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, 1998 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
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings. . . . . . . . . . . . . . 7
Item 4. Submission of Matters to a
Vote of Security Holders . . . . . . . . . . 7
PART II
Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters. . . . . . . 7
Item 6. Selected Financial Data. . . . . . . . . . . 8
Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . 10
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 14
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 15
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 42
PART III
Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . 42
Item 11. Executive Compensation . . . . . . . . . . . 44
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 47
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 48
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 48
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 52
i
<PAGE>
PART I
ITEM 1. BUSINESS
Unless otherwise indicated all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report. Capitalized
terms used herein, but not defined, have the same meanings as used in the
Notes.
The registrant, Carlyle Real Estate Limited Partnership-XVI (the
"Partnership"), was a limited partnership formed in December of 1985 and
was 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 offering closed on
December 31, 1987. Subsequent to admittance to the Partnership, no holder
of Interests (hereinafter, a "Holder" or "Holder of Interests") made any
additional capital contribution. The Holders of Interests of the
Partnership shared in their portion of the benefits of ownership of the
Partnership's real property investments according to the number of
Interests held.
The Partnership was engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments were held by fee title, leasehold estates and/or joint
venture partnership interests. The Partnership's real property investments
were located throughout the nation, and it had no real estate investments
located outside of the United States. A presentation of information about
industry segments, geographic regions, raw materials or seasonality was 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 was required to terminate no later than
December 31, 2036. The Partnership was self-liquidating in nature. At
sale of a particular property, the net proceeds, if any, were generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties. During 1998, the Partnership sold its
remaining investment property, wound up its affairs and made a final
liquidating distribution of $20,415,530 to the Holders of Interests and
$463,856 to the General Partners and terminated effective December 31,
1998. Reference is made to Item 7.
The Partnership made the real property investments set forth in the
following table:
<PAGE>
<TABLE>
<CAPTION>
NAME, TYPE OF PROPERTY DATE OF
AND LOCATION SIZE PURCHASE SALE DATE 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) (a)(b)
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)
(a)(b)
3. 260 Franklin Street
Building
Boston,
Massachusetts . . . 348,901 5/21/86 1/2/98 fee ownership of land
sq.ft. and improvements
n.r.a. (through joint venture
partnership) (a)(b)
4. Dunwoody Crossing
Apartments
(Phase I, II and III)
DeKalb County (Atlanta),
Georgia. . . . . . . 810 units 9/18/86 5/7/96 fee ownership of land
and improvements
(through joint venture
partnerships) (a)(b)
5. NewPark Mall
Newark (Alameda County),
California. . . . . 423,748 12/2/86 11/18/98 fee ownership of land
sq.ft. and improvements
g.l.a. (through joint venture
partnerships) (a)(b)
<PAGE>
NAME, TYPE OF PROPERTY DATE OF
AND LOCATION SIZE PURCHASE SALE DATE TYPE OF OWNERSHIP (b)
- ---------------------- ---------- -------- ----------- ---------------------
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)
7. Palm Desert Town
Center
Palm Desert
(Palm Springs),
California. . . . . 373,000 12/23/88 12/29/98 fee ownership of
sq.ft. improvements and
g.l.a. ground leasehold
interest in land
(through joint venture
partnership) (a)(c)
<FN>
- -----------------------
(a) Reference is made to the Notes for a description of the joint venture partnership or partnerships
through which the Partnership has made this real property investment.
(b) This property has been sold or transferred. Reference is made to the Notes for further discussion
of such sale or transfer.
(c) The Partnership interest in the property was sold. Reference is made to the Notes for further
discussion of such sale.
</TABLE>
<PAGE>
The Partnership's real property investments were subject to competi-
tion from similar types of properties (including properties owned by
affiliates of the General Partners) in the respective vicinities in which
they were located. Such competition was generally for the retention of
existing tenants. Additionally, the Partnership was in competition for new
tenants in markets where significant vacancies were present. Approximate
occupancy levels for the properties are set forth in the table in Item 2
below to which reference is hereby made. The Partnership maintained 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 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 owned 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 owned
indirectly an approximate 40% limited partnership interest in JMB/125. An
affiliate of the Partnership owned 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.
Pursuant to the bankruptcy reorganization of the makers of the note,
JMB/125, as an unsecured creditor, received limited partnership interests
and a convertible note receivable in a reorganized entity that has majority
or controlling interests in six office buildings in New York, New York and
Boston, Massachusetts. The assigned value, as of the bankruptcy
confirmation date, of the interests and note received by JMB/125 was
approximately $400,000. The convertible note was fully reserved due to the
uncertainty of the realizable value of the note. In June 1997, the
convertible note receivable for $297,000 was collected on by JMB/125
resulting in the recognition of gain, of which the Partnership's share was
$116,436. In December 1998, the limited partnership interests were sold
back to the reorganized entity for $118,642. Reference is made to Item 7
and to the Notes for a further discussion of this property.
On January 2, 1998, 260 Franklin, through a trust, disposed of the
land, building and related improvements of the 260 Franklin Street
Building. 260 Franklin transferred title to the land, building and
improvements, and all other assets and liabilities related to the property
in consideration of a discharge of the mortgage loan and receipt of $200 in
cash. Reference is made to Item 7 and to the Notes for a further
description of such event.
<PAGE>
On June 30, 1998, JMB/Owings collected approximately $5,598,000 on the
remaining principal balance of the purchase price note received in the sale
of its interest in Owings Mills Shopping Center in 1993.
Pursuant to a liquidation agreement dated November 13, 1998, the
Partnership, its affiliated venture partner and its unaffiliated venture
partner dissolved NewPark Associates and distributed all of its assets to
the joint venture partners. On November 18, 1998, the Partnership and its
affiliated venture partner sold their interests in the net assets of the
NewPark Mall to the unaffiliated joint venture partner for $16,000,000.
Reference is made to Item 7 and to the Notes for a further description of
such event.
On December 29, 1998, the Partnership and its affiliated venture
partner sold their interests in the Palm Desert Joint Venture to the
unaffiliated venture partner for $4,000,000. Reference is made to Item 7
and to the Notes for a further description of such event.
The Partnership had 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 owned 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 1998 and 1997 for the Partnership's investment properties owned
during 1998:
<PAGE>
<TABLE>
<CAPTION>
1997 1998
------------------------- -------------------------
Principal At At At At At At At At
Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---------------- ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 260 Franklin Street
Building
Boston, Massachusetts
(A) . . . . . . . . . . . Financial/Office 96% 97% 98% 98% N/A N/A N/A N/A
2. NewPark Mall
Newark (Alameda County),
California. . . . . . . . Retail 75% 75% 76% 79% 77% 77% 77% N/A
3. Palm Desert Town Center
Palm Desert
(Palm Springs),
California. . . . . . . . Retail 88% 86% 87% 88% 85% 84% 84% N/A
<FN>
- --------------------
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
</TABLE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
At its termination, the Partnership was 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 1997 and 1998.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
Immediately prior to the termination of the Partnership, there were
15,194 record Holders of the 140,332.21254 Interests outstanding in the
Partnership. There had been no public market for Interests and it had not
been anticipated that a public market for Interests would develop. Upon
request, the Corporate General Partner provided information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price paid for the Interests, as well as any other economic
aspects of the transaction, was subject to negotiation by the investor. On
December 31, 1998, the Partnership made a liquidating distribution to its
Holders of Interests and General Partners and subsequently terminated
effective December 31, 1998.
Reference is made to Item 6 below for a discussion of cash distribu-
tions made to the Holders of Interests. The mortgage loan secured by the
260 Franklin Street Office Building restricted the use by 260 Franklin
Associates of the cash flow from that property as more fully discussed in
the Notes.
Reference is made to the Notes for a discussion of the provisions of
the Partnership Agreement relating to cash distributions.
Reference is made to Item 7 for a discussion of unsolicited tender
offers received from unaffiliated third parties.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1998 (Immediately prior to final liquidating distribution), 1997, 1996, 1995 and 1994
(not covered by Independent Auditors' Report)
<CAPTION>
1998 1997 1996 1995 1994
----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . $12,354,088 11,436,847 11,796,272 11,621,375 11,512,558
=========== ========== ========== ========== ==========
Earnings (loss) before
gains on sale or
disposition of invest-
ment properties. . . . . $ 1,553,514 (1,058,836) (5,739,697) (1,774,644) (8,798,498)
Gain on sale of interest
in investment property . 2,018,594 -- -- -- --
Gains on sale or
disposition of
Partnership's
investment in
unconsolidated venture . 11,020,787 510,407 4,928,723 856,750 20,162,696
Loss on liquidation
of unconsolidated
venture. . . . . . . . . -- (269,147) -- -- --
----------- ---------- ---------- ---------- ----------
Earnings (loss)
before Partnership's
share of extraordinary
item from unconsolidated
ventures . . . . . . . . 14,592,895 (817,576) (810,974) (917,894) 11,364,198
Partnership's share of
extraordinary item
from unconsolidated
ventures . . . . . . . . 5,235,540 -- (175,007) -- --
----------- ---------- ---------- ---------- ----------
Net earnings (loss) . . . $19,828,435 (817,576) (985,981) (917,894) 11,364,198
=========== ========== ========== ========== ==========
<PAGE>
1998 1997 1996 1995 1994
----------- ---------- ---------- ---------- ----------
Net earnings (loss) per
Limited Partner Interest (b):
Earnings (loss) before
gains on sale or dis-
position of investment
properties . . . . . . $ 10.63 (7.24) (39.26) (12.14) (60.18)
Gain on sale of in-
terest in investment
property. . . . . . . 14.24 -- -- -- --
Gains on sale or dis-
position of Partner-
ship's investment in
unconsolidated
ventures . . . . . . . 42.64 3.60 34.77 6.04 142.23
Loss on liquidation
of unconsolidated
venture. . . . . . . . -- (1.90) -- -- --
Partnership's share
of extraordinary
item from uncon-
solidated ventures . . 36.94 -- (1.23) -- --
----------- ---------- ---------- ---------- ----------
Net earnings (loss) . . . $ 104.45 (5.54) (5.72) (6.10) 82.05
=========== ========== ========== ========== ==========
Total assets. . . . . . . $20,879,387 64,827,971 64,519,186 66,226,833 69,624,085
Long-term debt. . . . . . $ -- 40,622,529 41,079,673 41,485,363 41,845,394
Cash distributions per
Limited Partner
Interest (c) (d). . . . $ 23.11 2.18 38.80 17.25 116.00
=========== ========== ========== ========== ==========
<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 was based upon the limited partnership interests outstanding at the
end of each period.
(c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each Partner's taxable income (loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the
cash generated or distributed by the Partnership. Accordingly, cash distributions to the Holders of Interests
since the inception of the Partnership have not resulted in taxable income to such Holders of Interests and have
therefore represented a return of capital.
(d) This amount does not include a final liquidating cash distribution of $20,415,530 ($145.28 per Interest)
to the Holders of Interest and $463,856 to the General Partners paid by the Partnership on December 31, 1998.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the public offering of Interests as described in
Item 1, the Partnership had approximately $120,541,000 after deducting
selling expenses and other offering costs with which to make investments in
income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments and for working capital reserves. A portion of the proceeds
was utilized to acquire the properties described in Item 1 above.
The board of directors of JMB Realty Corporation ("JMB"), the
corporate general partner of the Partnership, established a special
committee (the "Special Committee") consisting of certain directors of JMB
to deal with all matters relating to tender offers for Interests in the
Partnership, including any and all responses to such tender offers. The
Special Committee retained independent counsel to advise it in connection
with any potential tender offers for Interests and retained Lehman Brothers
Inc. through June 30, 1998, as financial advisor to assist the Special
Committee in evaluating and responding to any additional potential tender
offers for Interests.
From 1996 through the first half of 1998, some of the Holders of
Interests in the Partnership received from unaffiliated third parties
unsolicited offers to purchase up to 4.9% of the outstanding Interests in
the Partnership at prices of $50 and $105 per Interest, respectively. Such
offers have expired. Early in the fourth quarter of 1998, some of the
Holders of Interests in the Partnership received from an unaffiliated third
party an unsolicited offer to purchase up to 4.9% of the outstanding
Interests in the Partnership at prices between $48 and $80 per Interest.
Such offers have expired. The Special Committee recommended against
acceptance of these offers on the basis that, among other things, the offer
prices were inadequate. Approximately 4.26% of the outstanding Interests
were purchased by all unaffiliated third parties who made unsolicited
offers for Interests, either pursuant to all such tender offers or through
negotiated purchases.
Pursuant to the terms of the Partnership Agreement, the General
Partners of the Partnership were required to contribute to the Partnership
$141,766, which represented the amount of all distributions they previously
received from sales and refinancing proceeds, and such amount was included
in the liquidating distribution made to the Holders of Interests. Such
contribution was required because the Holders of Interests had not received
distributions of net sale or refinancing proceeds equal to their initial
capital investment in the Partnership plus certain other distributions
constituting a specified return on their average capital investment for
each year (i.e., their initial capital investment as reduced by net sale or
refinancing proceeds previously distributed) commencing with the third
quarter of 1987.
JMB/125
In October 1995, the makers of the $5 million promissory note payable
to JMB/125 filed for protection from creditors under Chapter 11 of the
Bankruptcy Code. Pursuant to the bankruptcy reorganization of the makers
of the note, JMB/125, as an unsecured creditor, received limited
partnership interests and a convertible note interest in a reorganized
entity that has majority or controlling interests in six office buildings
in New York, New York and Boston, Massachusetts. The assigned value, as of
the bankruptcy confirmation date, of the interests and note received by
JMB/125 was approximately $400,000. The convertible note was fully
reserved due to the uncertainty of the realizable value of the note. In
June 1997, the convertible note receivable for $297,000 was collected on by
<PAGE>
JMB/125 resulting in the recognition of gain, of which the Partnership's
share was $116,436. In December 1998, the limited partnership interests
were sold back to the reorganized entity for $118,642 resulting in
recognition of gain, of which the Partnership's share was $52,586.
Reference is made to the Notes.
260 FRANKLIN
The long-term mortgage loan in the original principal amount of
approximately $75,000,000 plus accrued and deferred interest 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 also began investigating market conditions to
determine whether conditions were favorable for selling the property.
However, it was determined that conditions were not favorable and the
property continued to be held as investment property. The joint venture
reached agreements with the lender for extensions of the mortgage loan
through January 1, 1997 and again through January 1, 1998. In addition to
substantially the same terms as were in effect prior to such extensions,
the agreement required that the property submit net operating cash flow of
the property to the lender. In addition, the lender indicated that it
would not extend the loan beyond January 1, 1998. 260 Franklin and the
Partnership believed that the value of the office building was less than
the mortgage loan, and the Partnership did not intend to expend any
additional funds of its own on the property. Accordingly, 260 Franklin
began negotiations with the lender and an unaffiliated third party
regarding the sale of the property to the unaffiliated third party. Due to
the lender negotiations described above, the property was classified as
held for sale or disposition as of July 1, 1997, and therefore, was not
subject to continued depreciation as of that date.
Effective January 1, 1998, 260 Franklin entered into a loan
modification agreement with the lender in which the lender waived accrued
unpaid interest owed for the period prior to January 1, 1998, which was
approximately $17,200,000. On January 2, 1998, 260 Franklin through a
trust disposed of the land, building and related improvements of the 260
Franklin Street Building. 260 Franklin transferred title to the land,
building and improvements, and all other assets and liabilities related to
the property in consideration of a discharge of the mortgage loan and
receipt of $200 in cash. 260 Franklin recognized in 1998 gains in the
aggregate of approximately $23,200,000, in part as a result of previous
impairment losses recognized by 260 Franklin in 1996 aggregating
$11,145,446, and an extraordinary gain on discharge of indebtedness of
approximately $17,500,000 for financial reporting purposes, of which the
Partnership's share was approximately $7,000,000 and $5,000,000,
respectively. In addition, 260 Franklin recognized a gain of approximately
$24,400,000 for Federal income tax reporting purposes, of which the
Partnership's share was approximately $7,356,000, with no distributable
proceeds. 260 Franklin and the Partnership have no future liability for
any representations, warranties or covenants to the purchaser as a result
of the disposal of the property. Reference is made to the Notes.
JMB/OWINGS
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
required principal and interest payments of approximately $109,000 per
month with the remaining principal balance of approximately $5,500,000 due
and payable on June 30, 1998. On June 30, 1998, JMB/Owings collected
approximately $5,598,000, of which the Partnership's share was
approximately $2,800,000, on the remaining principal balance of the
purchase price note received in the sale of its interest in Owings Mills
Shopping Center in 1993. In September 1998, the Partnership made a
distribution of $21 per Interest of cash generated primarily from the
collection of this note receivable. Reference is made to the Notes.
<PAGE>
NEWPARK
Pursuant to a liquidation agreement dated November 13, 1998, the
Partnership, its affiliated venture partner and its unaffiliated venture
partner dissolved NewPark Associates and distributed all of its assets to
the partners. On November 18, 1998, the Partnership and its affiliated
venture partner sold their interests in the net assets of the NewPark Mall
to the unaffiliated joint venture partner for $16,000,000 of which the
Partnership's share was $1,600,000. Reference is made to the Notes.
PALM DESERT TOWN CENTER
The Partnership and Carlyle-XVII entered into an agreement with the
unaffiliated venture partner, effective January 1, 1998, pursuant to which
the Partnership and Carlyle-XVII granted the unaffiliated venture partner
an option to acquire their interests in the joint venture (the "Option
Agreement") . Pursuant to the Option Agreement, the unaffiliated venture
partner had the right (but not the obligation) to purchase all (but not
less than all) of the Partnership's and Carlyle-XVII's interests in the
joint venture by giving notice of its exercise of the option during the
term of the option, which was originally scheduled to expire July 15, 1998
but was extended first through August 14, 1998 pursuant to a first
amendment to the Option Agreement. The Option Agreement also provided for
certain rights and obligations of the Partnership, Carlyle-XVII and the
unaffiliated venture partner with respect to the joint venture and its
property during the option term. In consideration for the option and the
first amendment to the option, the unaffiliated venture partner was
required to pay $58,333 for each month of the option term. Pursuant to a
second amendment to the Option Agreement, the option term was extended
through December 29, 1998, the unaffiliated venture partner was required to
pay $120,000 to the Partnership and Carlyle-XVII and the aggregate purchase
price for the interests was reduced to $4,000,000. The Partnership and
Carlyle-XVII received their allocable shares of the consideration for the
option of which the Partnership's share was approximately $427,000.
Concurrently with the execution of the Option Agreement, the joint venture
made a distribution to the Partnership and Carlyle-XVII in the aggregate
amount of approximately $740,000 (of which the Partnership's share was
approximately $635,000), which represented undistributed net cash flow of
the joint venture through the end of 1997. All other funds and net cash
flow of the joint venture during the term of the option were held by the
joint venture for its use. Upon the expiration of the Option Agreement,
the rights and obligations of the parties subsequent to expiration of the
Option Agreement were to be governed by the terms of the joint venture
partnership agreement without regard to changes previously affected by the
terms of the Option Agreement. On December 29, 1998, the Partnership and
Carlyle-XVII sold their respective interests in the joint venture pursuant
to the Option Agreement for $4,000,000, of which the Partnership's share
was $3,431,000. Reference is made to the Notes.
GENERAL
There were 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 had economic or business interests or goals
that were inconsistent with those of the Partnership.
Due to the real estate market conditions experienced over the past
several years, the Partnership held its remaining investment properties
longer than originally anticipated in an effort to maximize the return of
their investment to the Holders of Interests.
<PAGE>
However, the Partnership's goal of capital appreciation was not
achieved. Aggregate distributions of sale and refinancing proceeds received
by Holders of Interests over the entire term of the Partnership were
significantly less than one-half of their original investment.
As discussed above, pursuant to the Partnership Agreement, the General
Partners returned to the Partnership $141,766 of previously received sales
distributions. The Partnership made a final liquidating cash distribution
to its Holders of Interests in the aggregate amount of $20,415,530 or
$145.48 per Interest. In addition, the Partnership made a final cash
distribution out of net cash receipts (as defined) to its General Partners
and paid a management fee to its Corporate General Partner in the aggregate
amount of $1,236,950. The Partnership wound up its affairs and terminated
effective December 31, 1998.
RESULTS OF OPERATIONS
The increase in interest income for the year ended December 31, 1998
as compared to the year ended December 31, 1997 is due to a higher average
balance in cash and cash equivalents mainly due to the receipts from sales
of investments and the timing of related distributions.
The other income reported for the year ended December 31, 1998
represents the Partnership's share of the consideration paid by the
unaffiliated venture partner of the Palm Desert Town Center during 1998
pursuant to the Option Agreement and the write-off of the Partnership's
assumption of its pro rata share (approximately $453,000) of unpaid
management and leasing fees payable to an affiliate of the General Partners
and to JMB, which amount was transferred to the accounts of the Partnership
upon the sale of 260 Franklin, and subsequently discharged.
The decrease in depreciation expense for the year ended December 31,
1998 as compared to the year ended December 31, 1997 and for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 is due to
the Palm Desert Town Center being classified as held for sale or
disposition as of July 1, 1997, and therefore, no longer being subject to
continued depreciation.
The decrease in property operating expenses for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 is
primarily due to a decrease in the allowance for doubtful accounts in 1997
at the Palm Desert Town Center.
The increase in professional services for the year ended December 31,
1998 as compared to the year ended December 31, 1997 is mainly due to an
increase in certain professional fees due to the winding up and termination
of the Partnership.
The increase in management fees to corporate general partner for the
year ended December 31, 1998 as compared to December 31, 1997 is due to
higher distributions to partners from operations during 1998. The decrease
in management fees to corporate general partner for the year ended December
31, 1997 as compared to December 31, 1996 is due to lower distributions to
partners from operations during 1997.
The increase in general and administrative expenses for the year ended
December 31, 1998 as compared to December 31, 1997 is primarily due to an
increase in certain costs due to the winding up and termination of the
Partnership. The increase in general and administrative expenses for the
year ended December 31, 1997 as compared to December 31, 1996 is primarily
due to the write off of amounts due from the 260 Franklin venture deemed
uncollectible as a result of the sale of the property in January 1998 and
an increase in the reimbursable costs to affiliates of the General
Partners.
<PAGE>
The increase in Partnership's share of earnings from operations of
unconsolidated ventures for the year ended December 31, 1998 as compared to
the year ended December 31, 1997 is primarily due to the disposition of the
260 Franklin Street building on January 2, 1998. The decrease in
Partnership's share of loss from operations of unconsolidated ventures for
the year ended December 31, 1997 as compared to the year ended December 31,
1996 is primarily due to the Partnership's share of the provisions for
value impairment of $3,343,634 and $430,000 recorded January 1, 1996 and
June 30, 1996, respectively, regarding the 260 Franklin venture and the
NewPark joint venture, respectively.
The increase in venture partners' share of ventures' operations for
the year ended December 31, 1998 as compared to the year ended December 31,
1997 and for the year ended December 31, 1997 as compared to the year ended
December 31, 1996 is due to an increase in net operating earnings at the
Palm Desert Town Center primarily as a result of the property being
classified as held for sale or disposition as of July 1, 1997, and
therefore, no longer being subject to continued depreciation.
The gain on sale of interest in investment property for the year ended
December 31, 1998 represents the Partnership's share of gain on sale of the
Palm Desert investment property.
The gain on sale or disposition of Partnership's investments in
unconsolidated ventures for the year ended December 31, 1998 primarily
represents recognition of deferred gain on sale of JMB/Owings' interest in
Owings Mills and gain on the disposition of the 260 Franklin Street
building and the sale of the interest in NewPark Mall.
The extraordinary item for the year ended December 31, 1998 represents
the Partnership's share of the gain on discharge of indebtedness resulting
from the loan modification agreement with the lender of the 260 Franklin
Street building, pursuant to which the lender waived accrued unpaid
interest for the period prior to January 1, 1998.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on the operations of the
Partnership. Inflation in future periods is not applicable since the
Partnership wound up its affairs and terminated in December 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership wound up its affairs and dissolved in 1998. As a
result, there is no meaningful disclosure for this item.
YEAR 2000
The Partnership wound up its affairs and terminated in 1998.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1998 (Immediately prior to
final liquidating distribution) and 1997
Consolidated Statements of Operations, Years ended December 31,
1998 (Immediately prior to final liquidating distribution), 1997 and 1996
Consolidated Statements of Partners' Capital Accounts (Deficits),
Years ended December 31, 1998 (Immediately prior to final
liquidating distribution), 1997 and 1996
Consolidated Statements of Cash Flows, Years ended December 31,
1998 (Immediately prior to final liquidating distribution),
1997 and 1996
Notes to Consolidated Financial Statements
Schedules not filed:
All schedules have been omitted as the required information is
inapplicable or the information is presented in the consolidated financial
statements or related notes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI:
We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XVI (a limited partnership) and consolidated
venture as listed in the accompanying index. These consolidated financial
statements are the responsibility of the General Partners of the
Partnership. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XVI and consolidated venture at
December 31, 1998 (immediately prior to final liquidating distribution) and
December 31, 1997, and the results of their operations and their cash flows
for year ended December 31, 1998 (immediately prior to final liquidating
distribution) and for the years ended December 31, 1997 and 1996, in
conformity with generally accepted accounting principles.
As discussed in the Notes to the consolidated financial statements, in
1996, the Partnership and its consolidated venture changed their method of
accounting for long-lived assets and long-lived assets to be disposed of to
conform with Statement of Financial Accounting Standards No. 121.
KPMG LLP
Chicago, Illinois
March 22, 1999
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION) AND 1997
ASSETS
------
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 20,879,387 16,214,633
Interest, rents and other receivables, net of allowances
for doubtful accounts of approximately $0 and
$710,147 at December 31, 1998 and 1997, respectively. . . . . . . -- 68,335
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . -- 111,897
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . 20,879,387 16,394,865
------------ ------------
Property held for sale or disposition . . . . . . . . . . . . . . . . -- 43,146,694
Investment in unconsolidated ventures,
at equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,904,784
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . -- 518,228
Notes receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 108,362
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . -- 2,755,038
------------ ------------
$ 20,879,387 64,827,971
============ ============
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1998 1997
------------ -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ -- 457,144
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . -- 987,066
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 218,929
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . -- 410,797
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . -- 2,073,936
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . -- 66,157
Ground rent payable . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,377,521
Investment in unconsolidated ventures, at equity. . . . . . . . . . . -- 12,771,462
Long-term debt, less current portion. . . . . . . . . . . . . . . . . -- 40,622,529
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . -- 56,911,605
Venture partners' subordinated equity in ventures . . . . . . . . . . -- 3,751,845
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . 161,766 20,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . 1,757,658 (3,413,841)
Cash distributions. . . . . . . . . . . . . . . . . . . . . . . (1,455,567) (1,443,873)
------------ ------------
463,857 (4,837,714)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . 120,541,353 120,541,353
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (46,018,140) (60,675,076)
Cash distributions. . . . . . . . . . . . . . . . . . . . . . . (54,107,683) (50,864,042)
------------ ------------
20,415,530 9,002,235
------------ ------------
Total partners' capital accounts. . . . . . . . . . . . . . 20,879,387 4,164,521
------------ ------------
$ 20,879,387 64,827,971
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
<CAPTION> 1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $10,576,925 10,693,118 11,005,766
Interest income . . . . . . . . . . . . . . . . . 898,441 743,729 790,506
Other income. . . . . . . . . . . . . . . . . . . 878,722 -- --
----------- ----------- -----------
12,354,088 11,436,847 11,796,272
----------- ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . . 4,900,388 5,070,238 4,919,196
Depreciation. . . . . . . . . . . . . . . . . . . -- 1,004,060 2,007,379
Property operating expenses . . . . . . . . . . . 4,360,917 4,625,426 5,138,083
Professional services . . . . . . . . . . . . . . 263,886 205,766 203,145
Amortization of deferred expenses . . . . . . . . 161,627 152,704 152,964
Management fees to corporate general partner. . . 792,585 19,492 63,349
General and administrative. . . . . . . . . . . . 445,236 430,542 311,946
----------- ----------- -----------
10,924,639 11,508,228 12,796,062
----------- ----------- -----------
1,429,449 (71,381) (999,790)
Partnership's share of earnings (loss) from
operations of unconsolidated ventures . . . . . . 313,071 (975,721) (5,190,635)
Venture partners' share of ventures' operations . . (189,006) (11,734) 450,728
----------- ----------- -----------
Earnings (loss) before gains on sale
or disposition of investment properties . . 1,553,514 (1,058,836) (5,739,697)
Gain on sale of interest in investment property . . 2,018,594 -- --
Gains on sale or disposition of Partnership's
investment in unconsolidated ventures . . . . . . 11,020,787 510,407 4,928,723
Loss on liquidation of unconsolidated venture . . . -- (269,147) --
----------- ----------- -----------
Earnings (loss) before Partnership's
share of extraordinary item from
unconsolidated venture. . . . . . . . . . 14,592,895 (817,576) (810,974)
Partnership's share of extraordinary item
from unconsolidated ventures. . . . . . . . . . . 5,235,540 -- (175,007)
----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . . . $19,828,435 (817,576) (985,981)
=========== =========== ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1998 1997 1996
------------ ------------ ------------
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on
sale or disposition of invest-
ment properties . . . . . . . . . . . . . $ 10.63 (7.24) (39.26)
Gain on sale of interest in investment
property . . . . . . . . . . . . . . . . 14.24 -- --
Gain on sale or disposition of
Partnership's investment in
unconsolidated ventures. . . . . . . . . 42.64 3.60 34.77
Loss on liquidation of unconsolidated
venture. . . . . . . . . . . . . . . . . -- (1.90) --
Partnership's share of extraordinary
item from unconsolidated ventures. . . . 36.94 -- (1.23)
----------- ----------- -----------
Net earnings (loss). . . . . . . . . $ 104.45 (5.54) (5.72)
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ ------------------------------------------------------
CONTRIBU-
TIONS, NET
OF OFFERING
NET COSTS AND NET
CONTRI- INCOME CASH PURCHASE INCOME CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL DISCOUNTS (LOSS) DISTRIBUTIONS TOTAL
-------- ---------- ------------- -------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
Net earnings
(loss) . . -- (182,051) -- (182,051) -- (803,930) -- (803,930)
Cash distri-
butions
($38.80 per
limited
partnership
interest). -- -- (38,009) (38,009) -- -- (5,447,324) (5,447,324)
------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Balance
(deficit)
Decem-
ber 31,
1996 . . . 20,000 (3,373,900) (1,432,178) (4,786,078) 120,541,353 (59,897,441) (50,558,700) 10,085,212
Net earnings
(loss) . . -- (39,941) -- (39,941) -- (777,635) -- (777,635)
Cash distri-
butions
($2.18 per
limited
partnership
interest). -- -- (11,695) (11,695) -- -- (305,342) (305,342)
------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ ------------------------------------------------------
CONTRIBU-
TIONS, NET
OF OFFERING
NET COSTS AND NET
CONTRI- INCOME CASH PURCHASE INCOME CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL DISCOUNTS (LOSS) DISTRIBUTIONS TOTAL
-------- ---------- ------------- -------- ----------- ---------- ------------- -----------
Balance
(deficit)
Decem-
ber 31,
1997 . . . 20,000 (3,413,841) (1,443,873) (4,837,714) 120,541,353 (60,675,076) (50,864,042) 9,002,235
Net earnings
(loss) . . -- 5,171,499 -- 5,171,499 -- 14,656,936 -- 14,656,936
Contributions
from general
partners .141,766 -- -- 141,766 -- -- -- --
Cash distri-
butions
($23.11 per
limited
partnership
interest). -- -- (11,694) (11,694) -- -- (3,243,641) (3,243,641)
------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Balance
(deficit)
Decem-
ber 31,
1998 . . .$161,766 1,757,658 (1,455,567) 463,857 120,541,353 (46,018,140) (54,107,683) 20,415,530
======== ========== ========== ========== =========== =========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
<CAPTION>
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $ 19,828,435 (817,576) (985,981)
Items not requiring (providing) cash or
cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . -- 1,004,060 2,007,379
Amortization of deferred expenses . . . . . . . 161,627 152,704 152,964
Partnership's share of discharged management
and leasing fees. . . . . . . . . . . . . . . (453,039) -- --
Partnership's share of (earnings) loss from
operations of unconsolidated ventures,
net of distributions. . . . . . . . . . . . . (313,071) 975,721 5,426,672
Venture partners' share of ventures'
operations. . . . . . . . . . . . . . . . . . 189,006 11,734 (450,728)
Gain on sale of interest in investment property (2,018,594) -- --
Gain on sale or disposition of Partner-
ship's investment in unconsolidated
ventures. . . . . . . . . . . . . . . . . . . (11,020,787) (510,407) (4,928,723)
Loss on liquidation of unconsolidated
venture . . . . . . . . . . . . . . . . . . . -- 269,147 --
Partnership's share of extraordinary item
from unconsolidated ventures. . . . . . . . . (5,235,540) -- 175,007
Changes in:
Interest, rents and other receivables . . . . 46,632 217,689 343,921
Prepaid expenses and other assets . . . . . . 11,934 20,517 46,530
Notes receivable. . . . . . . . . . . . . . . 86,274 63,261 33,795
Accrued rents receivable. . . . . . . . . . . 115,063 (219,060) (417,981)
Accounts payable. . . . . . . . . . . . . . . (8,180) 252,013 208,310
Accrued interest. . . . . . . . . . . . . . . (4,572) (4,057) (96,978)
Unearned rents. . . . . . . . . . . . . . . . (218,929) 50,318 168,611
Tenant security deposits. . . . . . . . . . . (6,899) (361) 18,568
Ground rent payable . . . . . . . . . . . . . (57,532) 109,530 208,991
----------- ----------- ----------
Net cash provided by (used in) operating
activities. . . . . . . . . . . . . . . 1,101,828 1,575,233 1,910,357
----------- ----------- ----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997 1996
------------ ----------- -----------
Cash flows from investing activities:
Additions to investment property. . . . . . . . . (44,152) (78,561) (3,205)
Payment of deferred expenses. . . . . . . . . . . (153,527) (103,636) (160,351)
Partnership's distributions from unconsolidated
ventures and proceeds from sale of interest
in investment property. . . . . . . . . . . . . 9,589,260 752,943 5,160,000
Partnership's contributions to unconsolidated
ventures. . . . . . . . . . . . . . . . . . . . -- -- (4,422)
----------- ----------- ----------
Net cash provided by (used in)
investing activities. . . . . . . . . . 9,391,581 570,746 4,992,022
----------- ----------- ----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . (457,144) (405,690) (360,031)
Venture partners' distributions from venture. . . (2,257,942) -- --
Contribution from general partners. . . . . . . . 141,766 -- --
Distributions to limited partners . . . . . . . . (3,243,641) (305,342) (5,447,324)
Distributions to general partners . . . . . . . . (11,694) (11,695) (38,009)
----------- ----------- ----------
Net cash provided by (used in)
financing activities. . . . . . . . . . (5,828,655) (722,727) (5,845,364)
----------- ----------- ----------
Net increase (decrease) in cash
and cash equivalents. . . . . . . . . . 4,664,754 1,423,252 1,057,015
Cash and cash equivalents,
beginning of the year . . . . . . . . . 16,214,633 14,791,381 13,734,366
----------- ----------- ----------
Cash and cash equivalents,
end of the year (immediately
prior to final liquidating
distribution) . . . . . . . . . . . . . $20,879,387 16,214,633 14,791,381
=========== =========== ==========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997 1996
------------ ----------- -----------
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . $ 4,904,960 5,074,295 5,016,174
=========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO
FINAL LIQUIDATING DISTRIBUTIONS), 1997 AND 1996
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership held (through joint ventures) real estate investments.
Business activities consisted of rentals to a wide variety of commercial
and retail companies, and the ultimate sale or disposition of such real
estate.
The accompanying consolidated financial statements include the
accounts of the Partnership and its majority-owned venture, JMB/Hahn PDTC
Associates, L.P. ("Palm Desert"). The effect of all transactions between
the Partnership and its consolidated venture has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interests in JMB/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 through Villages Northeast Associates, sold its
interest in Dunwoody Crossing Apartments in May 1996. In January, 1998,
the Partnership, through 260 Franklin, disposed of its interest in the 260
Franklin Street Building. In November 1998, the Partnership sold its
interest in NewPark Mall. In December 1998, the Partnership sold its
interest in the Palm Desert Town Center.
The Partnership records were 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 venture 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, 1998 and 1997 is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1998 1997
------------------------------- -------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . $20,879,387 20,879,387 64,827,971 78,664,247
Partners' capital accounts
(deficits):
General partners. . . . . . . . 463,857 463,857 (4,837,714) (2,311,670)
Limited partners. . . . . . . . 20,415,530 20,415,530 9,002,235 31,758,797
Net earnings (loss):
General partners. . . . . . . . 5,171,499 2,645,455 (39,941) 201,157
Limited partners. . . . . . . . 14,656,936 (8,099,626) (777,635) (1,918,067)
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . . 104.45 (57.72) (5.54) (13.67)
=========== ========== =========== ===========
</TABLE>
<PAGE>
The net earnings (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of the
period. Deficit capital accounts resulted, through the duration of the
Partnership, in net gain for financial reporting and income tax purposes.
Also, because net earnings were computed immediately prior to termination
of the Partnership, Holders of Interest may have, on termination of the
Partnership, an additional capital gain or loss depending on the Holders'
basis in their Interests for Federal income tax purposes.
The preparation of financial statements in accordance with GAAP
required the Partnership to make estimates and assumptions that affected
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 have differed 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 recorded
amounts held in U.S. Government obligations at cost, which approximates
market. For the purposes of these statements, the Partnership's policy was
to consider all such amounts held with original maturities of three months
or less (none at December 31, 1998 and $14,103,210 at December 31, 1997) as
cash equivalents, which includes investments in an institutional mutual
fund which holds U.S. Government obligations, with any remaining amounts
(generally with original maturities of one year or less) reflected as
short-term investments being held to maturity.
Deferred expenses were comprised of loan fees amortized over the term
of the related loan and lease commissions amortized over the terms of the
related leases using the straight-line method.
Although certain leases of the Partnership provided for tenant
occupancy during periods for which no rent was due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrued
prorated rental income for the full period of occupancy on a straight-line
basis.
No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
The Partnership acquired, through joint ventures, interests in three
contiguous apartment complexes, three office buildings and three shopping
centers. All of the properties have been sold or disposed of by the
Partnership. The cost of the investment properties represented 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 40 years using the straight-line
method.
Maintenance and repair expenses were charged to operations as
incurred. Significant betterments and improvements were capitalized and
depreciated over their estimated useful lives.
<PAGE>
Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
required that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value could not be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
was the difference between the property's carrying value and the property's
estimated fair value. The Partnership's policy was to consider a property
to be held for sale or disposition when the Partnership had committed to a
plan to sell or dispose of such property and active marketing activity had
commenced or was expected to commence in the near term or the Partnership
concluded that it might dispose of the property by no longer funding
operating deficits or debt service requirements of the property thus
allowing the lender to realize upon its security. In accordance with SFAS
121, any properties identified as "held for sale or disposition" were no
longer depreciated. Adjustments for impairment loss for such properties
(subsequent to the date of adoption of SFAS 121) were made in each period
as necessary to report these properties at the lower of carrying value or
fair value less costs to sell. In certain situations, such estimated fair
value was less than the existing non-recourse debt which was secured by the
property.
Under the prior accounting policy, provisions for value impairment
were recorded with respect to investment properties whenever the estimated
future cash flows from a property's operations and projected sale were less
than the property's carrying value. The amount of any such impairment loss
recognized by the Partnership was 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 was
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 had been
recognized under SFAS 121, the Partnership recognized, at a minimum, a net
gain for financial reporting purposes (comprised of gain on extinguishment
of debt and gain or loss on the sale or disposition of property) 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.
In addition, upon the disposition of any impaired property, the
Partnership generally recognized more net gain for financial reporting
purposes under SFAS 121 than it would have under the Partnership's prior
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 accounting statement could have significantly
impacted the Partnership's reported earnings, there was no impact on cash
flows. Further, any such impairment loss was not recognized for Federal
income tax purposes.
As of July 1, 1997, the Partnership and its consolidated venture had
committed to a plan to sell or dispose of the venture's investment
property. Accordingly, the property had been classified as held for sale
or disposition as of such date in the accompanying consolidated financial
statements. The results of operations, net of venture partners' share, for
this property were $1,072,819, $21,165 and ($812,922) for the years ended
December 31, 1998, 1997 and 1996, respectively.
<PAGE>
In addition, for the years ended December 31, 1998, 1997 and 1996 the
accompanying consolidated financial statements include $313,071, ($975,721)
and ($5,190,635), respectively, of the Partnership's share of total
property operations of $3,907,206, ($1,930,306) and ($25,073,353),
respectively, for unconsolidated properties which were held for sale or
disposition as of December 31, 1998 or have been sold or disposed of during
the past three years.
The investment properties were pledged as security for the long-term
debt, for which there was no recourse to the Partnership.
VENTURE AGREEMENTS - 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 two
(JMB/Warner Center Associates and 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 provided, 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,
were 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 $137,944,640 through
December 31, 1998.
Certain of these affiliated partnerships entered into joint venture
agreements with unaffiliated joint venture partners. In general, the
unaffiliated joint venture partners, who were either the sellers (or their
affiliates) of the property investments acquired or parties which had
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,
was 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 have been 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 Center Associates sold the Blue Cross Building. In
1994, the Partnership through its indirect ownership of JMB/125 assigned
its interest in the 125 Broad Street Building. During 1996, the
Partnership, through the Villages Northeast joint venture, sold its
interest in the Dunwoody Crossing Apartments. In January 1998, the
Partnership disposed of its interest in 260 Franklin. In November 1998,
NewPark Associates terminated and the Partnership sold its interest in the
net assets of the NewPark Mall. In December 1998, the Partnership sold its
interest in the Palm Desert Joint Venture. Certain of the ventures'
properties had been financed under various long-term debt arrangements as
described in the Notes.
<PAGE>
INVESTMENT PROPERTIES
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.
Due to the O&Y partners' previous failure to advance necessary funds
to 125 Broad as required under the joint venture agreement, 125 Broad in
June 1992 defaulted on certain mortgage obligations. On November 15, 1994,
effective as of October 31, 1994, JMB/125 and certain affiliates of O&Y
reached an agreement to settle their disputes regarding 125 Broad and its
property. Under the terms of the agreement, JMB/125 assigned its interest
in 125 Broad to an affiliate of O&Y and released the O&Y partners from any
claims related to 125 Broad. In return, JMB/125 received an unsecured
promissory note in the principal amount of $5 million bearing simple
interest at 4.5% per annum with all principal and accrued interest due at
maturity in October 1999, subject to mandatory prepayments of principal and
interest or acceleration of the maturity date under certain circumstances.
As of December 31, 1994, the note had been fully reserved for by JMB/125.
In addition, JMB/125 received a release from any claims of certain O&Y
affiliates and generally was to be indemnified against any liability as a
general partner of 125 Broad. JMB/125 was also relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance. Affiliates of O&Y subsequently filed a prearranged
bankruptcy plan for reorganization of 125 Broad under Chapter 11 of the
Bankruptcy Code in order to facilitate 125 Broad's transfer of the office
building to the mortgage lender in satisfaction of the mortgage debt and
other claims. In January 1995, the plan for reorganization was approved by
the bankruptcy court, was consummated, and the bankruptcy case was
concluded. As a result of the assignment of its interest, JMB/125 no
longer had an ownership interest in the office building.
In October 1995, the makers of the $5 million promissory note payable
to JMB/125 filed for protection from creditors under Chapter 11 of the
Bankruptcy Code. Pursuant to the bankruptcy reorganization of the makers
of the note, JMB/125, as an unsecured creditor, received limited
partnership interests and a convertible note receivable in a reorganized
entity that has majority or controlling interests in six office buildings
in New York, New York and Boston, Massachusetts. The assigned value, as of
the bankruptcy confirmation date, of the interests and note received by
JMB/125 was approximately $400,000. The convertible note was fully
reserved due to the uncertainty of the realizable value of the note. In
June 1997, the convertible note receivable for $297,000 was collected on by
JMB/125 resulting in the recognition of gain, of which the Partnership's
share was $116,436. In December 1998, the limited partnership interests
were sold back to the reorganized entity for $118,642 resulting in
recognition of gain, of which the Partnership's share was $52,586 and
JMB/125 was terminated.
<PAGE>
JMB/OWINGS
In December 1985, the Partnership, through the JMB/Owings joint
venture partnership, acquired an interest in an existing joint venture
partnership ("Owings Mills") which owned an interest in an enclosed
regional shopping center. JMB/Owings's original cash investment was
$7,000,000, of which the Partnership's share was $3,500,000. On June 30,
1993, JMB/Owings sold its interest in Owings Mills Shopping Center as
described below.
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 was secured by a guaranty from an
affiliate of the purchaser and the unaffiliated joint venture partner) bore
interest at a rate of 7% per annum subject to increase to 8% per annum for
the remainder of the term of the note. The promissory note required
principal and interest payments of approximately $109,000 per month with
the remaining principal balance of approximately $5,500,000 due and payable
on June 30, 1998. The monthly installment of principal and interest would
be adjusted for the increase in the interest rate if applicable. Early
prepayment of the promissory note may have been required under certain
circumstances including the sale or further encumbrance of Owings Mills
Mall. On June 30, 1998, JMB/Ownings collected the remaining principal
balance of the purchase price note of approximately $5,598,000 of which the
Partnership's share was approximately $2,800,000 and JMB/Owings was
subsequently terminated.
The net cash proceeds and gain from sale of the interest were
allocated 50% to the Partnership and 50% to Carlyle-XV in accordance with
the JMB/Owings partnership agreement. For financial reporting purposes,
JMB/Owings recognized, on the date of sale, gain of $5,254,855, of which
the Partnership's share was $2,627,427, attributable to JMB/Owings being
relieved of its obligations under the Owings Mills partnership agreement
pursuant to the terms of the sale agreement. JMB/Owings 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 had 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 $6,048,733, $787,942 and $870,121 of deferred gain and $202,547,
$494,172 and $527,237 of interest income for the years ended December 31,
1998, 1997 and 1996, respectively, of which the Partnership's share of
deferred gain was $3,028,163, $393,971 and $435,060 and the Partnership's
share of interest income was $101,273, $247,086 and $263,619, respectively.
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.
<PAGE>
The property was 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 was escrowing the payment of
property management fees and leasing commissions to the affiliate pursuant
to the terms of the debt modification described below. In December 1994,
the affiliated property manager sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. The property was then managed by the purchaser of the affiliate's
assets on the same terms provided in the property management agreement,
with the payment of the management fees guaranteed by JMB in 1995.
Beginning in January 1996, the unaffiliated property manager was paid
management fees out of the property operations.
The 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 had been required to (i) escrow
excess cash flow from operations (computed without a deduction for property
management fees and leasing commissions), beginning in 1991, to cover
future cash flow deficits, (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 was $45,000. The escrow account ($202,378
at December 31, 1997 including accrued interest) was to be used to cover
the cost of capital and tenant improvements and lease inducements
(approximately $5,045,000 used as of December 31, 1997) as defined. The
balance of the escrowed funds remaining at December 31, 1997 was used for
the payment of interest due to the lender as described above.
The mortgage loan matured January 1, 1996. 260 Franklin, as of such
date, began submitting the net operating cash flow of the property to the
lender while seeking an extension or refinancing of the loan. The joint
venture reached an agreement with the lender for an extension of the
mortgage loan through January 1, 1997 and again through January 1, 1998.
In addition to substantially the same terms as were in effect prior to such
extensions, the agreement required that the property submit net operating
cash flow of the property to the lender. In addition, the lender had
indicated that it would not extend the loan beyond January 1, 1998. 260
Franklin and the Partnership believed that the value of the office building
was less than the mortgage loan, and the Partnership did not intend to
expend any additional funds of its own on the property. Accordingly, 260
Franklin entered into negotiations with the lender and an unaffiliated
third party regarding the sale of the property to the unaffiliated third
party. Effective January 1, 1998, the joint venture entered into a loan
modification agreement with the lender in which the lender waived accrued
unpaid interest owed for the period prior to January 1, 1998, which was
approximately $17,200,000.
<PAGE>
On January 2, 1998, 260 Franklin Street Associates disposed of,
through a trust, the land, building and related improvements of the 260
Franklin Street Building. 260 Franklin transferred title to the land,
building and improvements, and other assets and liabilities related to the
property in consideration of a discharge of the mortgage loan and receipt
of $200 in cash. 260 Franklin recognized in 1998 gains in the aggregate of
approximately $23,200,000 for financial reporting purposes, in part as a
result of previous impairment losses recognized by the joint venture in
1996 aggregating $11,145,446, and an extraordinary gain on the discharge of
indebtedness of approximately $17,500,000 for financial reporting purposes,
of which the Partnership's share was approximately $7,000,000 and
$5,000,000, respectively. In addition, 260 Franklin recognized a gain of
approximately $24,400,000 for Federal income tax reporting purposes, of
which the Partnership's share was approximately $7,356,000, with no
distributable proceeds in 1998. 260 Franklin and the Partnership have no
future liability for any representations, warranties or covenants to the
purchaser as a result of the disposal of the property.
Due to the lender negotiations described above, the property had been
classified as held for sale or disposition as of July 1, 1997, and
therefore, was not subject to continued depreciation after such date.
VILLAGES NORTHEAST
The property was classified as held for sale or disposition as of
January 1, 1996, and therefore, had not been subject to continued
depreciation prior to its sale in May 1996.
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) Apartments.
Dunwoody (Phases I and III) Apartments secured an approximately
$21,000,000 first mortgage loan, which required 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 principal
balance was payable. The Dunwoody (Phase II) Apartments secured a
$9,800,000 first mortgage loan, which bore interest of 7.64% per annum, and
required monthly payments of principal and interest of $73,316 through
November 1, 1997, when the remaining balance was payable.
Villages Northeast was entitled to a cumulative preferred return of
annual net cash receipts (as defined) from the properties. Villages
Northeast received cash distributions from property operations through
May 7, 1996. After Villages Northeast received its preferential return,
the unaffiliated venture partner was entitled to a non-cumulative return on
its interest in the venture; additional net cash receipts were shared in a
ratio relating to the ownership interests of Villages Northeast (90%) and
its unaffiliated venture partner (10%). Villages Northeast also had
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,
were 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 were allocable solely to Villages Northeast and
certain costs of operations paid for out of capital contributions, if any,
of the unaffiliated venture partner were allocable solely to it.
<PAGE>
On May 7, 1996, the Partnership sold (through the Villages Northeast
venture) the Dunwoody apartment complex to the unaffiliated venture
partner, pursuant to such venture partner's right of first refusal, for
$47,000,000 less brokerage commissions, transfer taxes and legal fees of
approximately $470,000. Approximately $30,900,000 of the sales proceeds
were utilized to retire the mortgage debt including a prepayment penalty of
approximately $435,000 (of which the Partnership's share of approximately
$130,500 was included as an extraordinary item in the Partnership's 1996
consolidated financial statements). Additionally, approximately $787,000
(of which the Partnership's share was approximately $236,000) was paid to
the State of Georgia on behalf of the Holders of Interests for withholding
tax related to the sale. As a result of the sale, the Partnership
recognized a gain of approximately $4,300,000 for financial reporting
purposes and a gain of approximately $8,600,000 for Federal income tax
purposes in 1996. The Partnership made a distribution of $30 per Interest
from the net sales proceeds of this sale in August 1996. In 1997, the
Partnership recognized a loss of approximately $269,000 for financial
reporting purposes resulting from the liquidation of Villages Northeast.
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 secured a mortgage note payable in the principal
amount of $60,000,000, due on December 31, 2000. The loan provided for
monthly interest-only payments of $357,500. Interest on the non-recourse
loan accrued at 7.15% per annum.
A portion of the proceeds from the note payable was used to pay the
outstanding balance, including accrued interest, under a 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 provided that JMB/NewPark
and the joint venture partner were each entitled to receive 50% of profits
and losses, net cash flow and net sale or refinancing proceeds of NewPark
Associates and were each obligated to advance 50% of any additional funds
required under the terms of the NewPark Associates partnership agreement.
As a result of the acquisition by Federated Department Stores of the
company which owned the Emporium Capwell store at NewPark Mall, Federated,
which also owns the Macy's store at NewPark, approached the NewPark joint
venture regarding a sale of the Emporium building. Simultaneously with its
negotiations to acquire the Emporium Capwell building, the NewPark joint
venture negotiated to sell the building to a national retail store owner.
The transactions closed on April 22, 1997 and the joint venture received a
lease termination fee of approximately $2,187,000, of which the
Partnership's share was approximately $110,000.
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 was paid a management fee equal to 4%
of the fixed and percentage rent. An amendment to the management agreement
<PAGE>
provided that the new manager would pay to an affiliate of the General
Partners of the Partnership an annual consulting fee in the amount of
$100,000 in consideration for assisting NewPark Associates and the new
venture partner in the evaluation of property budgets, and leasing and
long-term strategies for NewPark Mall. Such consulting fee was paid out of
the management fee noted above.
Pursuant to a liquidation agreement dated November 13, 1998, the
Partnership, its affiliated venture partner and the unaffiliated venture
partner dissolved NewPark Associates and distributed all of its assets to
the joint venture partners. On November 18, 1998, the Partnership and its
affiliated venture partner sold their interests in the net assets of the
NewPark Mall to the unaffiliated joint venture partner for $16,000,000 less
brokerage commissions and closing costs of approximately $455,000. As a
result of the sale, the Partnership recognized a gain for financial
reporting purposes of approximately $813,000 in 1998, in part as a result
of a previous impairment loss recognized by the Partnership of $430,000.
The Partnership recognized a gain on sale of approximately $863,000 for
Federal income tax purposes in 1998.
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, 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, were 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 venture agreement provided that the
Partnership and Carlyle-XVII were 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 were 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 were distributable on an equal priority level; however, they were
subordinate to the receipt by the Partnership and Carlyle-XVII of their
respective current year preferred return. Any remaining annual cash flow
<PAGE>
was distributable 75% to the Partnership and Carlyle-XVII and 25% to the
joint venture partner until the Partnership and Carlyle-XVII had 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 was
distributable 50% to the Partnership and Carlyle-XVII and 50% to the joint
venture partner.
The Palm Desert venture agreement also provided that upon sale or
refinancing of the property, net sale or refinancing proceeds were
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 had 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 were
distributable 50% to the Partnership and Carlyle-XVII and 50% to the joint
venture partner.
The land underlying the shopping center was owned by the lender under
the first mortgage loan. Palm Desert leased the land by assignment of an
existing ground lease which had a term through December 2038 and provided
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
exceeded $6,738,256. Total ground rent expense for the years ended
December 31, 1998, 1997 and 1996 was $1,162,669, $1,312,906 and 1,293,112,
respectively. The ground lease provided for two 10-year extensions at the
option of the lessee. The ground lease did not provide for any option on
the part of Palm Desert to purchase the land.
Operating profits and losses, in general, were allocable in proportion
to the amount of net cash flow distributed to the partners of Palm Desert,
or, if there were 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 were
allocable to the partner whose contributions are used to pay such expenses.
For 1997 and 1996, 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 partners in 1997 and 1996. For 1998, profits
were allocated to the partners in proportion to the amount of net cash flow
distributed to the partners of Palm Desert.
The Palm Desert agreement also provided that the annual cash flow, net
sale or refinancing proceeds and tax items distributed or allocated
collectively to the Partnership and Carlyle-XVII generally were
distributable or allocable between them based upon their respective capital
contributions. Such capital contributions were generally in the
percentages of approximately 85.8% for the Partnership and approximately
14.2% for Carlyle-XVII.
The Partnership and Carlyle-XVII entered into an agreement with the
unaffiliated venture partner, effective January 1, 1998, pursuant to which
the Partnership and Carlyle-XVII granted the unaffiliated venture partner
an option to acquire their interests in the joint venture (the "Option
Agreement") . Pursuant to the Option Agreement, the unaffiliated venture
<PAGE>
partner had the right (but not the obligation) to purchase all (but not
less than all) of the Partnership's and Carlyle-XVII's interests in the
joint venture by giving notice of its exercise of the option during the
term of the option, which was originally scheduled to expire July 15, 1998
but was extended first through August 14, 1998 pursuant to a first
amendment to the Option Agreement. The Option Agreement also provided for
certain rights and obligations of the Partnership, Carlyle-XVII and the
unaffiliated venture partner with respect to the joint venture and its
property during the option term. In consideration for the option and the
first amendment to the option, the unaffiliated venture partner was
required to pay $58,333 for each month of the option term. Pursuant to a
second amendment to the Option Agreement, the option term was extended
through December 29, 1998, the unaffiliated venture partner was required to
pay $120,000 to the Partnership and Carlyle-XVII and the aggregate purchase
price for the interests was reduced to $4,000,000. The Partnership and
Carlyle-XVII received their allocable shares of the consideration for the
option of which the Partnership's share was approximately $427,000.
Concurrently with the execution of the Option Agreement, the joint venture
made a distribution to the Partnership and Carlyle-XVII in the aggregate
amount of approximately $740,000 (of which the Partnership's share was
approximately $635,000), which represented undistributed net cash flow of
the joint venture through the end of 1997. All other funds and net cash
flow of the joint venture during the term of the option were held by the
joint venture for its use. Upon the expiration of the Option Agreement,
the rights and obligations of the parties subsequent to expiration of the
Option Agreement were to be governed by the terms of the joint venture
partnership agreement without regard to changes previously affected by the
terms of the Option Agreement.
On December 29, 1998, the Partnership and Carlyle-XVII sold their
respective interests in the joint venture pursuant to the Option Agreement
for $4,000,000, of which the Partnership's share was $3,431,000. The sale
resulted in a gain to the Partnership in 1998 of approximately $2,019,000
for financial reporting purposes and a gain on sale of approximately
$3,418,000 for Federal income tax reporting purposes. The Partnership had
no liability for any representations, warranties or covenants in connection
with the sale of its interest in the joint venture.
The shopping center was managed pursuant to a long-term agreement with
an affiliate of the joint venture partner. The manager was 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 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 was entitled to receive compensation for leasing services.
LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1998 and
1997:
1998 1997
----------- -----------
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, released
of liability pursuant to the
Partnership's sale of its interest
in the Palm Desert joint venture. . . . . $ -- 41,079,673
Less current portion of
long-term debt. . . . . . . . . . -- 457,144
----------- -----------
Total long-term debt. . . . . . . . $ -- 40,622,529
=========== ===========
<PAGE>
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations were allocated 96% to the Holders
of Interests and 4% to the General Partners. Profits from the sale or
other disposition of investment properties generally were 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 would 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 were allocated 4% to the General Partners.
The remaining sale or other disposition profits and losses were allocated
to the Holders of Interests.
The General Partners were 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
were allocated 90% to the Holders of Interests and 10% to the General
Partners (of which 6.25% constituted a management fee to the Corporate
General Partner for services in managing the Partnership).
The Partnership Agreement provided that, subject to certain
conditions, the General Partners would 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 were entitled
to receive 99% and the General Partners 1% of net sale or refinancing
proceeds until the Holders of Interest (i) received cumulative cash
distributions from the Partnership's operations which, when combined with
net sale or refinancing proceeds previously distributed, equalled 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) 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. If upon
completion of the liquidation of the Partnership and the distribution of
all Partnership funds, the Holders of Interests had not received the
amounts in (i) and (ii) above, the General Partners were required to return
all or a portion of the 1% distribution of net sale or refinancing proceeds
described above up to an amount equal to such deficiency in payments to the
Holders of Interests pursuant to (i) and (ii) above. The Holders of
Interests did not receive the return levels in (i) and (ii) above.
Accordingly, in December 1998, the General Partners were required to
contribute to the Partnership $141,766, which represented the amount of all
distributions they previously received from sales and refinancing proceeds,
and such amount was included in the final liquidating distribution made to
the Holders of Interests.
TRANSACTIONS WITH AFFILIATES
The General Partners received distributions from the operations of the
Partnership in the amount of $11,694, $11,695 and $38,009 for 1998, 1997
and 1996, respectively. In addition, pursuant to the liquidating
distribution in December 1998, the General Partners received distributions
from operations of $463,856. In connection with the liquidation and
termination of the Partnership, the General Partners were required to
contribute to the Partnership $141,766, which represented the amount of all
distributions they previously received from sale and refinancing proceeds,
and such amount was included in the final liquidating distribution made to
the Holders of Interests.
<PAGE>
An affiliate of the General Partners was entitled to payment of
property management and leasing fees relating to 260 Franklin through
November 1994 and subsequently JMB guaranteed payment to the unaffiliated
third party property manager for the property management and leasing fees.
Pursuant to a loan modification for the property, property management and
leasing fees were required to be escrowed through December 1995. Beginning
in January 1996, the unaffiliated property manager was paid management and
leasing fees by the property. During 1998, $1,510,132 of management and
leasing fees remained payable (as a result of the escrowing of certain 1995
and prior years' management and leasing fees payable to an affiliate of the
General Partners and JMB's payment pursuant to its guarantee of the fees to
the unaffiliated property manager) of which the Partnership's share was
$453,039. In connection with the sale of the 260 Franklin Street building,
the Partnership assumed the liability for its pro rata share of the unpaid
fees, which amount was transferred to the accounts of the Partnership upon
the sale of 260 Franklin. The debt was discharged prior to liquidation of
the Partnership and the amount was written off the accounts of the
Partnership.
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, 1998, 1997 and 1996 are
as follows:
UNPAID AT
DECEMBER 31,
1998 1997 1996 1998
-------- -------- -------- ------------
Management fees to
Corporate General
Partners . . . . . . . . .$792,586 19,492 63,349 --
Insurance commissions . . . 32,240 29,843 28,153 --
Reimbursement (at cost)
for accounting services. . 7,279 5,767 4,553 --
Reimbursement (at cost)
for portfolio
management services. . . . 46,596 28,839 23,481 --
Reimbursement (at cost)
for legal services . . . . 10,165 8,276 4,357 --
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses . . 4,811 -- -- --
-------- ------- ------- ------
$893,677 92,217 123,893 --
======== ======= ======= ======
Pursuant to a winding up agreement between the Partnership and the
Corporate General Partner, in consideration of the Corporate General
Partner's assumption of any residual liabilities of the Partnership upon
its termination, the Partnership paid the Corporate General Partner $4,792
and transferred to the Corporate General Partner any residual rights to the
coverage and benefits of insurance on behalf of the Partnership and other
residual rights.
<PAGE>
UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
Summary combined financial information for JMB/Owings (through the
collection of the note receivable in July 1998), 260 Franklin (prior to its
disposal in January 1998), Villages Northeast (prior to its sale in May
1996) and JMB/NewPark (prior to its sale in November 1998) are as follows:
1998 1997
----------- ------------
Current assets. . . . . . . . . . $ -- 8,713,279
Current liabilities . . . . . . . -- (95,517,660)
------------ ------------
Working capital . . . . . . . -- (86,804,381)
------------ ------------
Deferred expenses and accrued
rents receivable . . . . . . . . -- 2,314,565
Ventures partners' (equity)
deficit. . . . . . . . . . . . . -- 9,247,047
Investment properties, net. . . . -- 124,664,551
Other liabilities . . . . . . . . -- (288,460)
Long-term debt. . . . . . . . . . -- (60,000,000)
------------ ------------
Partnership's capital
(deficit). . . . . . . . . . $ -- (10,866,678)
============ ============
Represented by:
Invested capital. . . . . . . . $ 58,461,522 58,008,483
Cumulative cash distributions . (34,088,987) (27,932,511)
Cumulative losses . . . . . . . (24,372,535) (40,942,650)
------------ ------------
$ -- (10,866,678)
============ ============
Total income. . . . . . . . . . . $ 10,997,796 26,087,701
Expenses. . . . . . . . . . . . . 7,093,153 28,106,925
------------ ------------
3,904,643 (2,019,224)
Gain on sale or disposition
of investment in uncon-
solidated ventures. . . . . . . 55,364,850 787,943
------------ ------------
Net earnings (loss) . . . . . $ 59,269,493 (1,231,281)
============ ============
Partnership's share of
earnings (loss) . . . . . . . . $ 16,570,115 (734,333)
============ ============
Additionally, for the year ended December 31, 1996, total income was
$26,526,465, expenses were $47,299,819, the gain on sale of investment in
unconsolidated ventures was $15,258,640 and the net earnings (loss) was
$(432,499) for the unconsolidated ventures listed above.
<PAGE>
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 years 1997 and 1998.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership was JMB Realty
Corporation ("JMB"), a Delaware corporation. Substantially all of the
outstanding shares of JMB are owned, directly or indirectly, by certain of
its officers, directors, members of their families and their affiliates.
JMB had responsibility for all aspects of the Partnership's operations
subject to the requirement that purchases and sales of real property were
to be approved by the Associate General Partner of the Partnership, ABPP
Associates, L.P., an Illinois limited partnership with JMB as its sole
general partner. The limited partners of the Associate General Partner are
generally officers, directors and affiliates of JMB or its affiliates.
The Partnership was 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 were 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 were to be provided on terms no less
favorable to the Partnership than could be obtained from independent third
parties and were otherwise subject to conditions and restrictions contained
in the Partnership Agreement. The Partnership Agreement permitted the
General Partners and their affiliates to provide services to, and otherwise
deal and do business with, persons who may have been engaged in
transactions with the Partnership, and permitted 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 have been 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 have been affected by various determinations by the
General Partners under the Partnership Agreement, including whether and
when to sell or refinance a property, the establishment and maintenance of
reasonable reserves and the determination of the sources (i.e., offering
proceeds, cash generated from operations or sale proceeds) and uses of such
reserves, the timing of expenditures and the allocation of certain tax
items under the Partnership Agreement, the General Partners may have had a
conflict of interest with respect to such determinations.
The names, positions held and length of service therein of each
director and the executive officers and certain other officers of the
Corporate General Partner are as follows:
<PAGE>
Served in
Name Office Office Since
---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber 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 2, 1999. 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 2,
1999. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV")
and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the
managing general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"),
JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties,
Ltd.-X ("JMB Income-X"), and JMB Income Properties, Ltd.-XI ("JMB
Income-XI"). JMB is also the sole general partner of the associate general
partner of most of the foregoing partnerships.
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")). Most of such directors and officers are also partners,
directly or indirectly, of certain partnerships which are or were associate
general partners in the following real estate limited partnerships, among
others: the Partnership, Carlyle-XI, Carlyle-XIII, Carlyle-XIV, Carlyle-
XV, JMB Income-VII, JMB Income-X, JMB Income-XI, and Carlyle Income Plus-
II.
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 61) is an individual general partner of JMB
Income-V. Mr. Malkin has been associated with JMB since October, 1969.
Mr. Malkin is also a director of Urban Shopping Centers, Inc., an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is also a director of Chisox
Corporation, which is the general partner of a limited partnership that
owns the Chicago White Sox Major League Baseball team, and CBLS, Inc.,
which is the general partner of the general partner of a limited
partnership that owns the Chicago Bulls National Basketball Association
team. He is a Certified Public Accountant.
<PAGE>
Neil G. Bluhm (age 61) is an individual general partner of JMB
Income-V. Mr. Bluhm has been associated with JMB since August, 1970. Mr.
Bluhm is also a principal of Walton Street Capital, L.L.C., which sponsors
real estate investment funds, and a director of Urban Shopping Centers,
Inc. He is a member of the Bar of the State of Illinois and a Certified
Public Accountant.
Burton E. Glazov (age 60) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
Mr. Glazov is currently retired. He is a member of the Bar of the State of
Illinois.
Stuart C. Nathan (age 57) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 65) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.
John G. Schreiber (age 52) 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.,
which is engaged in the real estate investing business. He is also a
senior advisor and partner of Blackstone Real Estate Advisors L.P., an
affiliate of the Blackstone Group, L.P. He is also a director of Urban
Shopping Centers, Inc., Host Marriott Corporation, The Brickman Group,
Ltd., which is engaged in the landscape maintenance business, and a
director of a number of investment companies advised or managed by T. Rowe
Price Associates, Inc. with its affiliates and a trustee of Amli
Residential Property Trust. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 50) 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 51) 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 46) 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 50) 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 63) 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 received no
direct remuneration in such capacities from the Partnership. The
Partnership was required to pay a management fee to the Corporate General
Partner and the General Partners were entitled to receive a share of cash
distributions, when and as cash distributions were made to the Holders of
Interests, and a share of profits or losses. Reference is made to the
Notes for a description of such distributions and allocations. In 1998,
the General Partners received $475,551 of distributions, including the
liquidating distribution, and the Corporate General Partner received
management fees of $792,586. The General Partners received a share of
Partnership income for Federal income tax purposes aggregating $2,645,455
in 1998.
<PAGE>
In connection with the liquidation and termination of the Partnership,
the General Partners were required to contribute to the Partnership
$141,766, which represented the amount of all distributions they previously
received from sale and refinancing proceeds, and such amount was included
in the liquidating distribution made to the Holders of Interests. The
General Partners were required to contribute such amount because the
Holders of Interests had not received distributions of net sale or
refinancing proceeds equal to their initial capital investment in the
Partnership plus certain other distributions constituting a specified
return on their average capital investment for each year (i.e., their
initial capital investment as reduced by net sale or refinancing proceeds
previously distributed) commencing with the third quarter of 1987.
The Partnership was permitted to engage in various transactions
involving the General Partners and their affiliates, certain of which may
have involved conflicts of interest, as discussed in Item 10 above. The
relationship of the Partnership to the Corporate General Partner (and its
directors and officers) and its affiliates is set forth above in Item 10.
An affiliate of the General Partners was entitled to payment of
property management and leasing fees relating to 260 Franklin through
November 1994 and subsequently JMB guaranteed payment to the unaffiliated
third party property manager for the property management and leasing fees.
Pursuant to a loan modification for the property, property management and
leasing fees were required to be escrowed through December 1995. Beginning
in January 1996, the unaffiliated property manager was paid management and
leasing fees by the property. During 1998, $1,510,132 of management and
leasing fees remained payable (as a result of the escrowing of certain 1995
and prior years' management and leasing fees payable to an affiliate of the
General Partners and JMB's payment pursuant to its guarantee of the fees to
the unaffiliated property manager) of which the Partnership's share was
$453,039. In connection with the sale of the 260 Franklin Street building,
the Partnership assumed the liability for its pro rata share of the unpaid
fees, which amount was transferred to the accounts of the Partnership upon
the sale of 260 Franklin. The debt was discharged prior to liquidation of
the Partnership and the amount was written off the accounts of the
Partnership.
As set forth in the Prospectus of the Partnership, the Corporate
General Partner was required to 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
could 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 owned 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 did 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 1998
aggregating $32,240 in connection with the provision of insurance coverage
for certain of the real property investments of the Partnership and
providing professional liability insurance for the Partnership. Such
commissions are at rates set by insurance companies for the classes of
coverage provided.
<PAGE>
The General Partners of the Partnership or their affiliates were
reimbursed for their direct expenses or out-of-pocket expenses, salaries
for administrative, legal and accounting services relating to the adminis-
tration of the Partnership and the acquisition and operation of the
Partnership's real property investments. Such costs for 1998 were $68,851,
all of which was paid as of December 31, 1998. Reference is made to the
Notes.
Pursuant to a winding up agreement between the Partnership and the
Corporate General Partner, in consideration of the Corporate General
Partner's assumption of any residual liabilities of the Partnership upon
its termination, the Partnership paid the Corporate General Partner $4,792
and transferred to the Corporate General Partner any residual rights to the
coverage and benefits of insurance on behalf of the Partnership and other
residual rights.
<PAGE>
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group was known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership immediately prior to its liquidation.
(b) The Corporate General Partner, its officers and directors and the Associate General Partner beneficially
owned the following Interests of the Partnership immediately prior to its liquidation:
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 5.25685 Interests Less than 1%
Interests (and Assignee (1)(2)
Interests therein)
Limited Partnership Corporate General Partner, 7.42372 Interests Less than 1%
Interests (and Assignee its officers and (1)(2)(3)
Interests therein) directors and the
Associate General
Partner as a group
- -----------------
<FN>
(1) Includes .25685 Interests owned directly by JMB.
(2) Includes 5 Interests owned by the Initial Limited Partner of the Partnership, for which JMB, as its
indirect majority shareholder, is deemed to have shared voting and investment power.
(3) Includes 2.16687 Interests owned by an estate for which an officer acts as co-executor and is deemed to
have shared investment and voting power for such Interests.
No officer or director of the Corporate General Partner of the Partnership possessed 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 existed no arrangement, known to the Partnership, the operation of which may have resulted in a
change in control of the Partnership.
</TABLE>
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) Exhibits.
3-A. Amended and Restated Agreement of Limited
Partnership and the Assignment Agreement set forth as Exhibit B to the
Prospectus, copies of which are hereby incorporated herein by reference to
Exhibit 3 and Exhibit 4-A to the Partnership's Report on Form 10-K for
December 31, 1992 (File No. 0-16516) dated March 19, 1993.
3-B. Acknowledgement of rights and duties of the
General Partners of the Partnership between ABPP Associates, L.P. (a
successor Associated General Partner of the Partnership) and JMB Realty
Corporation as of December 31, 1995 dated November 18, 1996 are hereby
incorporated herein by reference to the Partnership's Report for September
30, 1996 on Form 10-Q (File No. 0-16516) dated November 8, 1996.
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. Documents relating to the third mortgage
modification and extension agreement secured by the 260 Franklin Street
Building dated December 4, 1996 are hereby incorporated herein by reference
to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-
16516) dated March 21, 1997.
4-D. 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.
<PAGE>
4-E. 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-F. 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-G. Documents relating to the Promissory Note secured
by NewPark Mall dated December 19, 1995 are hereby incorporated by
reference to the Partnership's Report on Form 10-K for December 31, 1995
(File No. 0-16516) dated March 25, 1996.
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 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-E. 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 Report on Form 8-K (File No. 0-
16516) dated January 6, 1989.
10-F. Documents relating to the assignment of JMB/125's
interest in 125 Broad Street Company are hereby incorporated by reference
to the Partnership's Report on Form 10-K for December 31, 1994 (File No. 0-
16516) dated March 27, 1995.
10-G. Modification to Reserve Escrow Agreement relating
to the 260 Franklin Street Building is hereby incorporated by reference to
the Partnership's Report on Form 10-Q for March 31, 1995 (File No. 0-16516)
dated May 11, 1995.
<PAGE>
10-H. Modification to Reserve Escrow Agreement relating
to the 260 Franklin Street Building dated December 4, 1996 are hereby
incorporated herein by reference to the Partnership's Report for December
31, 1996 on Form 10-K (File No. 0-16516) dated March 21, 1997.
10-I. Sale documents relating to the contract for sale
between VNE Partners, L.P. and Post Apartment Homes, L.P. dated May 7, 1996
regarding the sale of the Partnership's interest in the Dunwoody Crossing
Apartments are hereby incorporated by reference to the Partnership's Report
on Form 10-Q for June 30, 1996 (File No. 0-16516) dated August 9, 1996.
10-J. Modification to Reserve Escrow Agreement relating
to the 260 Franklin Street Building dated May 22, 1997 is incorporated
herein by reference to the Partnership's Report for June 30, 1997 on Form
10-Q (File No. 0-16516) dated August 8, 1997.
10-K. Palm Desert Option Agreement and Palm Desert
Agreement for Purchase and Sale of Partnership Interests by the Partnership
and Carlyle-XVII relating to the unaffiliated venture partner's option to
purchase the Partnership and Carlyle-XVII's interest in the joint venture
dated March 11, 1998 are hereby incorporated by reference to the
Partnership's Report for March 31, 1998 on Form 10-Q (File No. 0-16516)
dated May 13, 1998.
10-L. First Amendment to Palm Desert Option Agreement,
and First Amendment to Palm Desert Agreement for Purchase and Sale of
Partnership Interests by the Partnership and Carlyle-XVII relating to the
unaffiliated venture partner's option to purchase the Partnership and
Carlyle-XVII's interest in the joint venture dated July 15, 1998 is hereby
incorporated by reference to the Partnership's Report for September 30,
1998 on Form 10-Q (File No. 0-16516) dated November 11, 1998.
10-M. Second Amendment to Palm Desert Option Agreement
and Second Amendment to Palm Desert Agreement for Purchase and Sale of
Partnership Interests by the Partnership and Carlyle-XVII relating to the
unaffiliated venture partner's option to purchase the Partnership and
Carlyle-XVII's interest in the joint venture dated December 28, 1998 is
hereby incorporated by reference to the Partnership's Report on Form 8-K
(File No. 0-16516) dated January 13, 1999.
10-N. Partnership Interest Purchase Agreement relating
to the sale of the Partnership and Carlyle-XV's interest in the NewPark
Mall dated November 18, 1998 is filed herewith.
<PAGE>
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) On January 13, 1999, the Partnership filed a report on
Form 8-K with respect to the sale of its interest in the joint venture that
owned the Palm Desert Town Center on December 29, 1998. Such report on
Form 8-K included a description of the sale.
No annual report or proxy material for the fiscal year 1998 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
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 22, 1999
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 22, 1999
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 22, 1999
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 22, 1999
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 22, 1999
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 22, 1999
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 22, 1999
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 22, 1999
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 22, 1999
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
EXHIBIT INDEX
-------------
DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
- ------- ------- ------------ -------------
3-A. Amended and Restated Agree-
ment of Limited Partnership
of the Partnership Yes
3-B. Acknowledgement of rights
and duties of the General
Partners 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. Documents relating to the
third mortgage modification and
extension agreement secured
by the 260 Franklin Street
Building Yes
4-D. First Amendment to Loan
Documents relating to the
mortgage loan secured by
Dunwoody Crossing Apartments
(Phases I and III) Yes
4-E. Documents relating to the
modification of the mortgage
loan secured by Dunwoody
Crossing Apartments (Phases I
and III) Yes
4-F. Forbearance agreement relating to
the modification of the mortgage
loan secured by New Park Mall Yes
4-G. Documents relating to the Promissory
Note secured by New Park Mall Yes
10-A. Escrow Deposit Agreement Yes
10-B. Acquisition documents relating
to the purchase of an interest
in the 260 Franklin Street
Building, Boston, Massachusetts Yes
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 Partnership of an interest
in NewPark Mall in Newark
(Alameda County), California Yes
<PAGE>
10-E. 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-F. Documents relating to the
assignment of JMB/125's interest
in 125 Broad Street Company Yes
10-G. Modification to Reserve
Escrow Agreement relating to
the 260 Franklin Street
Building Yes
10-H. Modification to Reserve
Escrow Agreement dated
December 4, 1996, relating
to the 260 Franklin Street
Building Yes
10-I Sale documents relating to the
contract for sale between VNE
Partners, L.P. and Post
Apartment Homes, L.P. regarding
the sale of the Partnership's
interest in the Dunwoody
Crossing Apartments Yes
10-J. Modification to Reserve Escrow
Agreement relating to the
260 Franklin Street Building
dated August 8, 1997 Yes
10-K. Palm Desert Option Agreement and
and Palm Desert Agreement for
Purchase and Sale of Partnership
Interests Yes
10-L. First Amendment to Palm Desert
Option Agreement and First
Amendment to Palm Desert
Agreement for Purchase and
Sale of Partnership Interests Yes
10-M. Second Amendment to Palm Desert
Option Agreement and Second
Agreement to Palm Desert
Agreement for Purchase and
Sale of Partnership Interests Yes
10-N. Partnership Interest Purchase
Agreement relating to sale
of Interest in NewPark Mall No
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
---------------------
EXHIBIT 10-N
- ------------
PARTNERSHIP INTEREST
PURCHASE AGREEMENT
--------------------
(New Park Mall; Newark, California)
THIS AGREEMENT (this "Agreement") made and entered into as of the ___
day of November, 1998, by and among CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois limited partnership ("Carlyle-XV"), CARLYLE
REAL ESTATE LIMITED PARTNERSHIP-XVI, an Illinois limited partnership
("Carlyle-XVI") (Carlyle-XV and Carlyle-XVI, individually and collectively,
are sometimes hereinafter called "Seller"), and NEWPARK MALL L.L.C.,
a Delaware limited liability company ("NewPark L.L.C."), and ALAMEDA MALL
L.L.C., a Delaware limited liability company ("Alameda L.L.C.") (NewPark
L.L.C. and Alameda L.L.C., individually and collectively, are sometimes
hereinafter called "Buyer").
WITNESSETH, THAT WHEREAS:
A. Carlyle-XV and Carlyle-XVI are all of the partners of
JMB/NewPark Associates, an Illinois general partnership (the
"Partnership");
B. Pursuant to that certain Liquidation Agreement dated as of
November 13, 1998 (the "Liquidation Agreement"), the Partnership and
GGP-NEWPARK L.L.C., a Delaware limited liability company ("GGP-Newpark
L.L.C.") have dissolved New Park Associates, a California general
partnership (the "Dissolved Partnership"), and caused all of the assets of
the Dissolved Partnership, consisting of the property commonly known as New
Park Mall, Newark, California and related assets (collectively, the
"Business Property"), to be transferred to them as tenants-in-common;
C. Seller desires to sell, and Buyer desires to purchase, all of
Seller's interest in the Partnership in the manner hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings of the parties hereto, it is hereby agreed as follows:
1. PURCHASE AND SALE. Seller shall sell to Buyer, and Buyer
shall purchase from Seller, all of Seller's right, title and interest in
and to the Partnership and any and all property owned by the Partnership
(individually and collectively, the "Seller Interest"), upon the terms,
covenants and conditions hereinafter set forth.
2. PURCHASE PRICE. Subject to the adjustments hereinafter
provided, the purchase price (the "Purchase Price") of the Seller Interest
is (i) Sixteen Million and No/100 Dollars ($16,000,000.00) plus or minus
(ii) one-half (1/2) of the "Partners' Equity Amount", as defined in
Paragraph 4 below. An amount equal to the $16,000,000 plus or minus the
"Base Partners' Equity Amount" as defined in Paragraph 4A below (the amount
to be paid as aforesaid being herein called the "Closing Payment") shall be
paid on the Closing Date by wire transfer to Seller of immediately
available federal funds in accordance with wiring instructions to be
provided by Seller in connection with the closing hereunder (and allocated
between each Seller as set forth in such instructions).
3. CLOSING. The closing of the sale and purchase herein
provided shall be consummated on November 18, 1998 (the "Closing Date").
On or before 11:00 a.m. Central time on the Closing Date, (a) Buyer shall
deliver to Seller (i) the Closing Payment by wire transfer of immediately
available federal funds as aforesaid, and (ii) two (2) duly executed and
acknowledged counterpart originals of the assignment and assumption of
partnership interest covering the Seller Interest, in the form of Exhibit
"A" attached hereto ("Assignment and Assumption"), (b) Seller shall deliver
<PAGE>
to Buyer two (2) duly executed and acknowledged counterpart originals of
the Assignment and Assumption, (c) Seller and Buyer shall each deliver
legal opinions respecting due organization and authorization in the forms
set forth in Exhibit "B" attached hereto, and (d) Seller and Buyer shall
each deliver such other documents as may be reasonably requested by the
other in order to effectuate the transactions provided for herein (provided
the same do not materially increase the costs to, or liability or
obligations of, such party in a manner not otherwise provided for herein).
Without limitation thereon, Buyer shall promptly cause the name of the
Partnership to be changed so as to delete any reference to JMB. At the
request of either party (exercised in writing prior to the Closing Date),
the deliveries to be made hereunder may be accomplished through appropriate
escrow arrangements with a reputable title company or other reputable
escrow holder pursuant to escrow instructions to be executed among the
parties in form reasonably acceptable to such parties in order to
effectuate the interest hereof.
4. BALANCE SHEET ADJUSTMENTS.
A. BASE BALANCE SHEET. At least three (3) business
days prior to the Closing Date, Buyer shall deliver to Seller a preliminary
balance sheet (the "Base Balance Sheet") for the Dissolved Partnership as
of the end of the most recent month which precedes the Closing Date (the
"Base Balance Sheet Date") and a statement of estimated accrued revenues
and estimated accrued expenses for the Business Property for the month of
Closing. The Base Balance Sheet shall include a certification of Buyer's
preliminary calculation of partners' capital as of such date plus or minus
the product of (i) the excess of estimated accrued revenues over estimated
accrued expenses for the month of Closing as set forth on the Base Balance
Sheet multiplied by (ii) a fraction in which the numerator is the number of
days to have elapsed in the month of Closing prior to Closing and the
denominator is 30 (e.g., provided the Closing occurs November 18, the
fraction would be 17/30) (the "Base Partners' Equity Amount"). The Base
Balance Sheet shall be prepared by Buyer in good faith in accordance with
the procedures set forth in Exhibit "C" hereto, and (together with the Base
Partners' Equity Amount) shall be subject to Seller's reasonable approval
on or before Closing.
B. CLOSING BALANCE SHEET.
(1) On or before December 10, 1998, Buyer will
cause to be prepared and delivered to Seller a balance sheet of the
Dissolved Partnership as of the Base Balance Sheet Date and a statement of
accrued revenues and accrued expenses for the Business Property for the
month of closing (the "Closing Balance Sheet"), together with a certificate
based on such Closing Balance Sheet setting forth Buyer's calculation of
partners' capital as of the Base Balance Sheet Date plus or minus the
product of (i) the excess of accrued revenues over accrued expenses for the
Business Property for the month of Closing as set forth on the Closing
Balance Sheet multiplied by (ii) a fraction in which the numerator is the
number of days to have elapsed in the month of Closing prior to the day of
Closing and the denominator is 30 (the "Partners' Equity Amount"). The
Closing Balance Sheet shall be prepared by Buyer in good faith in
accordance with the procedures set forth in Exhibit "C" hereto.
(2) If Seller disagrees with Buyer's calculation
of the Partners' Equity Amount, Seller may, within five (5) business days
after delivery of the documents referred to in Paragraph 4(B)(1), deliver a
notice to Buyer disagreeing with such calculation and setting forth
Seller's calculation of such amounts. Any such notice of disagreement
shall specify those items or amounts as to which Seller disagrees, and
Seller shall be deemed to have agreed with all other items and amounts
contained in the Closing Balance Sheet and the Buyer's calculation of the
Partners' Equity Amount.
<PAGE>
(3) If a notice of disagreement shall be duly
delivered pursuant to Paragraph 4(B)(2), Seller and Buyer shall, during the
five (5) business days following such delivery, use their best efforts to
reach agreement on the disputed items or amounts in order to determine, as
may be required, the "Final Partners' Equity Amount" (as defined below)
which amount shall not be less than the amount thereof shown in Buyer's
calculation delivered pursuant to Paragraph 4(B)(1) nor more than the
amounts thereof shown in Seller's calculation delivered pursuant to
Paragraph 4(B)(2). "Final Partners' Equity Amount" means the Partners'
Equity Amount as shown in Buyer's calculation delivered pursuant to
Paragraph 4(B)(1) if no notice of disagreement with respect thereto is duly
delivered pursuant to Paragraph 4(B)(2); or, if such a notice of
disagreement is delivered, as agreed by Seller and Buyer pursuant to
Paragraph 4(B)(3).
(4) Seller and Buyer agree that they will
reasonably cooperate and assist in the preparation of the Closing Balance
Sheet, the calculation of the Final Partners' Equity Amount and in the
conduct of the reviews referred to in this Section, including without
limitation, the making available to the extent necessary of books, records,
work papers and personnel. Unless otherwise agreed to in writing by
Seller, the final determination of all adjustment amounts hereunder shall
occur not later than December 20, 1998.
C. ADJUSTMENT TO PURCHASE PRICE.
(1) The Purchase Price will be adjusted as
follows: if the Final Partners' Equity Amount exceeds the Base Partners'
Equity Amount as set forth on the Base Balance Sheet, Buyer shall pay to
Seller, as an adjustment to the Purchase Price, one-half (1/2) of the
amount of such excess. If the Base Partners' Equity Amount exceeds the
Final Partners' Equity Amount, Seller shall pay to Buyer as an adjustment
to the Purchase Price, one-half (1/2)of the amount of such excess.
(2) Any payment pursuant to Paragraph 4(C)(1)
shall be made within five (5) business days after the Final Partners'
Equity Amount has been determined by Buyer or Seller, as the case may be,
by wire transfer of immediately available federal funds as directed by the
receiving party (or otherwise agreed by the parties).
D. CLOSING COSTS. Seller and Buyer shall each pay
one-half (1/2) of the costs of any escrow established in connection with
the closing hereunder. Seller shall pay its own legal fees in connection
with the transactions under this Agreement, together with an amount equal
to $35,200 of any documentary transfer taxes which may be payable in
connection with the transactions contemplated under or in connection with
this Agreement or the Liquidation Agreement. Buyer shall pay its own legal
fees in connection with the transactions under this Agreement, together
with all other closing costs, if any, which may be incurred in connection
with the transactions contemplated in this Agreement, including any
transfer fees and other fees and costs imposed or required to be paid by
"CIGNA" (as hereinafter defined), all transfer taxes other than those
referred to above, and any intangible and other taxes, if any, recording or
filing charges for any instruments or documents which may be recorded or
filed, if any, and all title, survey or escrow fees, if any.
E. PROFITS AND LOSSES OF THE PARTNERSHIP PRIOR TO
CLOSING; TAX RETURNS. Subject to the provisions set forth in subparagraph
B above, the parties confirm that profits and losses of the Partnership for
the period from January 1, 1998 through the Closing Date shall be allocated
for tax reporting purposes pursuant to the applicable provisions of the
Partnership Agreement. Buyer will cooperate with Seller in providing and
preparing such information and items as may be required in order to timely
prepare and deliver tax returns and other similar items after the Closing
Date (and, in connection therewith, after the Closing Date Buyer shall
continue to provide Seller full access to all books and records of the
Partnership and to all other financial information as may be reasonably
required in connection with such determinations).
<PAGE>
5. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF SELLER. Each
Seller hereby represents and warrants to Buyer as follows:
(1) Such Seller is a limited partnership, duly
organized, validly existing and in good standing under the laws of the
State of Illinois.
(2) Such Seller is duly authorized, and qualified
under any and all applicable laws, regulations, ordinances and orders to do
all things required of it, under and in connection with this Agreement.
(3) Such Seller has the right, power and
authority to enter into and perform the terms of this Agreement and to
consummate the transactions contemplated hereby.
(4) This Agreement and all agreements,
instruments and documents herein provided to be executed or to be caused to
be executed by such Seller are (or, in the case of agreements, instruments
and documents executed as of the Closing Date, will be as of the Closing
Date) duly authorized, executed and delivered by, such Seller and
constitute the legal, valid and binding obligations of such Seller,
enforceable against such Seller in accordance with their terms (except to
the extent enforceability may be limited by applicable bankruptcy,
insolvency and other similar debtor relief laws and equitable principals).
(5) Such Seller owns its Seller Interest, free
and clear of any and all security interests, rights, options, claims and
demands (other than any security interests and rights granted under the
Partnership Agreement or under the partnership agreement of the Dissolved
Partnership or the agreements in dissolution thereof) ("Liens").
(6) Except with respect to the CIGNA loan
documents and any agreements respecting the Business Property, the
execution, delivery and performance of this Agreement by each Seller do not
and will not (with the giving of notice and/or the passage of time)
violate, conflict with, result in a breach of, loss of rights or creation
of any Liens upon the Seller Interest of such Seller or require the consent
of or filing with any other person or entity (including without limitation
any governmental bodies, agencies or instrumentalities) under (a) the
organizational documents of such Seller, (b) any agreement, commitment or
instrument to which such Seller is a party or by which either such Seller
or its assets are bound or (c) any law, ordinance, rule, regulation, order,
judgment, decree or the like to which either such Seller or its assets are
subject.
(7) The Partnership is a general partnership duly
formed and validly existing under the laws of the State of Illinois with
full partnership power and authority to own an undivided interest in the
Business Property and conduct the business now being conducted by it. The
Seller Interest constitutes all of the equity interests in the Partnership
and no person or entity (other than Buyer ) has any option or other right
to acquire any Seller Interest or portion thereof, any other equity
interest in the Partnership or any security or instrument convertible into
any such equity interest. A true, correct and complete copy of the
partnership agreement of the Partnership and any and all amendments and
supplements thereto (which are described in the Assignment and Assumption
attached as Exhibit "A" hereto) have been delivered to Buyer, such
partnership agreement and amendments and supplements constitute the entire
agreement of Buyer with respect to the Partnership and there are no oral or
written amendments or supplements thereto. The sole asset of the
Partnership is its undivided interest in the Business Property (and prior
thereto its general partner interest in the Dissolved Partnership), and the
Partnership has no liabilities or obligations other than the liabilities
and obligations assumed by the Partnership and GGP-NewPark L.L.C. pursuant
to Section 3 of the Liquidation Agreement. The liabilities and obligations
<PAGE>
assumed by the Partnership and GGP-NewPark L.L.C. pursuant to Section 3 of
the Liquidation Agreement (including, without limitation, the CIGNA loan
documents), are hereinafter referred to as the "Business Property
Liabilities". Immediately prior to the liquidation of the Dissolved
Partnership, the Partnership owned its partnership interest in the
Dissolved Partnership free and clear of all Liens (other than any security
interests and rights granted under the partnership agreement for the
Dissolved Partnership) and the Partnership has not granted to any other
person or entity (other than GGP-Newpark L.L.C.) the option or other right
to acquire such interest or any portion thereof, an interest in the
Dissolved Partnership or a security or instrument convertible into an
interest in the Dissolved Partnership.
(8) Other than as disclosed herein, neither such
Seller nor the Partnership has entered into any agreements or incurred any
liability on behalf of the Dissolved Partnership or in respect of the
Business Property for which the Partnership would be liable which is not
reflected in the books and records relating to the Business Property or
which was not otherwise requested or consented to by GGP-Newpark L.L.C.,
"Manager" (as defined in Paragraph B(1))or its or their
predecessors-in-interest or affiliates.
B. REPRESENTATIONS AND WARRANTIES OF BUYER. Each
Buyer hereby represents and warrants to Seller as follows:
(1) Except as set forth in Paragraph 5A above,
the sale of the Seller Interest is and will be made on an "as is" basis,
without representations and warranties of any kind or nature, express,
implied, or otherwise, including, but not limited to, any representation or
warranty concerning title to the Business Property, the physical condition
of the Business Property (including, but not limited to, the condition of
the soil or the improvements), the environmental condition of the Business
Property (including, but not limited to, the presence or absence of
hazardous substances on or respecting the Business Property), the
compliance of the Business Property with applicable laws and regulations
(including, but not limited to, zoning and building codes or the status of
development or use rights respecting the Business Property), the financial
condition of the Business Property or the Partnership or any other
representation or warranty respecting any income, expenses, charges, liens
or encumbrances, rights or claims on, affecting or pertaining to the
Partnership or the Business Property or any part thereof. Such Buyer
acknowledges that an affiliate of such Buyer is an existing partner in the
Dissolved Partnership, and that such Buyer is also affiliated with General
Growth Management, Inc. ("Manager"), the manager of the Business Property.
Such Buyer acknowledges that, except as to matters specifically set forth
in Paragraphs 5A above, such Buyer will acquire its Seller Interest solely
on the basis of (a) its own physical and financial examination of the
Business Property (such Buyer having completed all such due diligence
reviews, examinations and inspections deemed necessary by such Buyer) and
(b) information and knowledge in its possession and in the possession of
Manager. As a result of its affiliate's existing interest in the
Partnership and/or its affiliations with Manager, as applicable, such Buyer
is not relying upon, and has no need to rely upon, any knowledge or
information in the possession of either Seller with respect to any of the
foregoing matters except as set forth herein.
(2) Such Buyer is a limited liability company,
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
(3) Such Buyer has the right, power and authority
to enter into and perform the terms of this Agreement and to consummate the
transactions contemplated hereby.
<PAGE>
(4) This Agreement and all agreements,
instruments and documents herein provided to be executed or to be caused to
be executed by such Buyer is (or, in the case of agreements, instruments
and documents executed as of the Closing Date, will be as of the Closing
Date) duly authorized, executed and delivered by, such Buyer and constitute
the legal, valid and binding obligations of such Buyer, enforceable against
such Buyer in accordance with their terms (except to the extent
enforceability may be limited by applicable bankruptcy, insolvency and
other similar debtor relief laws and equitable principles).
(5) The execution, delivery and performance of
this Agreement by each Buyer do not and will not (with the giving of notice
and/or the passage of time) violate, conflict with, result in a breach of
or loss of rights under or require the consent of or filing with any other
person or entity (including without limitation any governmental bodies,
agencies or instrumentalities) under (a) the organizational documents of
either Buyer, (b) any agreement, commitment or instrument to which either
Buyer is a party or by which either Buyer or its assets are bound or
(c) any law, ordinance, rule, regulation, order, judgment, decree or the
like to which Buyer or Buyer's assets are subject.
6. INDEMNIFICATION.
A. INDEMNIFICATION BY BUYER AND THE PARTNERSHIP. As
of the Closing Date, Buyer, on behalf of itself and the Partnership (as it
is constituted after the Closing of the transactions hereunder) shall hold
harmless, indemnify and defend Seller from and against all claims, rights,
demands, obligations, liabilities, costs and expenses (including reasonable
attorneys' fees) of any kind or nature related to the Business Property
Liabilities and any agreements, contracts or other matters respecting the
same (and Buyer, on behalf of itself and the reconstituted Partnership,
shall release Seller from all such matters). The foregoing indemnification
shall include any and all obligations of the Dissolved Partnership, the
Partnership or Seller (or its constituent partners) under or in connection
with that certain loan in the original principal amount of $60,000,000,
made to the Dissolved Partnership by Connecticut General Life Insurance
Company ("CIGNA") (including the Environmental Indemnity Agreement given in
connection therewith) other than liabilities or obligations for which
Seller is obligated to indemnify Buyer pursuant to Paragraph 6B. In
addition, Buyer shall hold harmless, indemnify and defend Seller from and
against any loss or damage to Seller resulting from any inaccuracy in or
breach of any representation and warranty of Buyer under this Agreement (or
any agreement executed in connection herewith) or resulting from any breach
or default by Buyer under this Agreement (or any agreement executed in
connection herewith).
B. INDEMNIFICATION BY SELLER. Each Seller shall hold
harmless, indemnify and defend Buyer from and against any loss or damage to
Buyer (including without limitation reasonable attorneys' fees) resulting
from any inaccuracy in or breach of any representation and warranty of such
Seller under this Agreement (or any agreement executed in connection
herewith) or resulting from any breach or default by such Seller under this
Agreement (or any agreement executed in connection herewith) or resulting
from any liabilities or obligations of the Partnership other than the
Business Property Liabilities.
7. BROKERAGE MATTERS.
A. Except as set forth in Section 7B, Seller
represents and warrants to Buyer, and Buyer represents and warrants to
Seller, that no broker or finder has been engaged by it, respectively, in
connection with any of the transactions contemplated by this Agreement or
to its knowledge is in any way connected with any of such transactions. In
the event of a claim for broker's or finder's fee or commissions in
connection herewith, then Seller shall indemnify and defend Buyer from the
same if it shall be based upon any statement or agreement alleged to have
been made by Seller or the Partnership, and Buyer shall indemnify and
defend Seller from the same if it shall be based upon any statement or
agreement alleged to have been made by Buyer. The indemnification
obligations under this Section 7A shall survive the closing of the
transactions hereunder or the earlier termination of this Agreement.
<PAGE>
B. If and only if the sale contemplated herein closes,
Seller agrees to pay a brokerage commission to Hamptons Information
("Broker") pursuant to a separate written agreement with Broker.
8. NOTICES. Any notice which a party is required or may
desire to give the other shall be in writing and shall be sent by personal
delivery, facsimile transmission, or by mail (either [i] by United States
registered or certified mail, return receipt requested, postage prepaid, or
[ii] by Federal Express or similar generally recognized overnight carrier
regularly providing proof of delivery), addressed as follows (subject to
the right of a party to designate a different address for itself by notice
similarly given):
TO BUYER:
c/o General Growth Properties, Inc.
110 North Wacker
Chicago, Illinois
Attention: Messrs. Joel Bayer and Thomas Gates
Facsimile: (312) 960-5475
Telephone: (312) 960-5000
WITH COPY TO:
General Growth Properties, Inc.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: General Counsel
Facsimile: (312) 960-5485
Telephone: (312) 960-5000
WITH COPY TO:
Neal, Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, Illinois 60602
Attention: Avram I. Feldman, Esq.
Facsimile: (312) 269-1747
Telephone: (312) 269-8000
TO SELLER:
c/o JMB Realty Corporation
900 North Michigan Avenue
12th Floor
Chicago, Illinois 60611
Attention: Mr. Glenn Emig
Facsimile: (312) 915-1023
Telephone: (312) 915-2350
WITH COPY TO:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (GML)
Facsimile: (310) 201-8922
Telephone: (310) 201-8900
Any notice so given by mail shall be deemed to have been given as of the
date of delivery (whether accepted or refused) established by U.S. Post
Office return receipt or the overnight carrier's proof of delivery, as the
case may be. Any such notice not so given shall be deemed given upon
receipt of the same by the party to whom the same is to be given. Notice
given by facsimile transmission shall be deemed given upon actual receipt
of the same by the party to whom the same is to be given (as evidenced by
electronic confirmation thereof).
<PAGE>
9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
regard to its conflicts of law principles.
10. LIMITATION ON LIABILITY. No constituent partner in or
agent of any Seller (other than its general partner, JMB Realty
Corporation, a Delaware corporation ("JMB")), nor any advisor, trustee,
member, director, officer, employee, beneficiary, shareholder, participant,
representative or agent of any corporation or trust that is or becomes a
constituent partner in any such Seller (including, but not limited to, JMB)
shall have any personal liability, directly or indirectly, under or in
connection with this Agreement or any agreement made or entered into under
or pursuant to the provisions of this Agreement, or any amendment or
amendments to any of the foregoing made at any time or times, heretofore or
hereafter, and Buyer, the Partnership and its or their successors and
assigns and, without limitation, all other persons and entities, shall look
solely to the assets of such Seller (and its general partner, JMB) for the
payment of any claim or for any performance, and Buyer, on behalf of
itself, the Partnership and its or their successors and assigns, hereby
waives any and all such personal liability. Notwithstanding anything to
the contrary contained in this Agreement (but subject to the provisions
regarding the personal liability of JMB that are contained in the
immediately preceding sentence), neither the negative capital account of
any constituent partner in such Seller or in any other constituent partner
of such Seller, nor any obligation of any constituent partner in such
Seller or in any other constituent partner of such Seller to restore a
negative capital account or to contribute capital to such Seller or to any
other constituent partner of such Seller, shall at any time be deemed to be
the property or an asset of such Seller or any such other constituent
partner (and neither Buyer nor the reconstituted Partnership nor any of its
or their successors or assigns shall have any right to collect, enforce or
proceed against or with respect to any partner's obligation to restore such
negative capital account or contribute).
11. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, provided each of the parties hereto executes at
least one counterpart; each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts, together, shall
constitute but one agreement.
12. FURTHER ASSURANCES. Each of Seller and Buyer agrees, at
any time and from time to time after the Closing, to execute, acknowledge
where appropriate and deliver such further instruments and other documents
and to take such other actions as the others of them may reasonably request
in order to carry out the intents and purposes of this Agreement (provided
the same do not materially increase the costs to, or liability or
obligations of, such party in a manner not otherwise provided for herein).
13. SURVIVAL. The representations, warranties, covenants and
agreements of the parties contained in this Agreement and the documents
delivered pursuant hereto shall survive the consummation of the
transactions contemplated hereby forever. The obligations of NewPark
L.L.C. and Alameda L.L.C. hereunder shall be joint and several and the
obligations of Carlyle-XV and Carlyle-XVI hereunder shall be joint and
several; provided, however, the obligations of Carlyle-XV and Carlyle-XVI
shall be such that in no event shall the liability of Carlyle-XV exceed 90%
of the overall liability of Seller and the liability of Carlyle-XVI shall
not exceed 10% of the overall liability of Seller. In the event any party
or parties hereto bring an action against any other party or parties hereto
in respect of any provision of this Agreement, the prevailing party or
parties in such action shall be entitled to recover its court costs and
reasonable attorneys' fees and expenses in the judgment rendered in such
action, including without limitation attorneys' fees incurred in an appeal
or in any bankruptcy proceeding.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SELLER:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership,
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:______________________________________
Name:____________________________________
Title:_____________________________________
"Carlyle-XV"
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVI,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:______________________________________
Name:____________________________________
Title:___________________________________
"Carlyle-XVI"
BUYER:
NEWPARK MALL L.L.C.,
a Delaware limited liability company
By:______________________________________
Name:____________________________________
Title:___________________________________
"NewPark L.L.C."
ALAMEDA MALL L.L.C.,
a Delaware limited liability company
By:______________________________________
Name:____________________________________
Title:___________________________________
"Alameda L.L.C."
<PAGE>
EXHIBIT "A"
ASSIGNMENT AND ASSUMPTION
See Attached
<PAGE>
ASSIGNMENT AND ASSUMPTION OF PARTNERSHIP INTEREST
FOR VALUABLE CONSIDERATION, receipt whereof is hereby acknowledged, each of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV, an Illinois limited partnership
("Carlyle-XV"), and CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVI,
an Illinois limited partnership ("Carlyle-XVI") (Carlyle-XV and
Carlyle-XVI, individually "Assignor" and collectively, "Assignors"), hereby
sells, transfers, assigns and conveys all of its right, title and interest
in and to JMB/Newpark Associates, an Illinois general partnership
("Partnership"), as such interest is described in the "Partnership
Agreement", including, but not limited to, each Assignor's interest in the
capital, profits and losses and property of the Partnership, as follows:
fifty percent (50%) to NewPark Mall L.L.C., a Delaware limited liability
company ("NewPark L.L.C."), and fifty percent (50%) to Alameda Mall L.L.C.,
a Delaware limited liability company ("Alameda L.L.C."). As used herein,
"Partnership Agreement" means that certain partnership agreement of the
Partnership dated as of December 1, 1986, captioned "Articles of
Partnership of JMB/Newpark Associates", by and between Assignors, as
amended by amendment dated as of December 1, 1986, captioned "Amendment
No. 1 to the Articles of Partnership of JMB/Newpark Associates", between
Assignors.
This Assignment and Assumption of Partnership Interest is given
pursuant to that certain Partnership Interest Purchase Agreement
("Agreement"), dated as of November ___, 1998, among Assignors, NewPark
L.L.C. and Alameda L.L.C.
The covenants, agreements, representations, warranties and
limitations provided in the Agreement with respect to the partnership
interest conveyed hereunder are hereby incorporated herein by this
reference as if herein set out in full and shall inure to the benefit of
and shall be binding upon Assignors, NewPark L.L.C. and Alameda L.L.C., and
their respective successors and assigns. Except as set forth in said
Agreement, said partnership interest is assigned without warranty or
representation, express or implied.
Each of NewPark L.L.C. and Alameda L.L.C. hereby assumes and
agrees to perform all obligations of Assignors under the Partnership
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Assignors, NewPark L.L.C. and Alameda
L.L.C. have each executed this Assignment and Assumption as of November __,
1998.
ASSIGNORS:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership,
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:______________________________________
Name:____________________________________
Title:___________________________________
"Carlyle-XV"
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVI,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:______________________________________
Name:____________________________________
Title:___________________________________
"Carlyle-XVI"
NEWPARK L.L.C.:
NEWPARK MALL L.L.C.,
a Delaware limited liability company
By:______________________________________
Name:____________________________________
Title:___________________________________
ALAMEDA L.L.C.:
ALAMEDA MALL L.L.C.,
a Delaware limited liability company
By:______________________________________
Name:____________________________________
Title:___________________________________
<PAGE>
EXHIBIT "B"
FORM OF LEGAL OPINIONS
<PAGE>
SELLER'S COUNSEL OPINION LETTER
November __, 1998
NewPark Mall L.L.C.
Alameda Mall L.L.C.
110 North Wacker
Chicago, Illinois 60606
Re: Sale of Partnership Interests in JMB/Newpark Associates
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to (i) Carlyle Real Estate Limited
Partnership-XV, an Illinois limited partnership ("Carlyle-XV"), Carlyle
Real Estate Limited Partnership-XVI, an Illinois limited partnership
("Carlyle-XVI"), and JMB Realty Corporation, a Delaware corporation
("JMB"), in connection with the sale of all of the partnership interests of
Carlyle-XV and Carlyle-XVI, in JMB/Newpark Associates, an Illinois general
partnership (the "Partnership") to NewPark Mall L.L.C., a Delaware limited
liability company ("NewPark L.L.C."), and Alameda Mall L.L.C., a Delaware
limited liability company ("Alameda L.L.C."). In this connection, we have
examined the following documents (individually, a "Document" and
collectively, the "Documents"):
A. That certain agreement captioned "PARTNERSHIP INTEREST PURCHASE
AGREEMENT", dated as of the date hereof, by and among Carlyle-XV, Carlyle-
XVI, NewPark L.L.C. and Alameda L.L.C.; and
B. That certain assignment and assumption agreement captioned
"ASSIGNMENT AND ASSUMPTION OF PARTNERSHIP INTEREST", dated as of the date
hereof, by and among Carlyle-XV, Carlyle-XVI, NewPark L.L.C. and Alameda
L.L.C.
Based, and in reliance, upon (a) the assumptions herein expressed,
(b) certain inquiries made of Seller, (c) our examination of the Documents,
and (d) our examination of such other documents and provisions of law and
such other investigations as we have deemed appropriate we are of the
opinion that:
1. Each of Carlyle-XV and Carlyle-XVI is a limited partnership,
duly formed, validly existing and in good standing under the laws of the
State of Illinois with the full partnership right, power and authority to
execute, deliver and perform its obligations under each Document to which
it is a party.
2. JMB is a corporation, duly formed, validly existing and in good
standing under the laws of the State of Delaware with the full corporate
right, power and authority to execute, deliver and perform its obligations
under each Document to which it is a party.
3. The execution, delivery and performance by Carlyle-XV of each
Document to which it is a party has been duly authorized by all requisite
partnership action on the part of Carlyle- XV, and each such Document has
been duly executed by Carlyle-XV.
4. The execution, delivery and performance by Carlyle-XVI of each
Document to which it is a party has been duly authorized by all requisite
partnership action on the part of Carlyle-XVI, and each such Document has
been duly executed by Carlyle-XVI.
5. The execution and delivery by JMB of each Document to which it
is a signatory in its capacity as the general partner of each of Carlyle-XV
and Carlyle-XVI has been duly authorized by all requisite corporate action
on the part of JMB, and each such Document has been duly executed by JMB.
This opinion is limited to the matters expressly set forth herein.
This opinion is given solely for the benefit of you and your counsel, and
solely in connection with this transaction, and may not, without our
written permission, be relied upon by any other person or entity.
Very truly yours,
<PAGE>
EXHIBIT "C"
ACCOUNTING PRINCIPLES
---------------------
The Base Balance Sheet and the Closing Balance Sheet shall be
prepared in accordance with generally accepted accounting principles
applied on the accrual basis, and the Closing Balance Sheet shall include
line items substantially consistent with those used in the Base Balance
Sheet and be prepared in accordance with accounting principles, policies
and practices consistent with those used in preparation of the Base Balance
Sheet; provided that with respect to the Base Balance Sheet and the Closing
Balance Sheet:
(a) No amount shall be recorded under the classification
"Building & Improvements", "Fixtures & Equipment" and "Land" as the
consideration for such assets consists of the $16,000,000 specified in
Paragraph 2;
(b) Net carrying amounts for or in respect of the following
shall be eliminated, with such elimination to be done, in each case net of
accumulated amortization and depreciation, allowances for bad debts and
other contra accounts: building and improvements, fixtures and equipment,
land, deferred rent and real estate mortgage; and
(c) Percentage rent (i.e., earned unbilled receivable) shall
be calculated on the straight-line method rather than the percentage of
sales method.
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership was a partner of the following joint ventures:
JMB/Owings Mills Associates, an Illinois general partnership, which
formerly held an interest in the Owings Mills Shopping Center, Carlyle-XVI
Associates, L.P., a Delaware limited partnership, which was a partner in
JMB/125 Broad Building Associates, an Illinois general partnership; 260
Franklin Street Associates, an Illinois general partnership which owned
title to the 260 Franklin Street office building, located in Boston
Massachusetts; JMB/NewPark Associates, an Illinois general partnership,
which was a partner in NewPark Associates, a California general partnership
which held title to the NewPark Mall in Newark, California; JMB/Hahn PDTC
Associates, L.P., a California Limited Partnership, which held title to
Palm Desert Town Center located in Palm Desert (Palm Springs), California.
The Partnership also owned a 50% interest in Carlyle/Palm Desert, Inc., a
corporation which was a partner in JMB/Hahn PDTC Associates, L.P., a 40%
interest in Carlyle Advisors, Inc., a corporation which was the General
Partner in JMB/125 Broad Building Associates and a 40% interest in Carlyle
Partners, Inc., a corporation which was a partner in Carlyle-XVI
Associates, L.P. Reference is made to the Notes 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, 1998, 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 29th day of January, 1999.
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, 1998,
and any and all amendments thereto, the 29th day of January, 1999.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers 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, 1998, 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 29th day of January, 1999.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1998,
and any and all amendments thereto, the 29th day of January, 1999.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 20,879,387
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,879,387
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,879,387
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 20,879,387
<TOTAL-LIABILITY-AND-EQUITY> 20,879,387
<SALES> 10,576,925
<TOTAL-REVENUES> 12,354,088
<CGS> 0
<TOTAL-COSTS> 4,522,544
<OTHER-EXPENSES> 1,501,707
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,900,388
<INCOME-PRETAX> 1,429,449
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,553,514
<DISCONTINUED> 13,039,381
<EXTRAORDINARY> 5,235,540
<CHANGES> 0
<NET-INCOME> 19,828,435
<EPS-PRIMARY> 104.45
<EPS-DILUTED> 104.45
</TABLE>
