCE. Time is of the essence in this Note and
the other Loan Documents.

13.

17. ATTORNEYS' FEES. Any reference to "attorney fees", or
"attorneys' fees" in this document includes but is not limited to both the
fees, charges and costs incurred by Holder through its retention of outside
legal counsel, paralegals and legal assistants and the allocable fees,
costs and charges for services rendered by Holder's in-house counsel,
paralegals and legal assistants. Any reference to "attorney fees", or
"attorneys' fees" shall also include but not be limited to those attorneys
or legal fees, experts' fees, costs and charges incurred by Holder in the
collection of any Principal Indebtedness, the enforcement of any
obligations hereunder or under any other Loan Document, the protection of
the Security, the foreclosure of the Deed of Trust, the sale of the
Security, the defense of actions arising hereunder or under any other Loan
Document and the collection, protection or setoff of any claim the Holder
may have in a proceeding under Title 11, United States Code. Attorneys'
fees provided for hereunder shall accrue whether or not Holder has provided
notice of an Event of Default or of an intention to exercise its remedies
for such Event of Default.

14.

18. WAIVER OF TRIAL BY JURY. Maker hereby waives its rights to a
trial by jury as to any matter arising out of or concerning the subject
matter of this Note.

IN WITNESS WHEREOF, Maker has duly executed this note as of the day
and year first above written.

MAKER:

NEWPARK ASSOCIATES, a California general
Partnership

By: HOMART DEVELOPMENT CO., a Delaware
corporation, managing general partner

By:
Its: First Vice President

By: JMB/NEWPARK ASSOCIATES, and Illinois
general partnership, a general partner

By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois
limited partnership

By: JMB REALTY CORPORATION, a
Delaware corporation a
general partner

By:
Its: Vice President

By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XVI, an Illinois
limited partnership

By: JMB REALTY CORPORATION, a
Delaware corporation, a
general partner

By:
Its: Vice President

15.

EXHIBIT 21

LIST OF SUBSIDIARIES

The Partnership is a partner of the following joint ventures:
JMB/Owings Mills Associates, an Illinois general partnership, which
formerly held an interest in the 125 Broad Street Building, 260 Franklin
Street Associates, an Illinois general partnership which holds title to the
260 Franklin Street office building, located in Boston Massachusetts;
Villages Northeast Associates, an Illinois general partnership, which is a
partner in the VNE Partners, Ltd., a Georgia limited partnership, which
holds title to the Post Crest, Post Terrace and Post Crossing Apartment
complexes located in DeKalb County (Atlanta), Georgia; JMB/NewPark
Associates, an Illinois general partnership, which is a partner in NewPark
Associates, a California general partnership which holds title to the
NewPark Mall in Newark, California; JMB/Warner Center Associates, an
Illinois general partnership JMB/Hahn PDTC Associates, L.P., a California
Limited Partnership, which holds title to Palm Desert Town Center located
in Palm Desert (Palm Springs), California. The Partnership also owns a 50%
interest in Carlyle/Palm Desert, Inc., a corporation which is a partner in
JMB/Hahn PDTC Associates, L.P. Reference is made to Note 3 for a
description of the terms of such venture partnerships.

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XVI, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1995, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 5th day of February, 1996.

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

GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer

The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1995,
and any and all amendments thereto, the 5th day of February, 1996.

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

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

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

EXHIBIT 24

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 5th day of February, 1996.

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

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

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

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

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

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

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

<ARTICLE> 5

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

<CIK> 0000789950
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995

<CASH> 13,734,366
<SECURITIES> 0
<RECEIVABLES> 808,889
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,543,255
<PP&E> 60,100,323
<DEPRECIATION> 14,023,956
<TOTAL-ASSETS> 66,226,833
<CURRENT-LIABILITIES> 1,398,606
<BONDS> 41,485,363
<COMMON> 0
0
0
<OTHER-SE> 11,770,448
<TOTAL-LIABILITY-AND-EQUITY> 66,226,833
<SALES> 10,812,438
<TOTAL-REVENUES> 11,621,375
<CGS> 0
<TOTAL-COSTS> 7,230,498
<OTHER-EXPENSES> 795,096
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,100,070
<INCOME-PRETAX> (1,504,289)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,774,644)
<DISCONTINUED> 856,750
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (917,894)
<EPS-PRIMARY> (6.10)
<EPS-DILUTED> (6.10)

</TABLE>