SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1995 Commission file number 0-17708
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(Exact name of registrant as specified in its charter)
Illinois 36-3467497
(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 INTEREST
AND ASSIGNEE INTERESTS THEREIN
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K X
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Documents incorporated by reference: None
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . 12
Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . . . . . 16
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . . . . . 59
PART III
Item 10. Director and Executive Officers . . . . . . . . 59
Item 11. Executive Compensation. . . . . . . . . . . . . 62
Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . . . . . 63
Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . 64
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . 64
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 66
i
PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report.
The registrant, Carlyle Real Estate Limited Partnership-XVII (the
"Partnership"), is a limited partnership formed October 9, 1986 and
currently governed by the Revised Uniform Limited Partnership Act of the
State of Illinois to invest in income-producing commercial and residential
real property. On February 9, 1988, the Partnership commenced an offering
to the public of $100,000,000 (subject to increase by up to $100,000,000)
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. 33-9607). A total of 34,215.16336 Interests
were sold to the public at $1,000 per Interest. The holders of 22,501.15
Interests were admitted to the Partnership in 1988 and the holders of
11,714.01336 Interests were admitted to the Partnership in 1989. The
offering closed on December 29, 1989 (extended from its originally
scheduled termination date of April 30, 1989). Subsequent to admittance to
the Partnership, no Holder of Interest (hereinafter, a "Holder" or "Holder
of Interest(s)") has made any additional capital contribution after such
date. The Holders of Interests of the Partnership share in their portion
of the benefits of ownership of the Partnership's real property investments
according to the number of Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or through
joint venture partnership interests. The Partnership's real property
investments are located throughout the nation and it has no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding
of the Partnership's business taken as a whole. Pursuant to the
Partnership Agreement, the Partnership is required to terminate no later
than December 31, 2037. The Partnership is self-liquidating in nature. At
sale of a particular property, the net proceeds, if any, are generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties. As discussed further in Item 7, the
marketplaces in which the portfolio operates and real estate markets in
general are in a recovery mode. The Partnership currently expects to
conduct an orderly liquidation of its remaining investment portfolio as
quickly as practicable and to wind up its affairs not later than December
31, 1999, barring any unforeseen economic developments. (Reference is also
made to Note 1.)
The Partnership has made the real property investments set forth in
the following table:
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Blue Cross Building
office building
Woodland Hills
(Los Angeles),
California. . . . . 421,716 12/18/87 11/2/93 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(g)
2. Palm Desert Town
Center
shopping center
Palm Desert,
California. . . . . 373,000 12/23/88 13% fee ownership of
sq.ft. improvements and
g.l.a. ground leasehold
interest (through joint
venture partnership)
(c)(d)
3. 18 Central
Shopping Center
East Brunswick,
New Jersey . . . . 85,772 7/27/89 20% fee ownership of land
sq.ft. and improvements (b)(f)
g.l.a.
4. Minimax 2
Industrial Property
Houston, Texas . . 91,156 1/21/92 3% fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(b)(c)
5. Minimax 3 Industrial
Property
Houston, Texas . . 128,270 1/21/92 3% fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(b)(c)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ---------------------- ---------------------
6. 1801 West Belt
Industrial Property
Houston, Texas . . 110,621 1/21/92 3% fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(b)(c)
7. Pine Forest #17
Industrial Property
Houston, Texas . . 170,558 1/21/92 5% fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(b)(c)
8. Silber #1 Industrial
Property
Houston, Texas . . 184,500 2/26/93 11% fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(b)(c)
<FN>
- ---------------
(a) The computation of this percentage for properties held at
December 31, 1995 does not include amounts invested from sources other than
the original net proceeds of the public offering as described below and in
Item 7.
(b) Reference is made to Note 4 and Schedule III filed with this
annual report for the current outstanding principal balances and a
description of the long-term mortgage indebtedness secured by certain of
the Partnership's real property investments.
(c) Reference is made to Note 3 for a description of the joint
venture partnership or partnerships through which the Partnership has made
this real property investment.
(d) Reference is made to Note 3(c) for a description of the
leasehold interest, under a ground lease, in the land on which this real
property investment is situated.
(e) Reference is made to Item 8 - Schedule III to the Consolidated
Financial Statements and to the Financial Statements of JMB/Hahn PDTC
Associates filed with this annual report for further information concerning
real estate taxes and depreciation.
(f) Reference is made to Item 6 - Selected Financial Data for
additional operating and lease expiration data concerning this investment
property.
(g) This property has been sold. Reference is made to Note 3(b)
for a description of the sale of such property.
</TABLE>
The Partnership's real property investments are subject to competition
from similar types of properties (including in certain areas properties
owned or advised by affiliates of the General Partners) in the respective
vicinities in which they are located. Such competition is generally for
the retention of existing tenants. Additionally, the Partnership is in
competition for new tenants in markets where significant vacancies are
present. Reference is made to Item 7 below for a discussion of competitive
conditions and future renovation and capital improvement plans of the
Partnership and certain of its significant investment properties.
Approximate occupancy levels for the properties are set forth in the table
in Item 2 below to which reference is hereby made. The Partnership
maintains the suitability and competitiveness of its properties in their
markets primarily on the basis of effective rents, tenant allowances and
service provided to tenants. In the opinion of the Corporate General
Partner of the Partnership, all of the investment properties held at
December 31, 1995 are adequately insured. Although there is earthquake
insurance coverage for a portion of the value of the Partnership's
investment properties, the Corporate General Partner does not believe that
such coverage for the entire replacement cost of the investment properties
is available on economic terms.
Reference is made to Note 6 and to Note 4 of the Financial Statements
of JMB/Hahn PDTC Associates for a schedule of minimum lease payments to be
received in each of the next five years, and in the aggregate thereafter,
under leases in effect at the properties owned by the Partnership or its
ventures as of December 31, 1995.
The Partnership has no employees other than personnel performing on-
site duties at certain of the Partnership's properties, none of whom are
officers or directors of the Corporate General Partner of the Partnership.
The terms of transactions between the Partnership and the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.
ITEM 2. PROPERTIES
The Partnership owns directly or through joint venture partnerships,
the property or interests in the properties referred to under Item 1 above
to which reference is hereby made for a description of said properties.
The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1995 and 1994 for the Partnership's investment properties owned
during fiscal year 1995:
<TABLE>
<CAPTION>
1994 1995
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Palm Desert Town
Center
Palm Desert,
California . . . . . . . . . Retail 97% 95% 96% 97% 97% 96% 93% 93%
2. 18 Central Shopping
Center
East Brunswick,
New Jersey. . . . . . . . . Retail 88% 93% 93% 91% 91% 82% 82% 91%
3. Minimax 2,
Houston, Texas (a). . . . . Warehouse 100% 100% 100% 100% 100% 100% 100% 100%
4. Minimax 3,
Houston, Texas (a). . . . . Warehouse 100% 91% 100% 100% 100% 100% 100% 100%
5. 1801 West Belt
Houston, Texas (a). . . . . Warehouse 100% 100% 100% 100% 100% 100% 100% 100%
6. Pine Forest #17
Houston, Texas. . . . . . . Warehouse 100% 100% 100% 100% 100% 100% 100% 100%
7. Silber #1
Houston, Texas(a) . . . . . Warehouse 100% 100% 100% 100% 100% 100% 100% 100%
- ----------
<FN>
Reference is made to Item 6, Item 7 and Note 6 for further information regarding property occupancy,
competitive conditions and tenant leases at the Partnership's investment properties.
(a) This investment property was 100% leased through February 1994 pursuant to the rent guarantee agreement
entered into in connection with the Partnership's acquisition of the property, as discussed in Note 3.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
fiscal years 1994 and 1995.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTEREST
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1995, there were 8,886 record Holders of Interests
of the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request,
the Corporate General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspects of the transactions, will be subject to negotiations by
the investor. There are certain conditions and restrictions on the
transfer of Interests, including, among other things, the requirement that
the substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Corporate General
Partner. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests. No transfer
will be effective until the first day of the next succeeding calendar
quarter after the requisite transfer form satisfactory to the Corporate
General Partner has been received by the Corporate General Partner. The
transferee consequently will not be entitled to receive any cash
distributions or any allocable share of profits or losses for tax purposes
until such next succeeding calendar quarter. Profits or losses from
operations of the Partnership for a calendar year in which a transfer
occurs will be allocated between the transferor and the transferee based
upon the number of quarterly periods in which each was recognized as the
holder of the Interests, without regard to the results of the Partnership's
operations during particular quarterly periods and without regard to
whether cash distributions were made to the transferor or transferee.
Profits or losses arising from the sale or other disposition of Partnership
properties will be allocated to the recognized holder of the Interests as
of the last day of the quarter in which the Partnership recognized such
profits or losses. Cash distributions to a holder of Interests arising
from the sale or other disposition of Partnership properties will be
distributed to the recognized holder of the Interests as of the last day of
the quarterly period with respect to which such distribution is made.
Reference is made to Item 6 below for a discussion of cash distribu-
tions made to the Limited Partners.
Reference is made to Note 5 for a discussion of the provisions of the
Partnership Agreement relating to cash distributions.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
DECEMBER 31, 1995, 1994, 1993, 1992 AND 1991
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1995 1994 1993 1992 1991
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . . $ 4,251,580 4,061,678 3,987,191 3,558,865 2,410,615
============ =========== =========== =========== ===========
Operating earnings (loss) . $ 250,822 (2,575,727) 102,245 22,815 209,180
Partnership's share of
operations of uncon-
solidated ventures . . . . (137,178) (61,913) 382,515 (29,847) (297,694)
Venture partners'
share of ventures'
operations . . . . . . . . (6,209) (4,623) (1,979) (2,135) --
------------ ----------- ----------- ----------- -----------
Net operating
earnings (loss). . . . . . 107,435 (2,642,263) 482,781 (9,167) (88,514)
Partnership's share
of gain on sale of
investment property
of unconsolidated
venture. . . . . . . . . . -- -- 261,656 -- --
------------ ----------- ----------- ----------- -----------
Net earnings (loss) . . . . $ 107,435 (2,642,263) 744,437 (9,167) (88,514)
============ =========== =========== =========== ===========
Net earnings (loss)
per Interest (b):
Net operating
earnings (loss). . . . . $ 3.01 (74.12) 13.55 (.26) (2.48)
Partnership's share
of gain on sale of
investment property
of unconsolidated
venture. . . . . . . . . -- -- 7.57 -- --
------------ ----------- ----------- ----------- -----------
$ 3.01 (74.12) 21.12 (.26) (2.48)
============ =========== =========== =========== ===========
Total assets. . . . . . . . $ 28,739,912 30,077,627 38,601,350 38,559,085 32,333,625
Long-term debt. . . . . . . $ 16,895,434 17,219,023 17,509,219 6,679,611 --
Cash distributions
per Interest (c) . . . . . $ 20.00 166.00 30.00 30.00 30.00
============ =========== =========== =========== ===========
<FN>
- -------------
(a) The above selected financial data should be read in conjunction
with the financial statements and the related notes appearing elsewhere in
this annual report.
(b) The net earnings (loss) per Interest is based upon the limited
partnership interests outstanding at the end of each period (34,220.16336).
(c) Cash distributions from the Partnership are generally not equal
to Partnership income (loss) for financial reporting or Federal income tax
purposes. Each Partner's taxable income (or loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of
the Partnership, without regard to the cash generated or distributed by the
Partnership. Accordingly, cash distributions to the Limited Partners
subsequent to the close of the public offering have not resulted in taxable
income to such Limited Partners and have therefore represented a return of
capital.
</TABLE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1995
<CAPTION>
Property
- --------
18 Central
Shopping Center a) The gross leasable area ("GLA") rate
and average base rent per square foot
as of December 31 for each of the
last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>
1991 . . . . . 80% 21.49
1992 . . . . . 60% 24.19
1993 . . . . . 88% 16.41
1994 . . . . . 91% 16.16
1995 . . . . . 91% 16.23
<FN>
(1) Average base rent per square foot is based on GLA occupied
as of December 31 of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option(s)
------------------- ----------- --------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
The Wiz 14,844 $341,412 July, 1997 N/A
(Electronics Store)
Barnes & Noble 10,000 195,000 May, 1997 N/A
(Book Store)
The Gap 9,504 152,367 January, 2008 N/A
(Clothing Store)
Office Max 32,373 364,196 January, 2003 2/5 year
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain
information with respect to the expiration
of leases for the next ten years at the
18 Central Shopping Center:
Annualized Percent of
Number of Approx. Total Base Rent Total 1995
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 1 4,009 88,197 6.9%
1997 2 24,844 536,412 42.4%
1998 1 2,238 40,284 3.2%
1999 -- -- -- --
2000 1 1,365 27,300 2.2%
2001 -- -- -- --
2002 -- -- -- --
2003 1 32,373 400,616 31.6%
2004 1 4,007 72,727 5.7%
2005 -- -- -- --
<FN>
(1) Excludes leases that expire in 1996 for which
renewal leases or leases with replacement tenants
have been executed as of March 25, 1996.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On February 9, 1988, the Partnership commenced an offering of
$100,000,000 (subject to increase by up to $100,000,000) of limited
partnership interests (and assignee interests therein) pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933. The
offering terminated on December 29, 1989. A total of 34,215.16336
Interests have been issued by the Partnership and assigned to the public at
$1,000 per Interest (fractional interests are due to the Distribution
Reinvestment Program). The Holders of 22,501.15 Interests were admitted to
the Partnership in 1988 and the Holders of 11,714.01336 Interests were
admitted in 1989.
After deducting selling expenses and other offering costs, the
Partnership had approximately $29,696,000 with which to make investments in
income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments and for working capital reserves. A portion of the proceeds
was utilized to acquire the properties, described in Item 1 above.
At December 31, 1995, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $4,856,000. Such cash and cash
equivalents are available for distributions to partners, capital
improvements, including certain capital and major repair projects to be
completed over the next few years at the 18 Central investment property,
and working capital requirements. The Partnership and its consolidated
venture have currently budgeted in 1996 approximately $148,000 for tenant
improvements and other capital expenditures. The Partnership's share of
such items (including its share of such items for its unconsolidated
ventures) in 1996 is currently budgeted to be approximately $198,000.
Actual amounts expended in 1996 may vary depending on a number of factors
including actual leasing activity, results of property operations,
liquidity considerations and other market conditions over the course of the
year. The source of capital for such items and for both short-term and
long-term future liquidity and distributions is expected to be through cash
generated by the Partnership's investment properties, and from the sale and
refinancing of the Partnership's remaining investment properties. In such
regard, reference is made to the Partnership's property specific
discussions below and also to the Partnership's disclosure of certain
property lease expirations in Item 6. Pursuant to the Partnership
Agreement, the General Partners deferred over a five-year period ending
December 31, 1994 their share of net cash flow and management fees of the
Partnership to the receipt by Holders of Interest of a specified return
through December 1994. The cumulative amount of such deferrals was
$503,803 and was paid in full in April 1995. Beginning in 1995, the
General Partners began receiving partnership management fees and
distributions of net cash generated from operations on a current basis.
Reference is made to Note 7.
The Partnership's and its ventures' mortgage obligations are separate
non-recourse mortgage loans secured individually by the investment
properties and not obligations of the entire investment portfolio, and the
Partnership and its ventures are not personally liable for the payment of
the mortgage indebtedness. For any particular investment property that is
incurring deficits or for which the existing financing has matured, the
Partnership or its ventures may seek a modification or refinancing of
existing indebtedness and, in the absence of a satisfactory debt
modification or refinancing, may decide, in light of the then existing and
expected future market conditions for such investment property, not to
commit additional funds to such investment property. This would result in
the Partnership no longer having an ownership interest in such property and
would result in gain to the Partnership for financial reporting and Federal
income tax purposes with no corresponding distributable proceeds.
The Partnership received through December 1994 preferred returns of
annual cash flow with respect to the Palm Desert Town Center investment
property through the obligations of its unaffiliated joint venture partner.
Since the preferred return period has expired, the Partnership's share of
cash flow is dependent upon the operations of the property. During 1995,
the operations of the property were negatively affected by lower occupancy
as well as decreased sales resulting from new competition in the Center's
trade area. The Center will continue to be subject to increased
competition from new developments that are expected to be opening in the
vicinity in the near future.
In December 1992 the mortgage loan, secured by the 18 Central Shopping
Center, became due and payable. In March 1993, the Partnership modified
and extended the loan to December 1997. In connection with the loan
modification and extension, commencing in 1994 the Partnership is required
to deposit 95% of the "net cash flow" (as defined) from the property up to
$750,000 and 47.5% in excess of such amount in a collateral account to be
used for the payment of tenant improvement costs, leasing commissions,
other capital expenditures and operating deficits (as of the date of this
report $93,750 was deposited and no amounts have been funded from this
account). Reference is made to Note 4(b). In addition, the property
requires certain capital and major repair projects, including roof
replacement, to be completed over the next several years which are
currently expected to commence in 1996. These costs, which are estimated
to be approximately $200,000, are currently expected to be paid out of the
Partnership's working capital and cash flow from other investment
properties. During 1995, a tenant occupying 7,500 square feet
(approximately 9% of the portion of the center owned by the Partnership)
filed for protection under Chapter 11 of the United States Bankruptcy Code
and vacated its space. A negotiated settlement of $60,000 was received in
1995 from the former tenant to offset lost rent. The space was subdivided
and 4,977 square feet was leased in 1995 to a new tenant. The Partnership
is actively pursuing replacement tenants for the remaining vacant space.
In 1997, tenant leases representing approximately 25,000 square feet
(approximately 29% of the portion of the center owned by the Partnership)
expire. Not all of these leases are expected to renew. This may result in
increased vacancy and/or significant re-leasing costs for the property.
Due to the uncertainty of the Partnership's ability to recover the net
carrying value to the 18 Central Shopping Center through future operations
or sale, the Partnership made a provision for value impairment on such
investment property of $2,638,820. Such provision at December 31, 1994 was
recorded to reduce the carrying value of the investment property to the
then outstanding balance of the non-recourse debt.
During 1995, the Partnership negotiated a five year lease extension on
approximately 59,000 square feet (approximately 9% of the Houston warehouse
portfolio), for a major tenant at the Houston Properties (as defined in
Note 3(b)). Previously, the tenant had three leases which were scheduled
to expire at various dates in 1996. The new five year leases commence at
the various expirations and expire at various dates in 2001.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
As a result of the real estate market conditions, the Partnership
continues to conserve its working capital. All expenditures are carefully
analyzed and certain capital projects are deferred when appropriate. In an
effort to reduce the Partnership's administrative expenses, the Partnership
has elected to change to a semi-annual rather than quarterly distribution
of available operating cash flow commencing with the third quarter of 1995.
The Partnership has also sought a loan modification where appropriate. By
conserving working capital, the Partnership will be in a better position to
meet the future needs of its properties since the availability of
satisfactory outside sources of capital may be limited given the
portfolio's current debt levels. Due to existing market conditions, the
Partnership has held its remaining investment properties longer than
originally anticipated in an effort to maximize the return to the Limited
Partners. However, after reviewing the remaining properties and the
marketplaces in which they operate, the General Partners of the Partnership
expect to be able to conduct an orderly liquidation of its remaining
investment portfolio as quickly as practicable. Therefore, the affairs of
the Partnership are expected to be wound up no later than December 31, 1999
(sooner if the properties are sold in the near term), barring unforeseen
economic developments. Although the Partnership expects to distribute sale
proceeds from the disposition of the Partnership's remaining assets,
without a dramatic improvement in market conditions, Limited Partners will
receive significantly less than their original investment.
RESULTS OF OPERATIONS
The aggregate decrease in cash and cash equivalents and short-term
investments at December 31, 1995 as compared to December 31, 1994 is
primarily due to the payment of approximately $504,000 of deferred
partnership management fees and distributions to the General Partners in
April 1995. (Reference is made to Note 7).
The increase in escrow deposits at December 31, 1995 as compared to
December 31, 1994 is primarily due to the Partnership funding the quarterly
cash flow deposit at the 18 Central Shopping Center as required by the
mortgage loan extension agreement. (Reference is made to Note 4(b)).
The decrease in investment in unconsolidated venture, at equity at
December 31, 1995 as compared to December 31, 1994 is primarily due to
operating losses at the Palm Desert investment property.
The decrease in the notes receivable for the year ended December 31,
1995 as compared to the year ended December 31, 1994 is due to
reimbursements received by JMB/Warehouse for tenant improvement costs at
1801 West Belt, which were advanced by the venture.
The decrease in deferred expenses at December 31, 1995 as compared to
December 31, 1994 is primarily due to the amortization of loan costs at the
18 Central Shopping Center.
The decrease in accounts payable at December 31, 1995 as compared to
December 31, 1994 is primarily due to the payment of deferred management
fees to the Corporate General Partner. (Reference is made to Note 7).
The increase in accrued interest payable at December 31, 1995 as
compared to December 31, 1994 is primarily due to interest expense being
accrued in excess of amounts required to be paid currently for the mortgage
loans on Minimax #2, Minimax #3 and 1801 West Belt. (Reference is made to
Note 4).
The increase in rental income for the years ended December 31, 1995
and 1994 as compared to the year ended December 31, 1993 is primarily due
to increased occupancy at the 18 Central Shopping Center and the Houston
Properties.
The increase in interest income for the year ended December 31, 1995
as compared to the year ended December 31, 1994 is primarily due to an
increase in 1995 in the average daily balance of U.S. Government
obligations and an increase in 1995 in the average interest rate earned on
funds invested.
Other income for the year ended December 31, 1993 is due to
approximately $384,000 of the acquisition fees previously paid being
reimbursed to the Partnership. Reference is made to Note 7.
The decrease in depreciation expense for the year ended December 31,
1995 as compared to the year ended December 31, 1994 is primarily due to
the $2,638,820 provision for value impairment recorded in 1994 for the 18
Central Shopping Center to reduce the net carrying value to the then
outstanding balance of the related non-recourse financing. (Reference is
made to Note 2).
The increase in general and administrative expenses for the year ended
December 31, 1995 as compared to the years ended December 31, 1994 and 1993
is attributable primarily to an increase in reimbursable costs to
affiliates of the General Partners in 1995 and the recognition of certain
additional prior year reimbursable costs to such affiliates. Reference is
made to Note 7.
The $2,638,820 provision for value impairment for 1994 is due to the
Partnership recording a provision for value impairment at the 18 Central
Shopping Center to reduce the net carrying value to the outstanding balance
of the related non-recourse financing due to the uncertainty of the
Partnership's ability to recover the net carrying value of the investment
property through future operations or sale. Reference is made to Note 2.
The decrease in Partnership's share of operations of unconsolidated
venture for the year ended December 31, 1995 as compared to the year ended
December 31, 1994 is primarily due to the Partnership's venture partner at
Palm Desert Shopping Center completing its obligation to fund deficits,
resulting in a change in the profit and loss allocations commencing in
1995. (Reference is made to Notes 3 and 5.) The decrease in Partnership's
share of operations of unconsolidated ventures for the year ended December
31, 1994 as compared to the year ended December 31, 1993 is primarily due
to the sale of the Blue Cross Building in November 1993.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
Inflation is not expected to significantly impact future operations
due to the expected liquidation of the Partnership by 1999. However, to
the extent that inflation in future periods would have an adverse impact on
property operating expenses, the effect would generally be offset by
amounts recovered from tenants as many of the long-term leases at the
Partnership's commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes. Therefore, there should be little effect on
operating earnings if the properties remain substantially occupied. In
addition, substantially all of the leases at the Partnership's shopping
center investments contain provisions which entitle the Partnership to
participate in gross receipts of tenants above fixed minimum amounts.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1995 and 1994
Consolidated Statements of Operations, Years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Partners' Capital Accounts (Deficits),
Years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows, Years ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
SCHEDULE
--------
Consolidated Real Estate and
Accumulated Depreciation. . . . . . . . . . . . . . III
Schedules not filed:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the financial statements or related notes.
JMB/HAHN PDTC ASSOCIATES, L.P.
AN UNCONSOLIDATED VENTURE OF
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
INDEX
Independent Auditors' Report
Balance Sheets, December 31, 1995 and 1994
Statements of Operations, Years ended December 31, 1995, 1994 and 1993
Statements of Partners' Capital Accounts, Years ended December 31,
1995, 1994 and 1993
Statements of Cash Flows, Years ended December 31, 1995, 1994
and 1993
Notes to Financial Statements
SCHEDULE
--------
Real Estate and Accumulated Depreciation. . . . . . . III
Schedules not filed:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII:
We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XVII (a limited partnership) and consolidated
venture as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the
financial statement schedule listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XVII and consolidated venture at
December 31, 1995 and 1994, and the results of their operations and their
cash flows for each of the years in the three-year period ended December
31, 1995, in conformity with generally accepted accounting principles.
Also, in our opinion, the financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 23, 1996
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
------
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1). . . . . . . . . . . . . . . . . . . $ 4,856,276 4,943,718
Short-term investments (note 1) . . . . . . . . . . . . . . . . . . . . -- 396,561
Interest, rents and other receivables . . . . . . . . . . . . . . . . . 204,518 182,211
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,867 14,867
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,011 72,403
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 5,238,672 5,609,760
------------ -----------
Investment properties, at cost (notes 1 and 2) - Schedule III:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,835,602 4,835,602
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . 21,397,235 21,375,931
------------ -----------
26,232,837 26,211,533
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . (4,076,379) (3,365,742)
------------ -----------
Total investment properties, net of accumulated depreciation. . 22,156,458 22,845,791
------------ -----------
Investment in unconsolidated venture, at equity (notes 1, 3 and 8). . . . 410,294 569,845
Note receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,914 176,912
Deferred expenses (note 1). . . . . . . . . . . . . . . . . . . . . . . . 488,710 556,290
Accrued rents receivable (note 1) . . . . . . . . . . . . . . . . . . . . 316,864 319,029
------------ -----------
$ 28,739,912 30,077,627
============ ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1995 1994
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4). . . . . . . . . . . . . . . $ 323,589 290,196
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,243 355,304
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 277,297 233,724
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . 348,998 311,580
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 959,127 1,190,804
------------ -----------
Other liabilities (note 4(b)) . . . . . . . . . . . . . . . . . . . . . . 302,500 302,500
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . 59,951 59,951
Long-term debt, less current portion (note 4) . . . . . . . . . . . . . . 16,895,434 17,219,023
------------ -----------
Commitments and contingencies (notes 2, 3, 4 and 6)
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 18,217,012 18,772,278
Venture partner's subordinated equity in venture. . . . . . . . . . . . . 75,213 69,004
Partners' capital accounts (deficits) (notes 1 and 5):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (213,122) (1,382)
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . (276,410) (280,707)
------------ -----------
(469,532) (262,089)
------------ -----------
Limited partners (34,220.16336 Interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 29,696,495 29,696,495
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (12,341,712) (11,657,359)
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . (6,437,564) (6,540,702)
------------ -----------
10,917,219 11,498,434
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . . . . . 10,447,687 11,236,345
------------ -----------
$ 28,739,912 30,077,627
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income (note 2). . . . . . . . . . . . . . . $ 3,966,280 3,851,921 3,399,451
Interest income . . . . . . . . . . . . . . . . . . 285,300 209,757 203,788
Other income (note 9) . . . . . . . . . . . . . . . -- -- 383,952
------------ ------------ ------------
4,251,580 4,061,678 3,987,191
------------ ------------ ------------
Expenses:
Mortgage and other interest . . . . . . . . . . . . 1,496,025 1,520,481 1,484,230
Depreciation. . . . . . . . . . . . . . . . . . . . 710,637 791,426 780,591
Property operating expenses . . . . . . . . . . . . 1,142,665 1,234,976 1,187,765
Professional services . . . . . . . . . . . . . . . 158,633 90,692 119,683
Amortization of deferred expenses . . . . . . . . . 176,124 174,345 82,968
Management fees to corporate general
partner (note 7). . . . . . . . . . . . . . . . . 47,525 38,022 71,292
General and administrative. . . . . . . . . . . . . 269,149 148,643 158,417
Provision for value impairment (note 2(b)). . . . . -- 2,638,820 --
------------ ------------ ------------
4,000,758 6,637,405 3,884,946
------------ ------------ ------------
Operating earnings (loss) . . . . . . . . . 250,822 (2,575,727) 102,245
Partnership's share of operations of uncon-
solidated ventures (notes 1, 3 and 8). . . . . . . . (137,178) (61,913) 382,515
Venture partner's share of venture's
operations . . . . . . . . . . . . . . . . . . . . . (6,209) (4,623) (1,979)
------------ ------------ ------------
Net operating earnings (loss) . . . . . . . 107,435 (2,642,263) 482,781
Partnership's share of gain on sale of
investment property of unconsolidated
venture (note 3(b)). . . . . . . . . . . . . . . . . -- -- 261,656
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . $ 107,435 (2,642,263) 744,437
============ ============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1995 1994 1993
------------ ------------ ------------
Net earnings (loss) per limited
partnership interest (note 1):
Net operating earnings (loss) . . . . . . . . . $ 3.01 (74.12) 13.55
Partnership's share of gain on
sale of investment property of
unconsolidated venture (note 3(b)) . . . . . . -- -- 7.57
------------ ------------ ------------
$ 3.01 (74.12) 21.12
============ ============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (NOTE 1)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
December 31,
1992 . . . . . . $20,000 (196,944) -- (176,944) 29,696,495 (4,726,639) (4,950,214) 20,019,642
Net earnings. . . -- 21,928 -- 21,928 -- 722,509 -- 722,509
Cash distri-
butions
($30.00 per
limited
partnership
interest)
(note 5) . . . . -- -- -- -- -- -- (1,026,619) (1,026,619)
------ -------- -------- ---------- ---------- ---------- ----------- ----------
Balance
(deficit)
December 31,
1993 . . . . . .20,000 (175,016) -- (155,016) 29,696,495 (4,004,130) (5,976,833) 19,715,532
Net loss . . . . -- (105,691) -- (105,691) -- (2,536,572) -- (2,536,572)
Cash distri-
butions
($166.00 per
limited
partnership
interest)
(note 5) . . . . -- -- (1,382) (1,382) -- -- (5,680,526) (5,680,526)
------ -------- -------- ---------- ---------- ---------- ----------- ----------
Balance
(deficit)
December 31,
1994 . . . . . .20,000 (280,707) (1,382) (262,089) 29,696,495 (6,540,702) (11,657,359) 11,498,434
Net earnings. . . -- 4,297 -- 4,297 -- 103,138 -- 103,138
Cash distri-
butions
($20.00 per
limited
partnership
interest)
(note 5) . . . . -- -- (211,740) (211,740) -- -- (684,353) (684,353)
------ -------- -------- ---------- ---------- ---------- ----------- ----------
Balance
(deficit)
December 31,
1995 . . . . . .$20,000 (276,410) (213,122) (469,532) 29,696,495 (6,437,564) (12,341,712) 10,917,219
======= ======== ======== ========== ========== ========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . $ 107,435 (2,642,263) 744,437
Items not requiring (providing) cash or
cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . 710,637 791,426 780,591
Amortization of deferred expenses . . . . . . . . . 176,124 174,345 82,968
Provision for value impairment. . . . . . . . . . . -- 2,638,820 --
Partnership's share of operations and
gain on sale of investment property of
unconsolidated ventures . . . . . . . . . . . . . 137,178 61,913 31,650
Venture partner's share of venture's
operations. . . . . . . . . . . . . . . . . . . . 6,209 4,623 1,979
Changes in:
Interest, rents and other receivables . . . . . . . (22,307) 80,789 (78,072)
Prepaid expenses. . . . . . . . . . . . . . . . . . -- 7,798 (2,924)
Escrow deposits . . . . . . . . . . . . . . . . . . (90,608) (23,946) 750,204
Notes receivable . . . . . . . . . . . . . . . . . 47,998 43,388 (220,300)
Accrued rents receivable. . . . . . . . . . . . . . 2,165 36,961 (199,720)
Accounts payable. . . . . . . . . . . . . . . . . . (346,061) 18,727 46,377
Accrued interest. . . . . . . . . . . . . . . . . . 43,573 45,420 4,646
Accrued real estate taxes . . . . . . . . . . . . . 37,418 (23,524) 108,346
Due to seller . . . . . . . . . . . . . . . . . . . -- -- (624,700)
Security deposits . . . . . . . . . . . . . . . . . -- 14,475 4,847
----------- ----------- -----------
Net cash provided by
operating activities. . . . . . . . . . . . 809,761 1,228,952 1,430,329
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases)
of short-term investments . . . . . . . . . . . . . 396,561 8,153,443 (2,522,632)
Additions to investment properties. . . . . . . . . . (21,304) (195,120) (526,608)
Purchase price adjustments (note 3(d)). . . . . . . . -- 33,210 141,070
Net cash used in purchase of
investment property . . . . . . . . . . . . . . . . -- -- (2,081,250)
Partnership's distributions from
unconsolidated ventures including
amounts relating to sale of
investment property (note 3(b)) . . . . . . . . . . 23,368 1,171,642 4,974,040
Partnership's contributions to
unconsolidated ventures . . . . . . . . . . . . . . (995) -- (17,316)
Payment of deferred expenses. . . . . . . . . . . . . (108,544) (90,362) (224,400)
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . . 289,086 9,072,813 (257,096)
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . (290,196) (265,917) (463,542)
Venture partner contributions to venture. . . . . . . -- 6,644 19,902
Distributions to limited partners . . . . . . . . . . (684,353) (5,680,526) (1,026,619)
Distributions to general partners . . . . . . . . . . (211,740) (1,382) --
----------- ----------- -----------
Net cash used in
financing activities. . . . . . . . . . . . (1,186,289) (5,941,181) (1,470,259)
----------- ----------- -----------
Net increase (decrease) in
cash and equivalents. . . . . . . . . . . . (87,442) 4,360,584 (297,026)
Cash and cash equivalents,
beginning of the year . . . . . . . . . . . 4,943,718 583,134 880,160
----------- ----------- -----------
Cash and cash equivalents,
end of the year . . . . . . . . . . . . . . $ 4,856,276 4,943,718 583,134
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . $ 1,452,451 1,475,061 1,479,584
=========== =========== ===========
Non-cash investing and financing activities:
Purchase of investment property:
Total purchase price. . . . . . . . . . . . . $ -- -- 3,081,250
Purchase money notes. . . . . . . . . . . . . -- -- (1,000,000)
----------- ----------- -----------
Net cash used in purchase of
investment property . . . . . . . . . . $ -- -- 2,081,250
=========== =========== ===========
Purchase price adjustment (note 2(b)) . . . . . . . $ -- -- 75,908
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(1) OPERATIONS AND BASIS OF ACCOUNTING
The Partnership holds (either directly or through joint ventures) an
equity investment portfolio of United States real estate. Business
activities consist of rentals to a wide variety of commercial and retail
companies, and the ultimate sale or disposition of such real estate. The
Partnership currently expects to conduct an orderly liquidation of its
remaining investment portfolio and wind up its affairs not later than
December 31, 1999.
The accompanying consolidated financial statements include the
accounts of the Partnership and one of its ventures, JMB/Warehouse
Associates Limited Partnership ("JMB/Warehouse") (note 3(d)). The effect
of all transactions between the Partnership and its consolidated venture
have been eliminated. The equity method of accounting has been applied in
the accompanying financial statements with respect to the Partnership's
interest in JMB/Warner Center Associates ("JMB/Warner") and JMB/Hahn PDTC
Associates ("Palm Desert") (notes 3 and 10). The Partnership, through
JMB/Warner, sold its interest in the Blue Cross Building in November 1993
(note 3(b)).
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to present the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") 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, 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------------------------------------------
TAX BASIS
GAAP BASIS (Unaudited) GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . . $28,739,912 35,655,687 30,077,627 36,976,535
Partners' capital accounts
(deficits):
General partners . . . . . . . . . (469,532) (1,050,915) (262,089) (831,664)
Limited partners . . . . . . . . . 10,917,219 18,666,266 11,498,434 19,530,875
Net earnings (loss):
General partners . . . . . . . . . 4,297 (7,511) (105,691) 3,191
Limited partners . . . . . . . . . 103,138 (180,256) (2,536,572) 76,583
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . . . 3.01 (5.27) (74.12) 2.24
============ =========== =========== ===========
</TABLE>
The earnings (loss) per limited partnership interest for the years
ended December 31, 1995 and 1994 is based upon the limited partnership
interests outstanding at the end of each period (34,220.16336). Deficit
capital accounts will result, through the duration of the Partnership, in
net gain for financial reporting and Federal income tax purposes.
Deferred organization costs were being amortized over a 60-month
period. Deferred loan costs are being amortized over the term of the
related loan. Deferred leasing fees are amortized using the straight-line
method over the terms stipulated in the related agreements.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations at cost, which approximates
market. For the purposes of these statements, the Partnership's policy is
to consider all such amounts held with original maturities of three months
or less (approximately $4,792,000 and $1,784,000 at December 31, 1995 and
1994, respectively) as cash equivalents with any remaining amounts
(generally with original maturities of one year or less) reflected as
short-term investments being held to maturity.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, rental income is accrued
for the full period of occupancy on a straight-line basis.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires all
entities to disclose the SFAS 107 value of all financial assets and
liabilities for which it is practicable to estimate. Value is defined in
the Statement as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes the carrying amount of its
financial instruments classified as current assets and liabilities
(excluding current portion of long-term debt) approximates SFAS 107 value
due to the relatively short maturity of these instruments. There is no
quoted market value available for any of the Partnership's other
instruments. The carrying balance of the debt approximates the SFAS 107
value. Due to restrictions on transferability and prepayment and the
inability to obtain comparable financing due to current levels of debt,
previously modified debt terms or other property specific competitive
conditions, the Partnership would be unable to refinance these properties
to obtain such calculated debt amounts reported (see note 4.) The
Partnership has no other significant financial instruments.
Certain amounts in the 1993 and 1994 consolidated financial statements
have been reclassified to conform to the 1995 presentation.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
(2) INVESTMENT PROPERTY
(a) General
The Partnership has acquired, either directly or through joint
ventures, two shopping centers, an office building and five industrial
properties. During 1993, the Partnership through JMB/Warner sold its
interest in the Blue Cross Building (note 3(b)). All of the properties
owned at December 31, 1995 were in operation.
Depreciation on the investment property has been provided over an
estimated useful life of 5-30 years using the straight-line method.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives.
During March 1995, Statement of Financial Accounting Standards No. 121
("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" was issued. SFAS 121, when effective,
will require that the Partnership record an impairment loss on its long-
lived assets to be held and used whenever their carrying value cannot be
fully recovered through estimated undiscounted future cash flows from
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the long-lived asset's carrying value and
the asset's estimated fair value. Any long-lived assets identified as "to
be disposed of" would no longer be depreciated. Adjustments for impairment
loss would be made in each period as necessary to report these assets at
the lower of carrying value and fair value less costs to sell. In certain
situations, such estimated fair value could be less than the existing non-
recourse debt which is secured by the property. There would be no
assurance that any estimated fair value of these assets would ultimately be
obtained by the Partnership in any future sale or disposition transaction.
Under the current impairment policy, provisions for value impairment
are recorded with respect to investment properties whenever the estimated
future cash flows from a property's operations and projected sale are less
than the property's net carrying value. The amount of any such impairment
loss recognized by the Partnership is limited to the excess, if any, of the
property's carrying value over the outstanding balance of the property's
non-recourse indebtedness. An impairment loss under SFAS 121 would be
determined without regard to the nature or the balance of such non-recourse
indebtedness. Upon the disposition of a property with the related
extinguishment of the long-term debt for which an impairment loss has been
recognized under SFAS 121, the Partnership would recognize, at a minimum, a
net gain (comprised of gain on extinguishment of debt and gain or loss on
sale or disposition of property) for financial reporting purposes to the
extent of any excess of the then outstanding balance of the property's non-
recourse indebtedness over the then carrying value of the property,
including the effect of any reduction for impairment loss under SFAS 121.
The Partnership will adopt SFAS 121 as required in the first quarter
of 1996. Based upon the Partnership's current assessment of the full
impact of adopting SFAS 121, it is not anticipated that any significant
additional provisions for value impairment would be required for the
Partnership's properties in the first period of implementation of SFAS 121.
In addition, upon the disposition of an impaired property, the Partnership
would generally recognize more net gain for financial reporting purposes
under SFAS 121 than it would have under the Partnership's current
impairment policy, without regard to the amount, if any, of cash proceeds
received by the Partnership in connection with the disposition. Although
implementation of this new accounting statement could significantly impact
the Partnership's reported earnings, there would be no impact on cash
flows. Further, any such impairment loss would not be recognized for
Federal income tax purposes.
The investment properties are pledged as security for the long-term
debt, for which there is no recourse to the Partnership.
(b) 18 Central Shopping Center
In July 1989, the Partnership acquired an existing shopping center in
East Brunswick, New Jersey known as 18 Central Shopping Center. The
shopping center contains approximately 105,800 square feet of gross
leasable area, of which the Partnership acquired approximately 85,800
square feet. The remaining approximately 20,000 square feet of gross
leasable area is occupied by a retailer who owns its own store and a
portion of the parking lot.
The Partnership acquired the shopping center for a purchase price of
$14,750,000, including the assumption of a first mortgage loan of
$10,500,000 (note 4). The total cash investment of the Partnership
(exclusive of acquisition fees and expenses) was $4,355,000 including a
transfer fee paid to the mortgage lender and the holdback of $750,000,
which is described more fully below. In March 1993, the Partnership
modified and extended the mortgage note as more fully discussed in note
4(b).
Due to the uncertainty of the Partnership's ability to recover the net
carrying value of the 18 Central Shopping Center through future operations
or sale, the Partnership made a provision for value impairment on such
investment property of $2,638,820. Such provision at December 31, 1994 was
recorded to reduce the carrying value of the investment property to the
then outstanding balance of the non-recourse debt.
An affiliate of the General Partners manages the property for a fee
equal to 4% of base and percentage rents from the property.
(3) VENTURE AGREEMENTS
The terms of the venture agreements are summarized as follows:
(a) General
The Partnership at December 31, 1995 is party to one joint venture
agreement (Palm Desert) with Carlyle Real Estate Limited Partnership-XVI,
sponsored by the Corporate General Partner ("Carlyle - XVI") and an
unaffiliated venture partner and one joint venture agreement with an
unaffiliated venture partner. In addition, the Partnership was a party to
a joint venture agreement with Carlyle-XVI for JMB/Warner, which sold its
interest in its property in November 1993 and was terminated (note 3(b)).
The terms of the affiliated partnerships provide, in general, that the
benefits and obligations of ownership, including tax effects, net cash
receipts and sale and refinancing proceeds and capital contribution
obligations are allocated or distributed, as the case may be, between the
Partnership and Carlyle-XVI in proportion to their respective capital
contributions to the affiliated venture. Pursuant to such agreements, the
Partnership made capital contributions aggregating $22,222,483 through
December 31, 1995. Under certain circumstances, either pursuant to the
venture agreements or due to the Partnership's obligations as general
partner, the Partnership may be required to make additional cash
contributions to the ventures.
The Partnership acquired, through the above ventures, one office
building, one regional shopping mall and five industrial properties which
are described below. In 1993 the Partnership, through JMB/Warner, sold its
interest in the Blue Cross Building. The venture properties have been
financed under various long-term debt arrangements as described in note 4.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
(b) JMB/Warner
On November 2, 1993, the Partnership, through JMB/Warner, sold its
interest in the Blue Cross Building as described below.
In December 1987, the Partnership, through a joint venture partnership
(JMB/Warner), with Carlyle - XVI, acquired an interest in the Blue Cross
Building. JMB/Warner's cash investment in the property, was approximately
$35,000,000, of which the Partnership's share was $9,032,258 (or approxi-
mately 26%). The JMB/Warner venture agreement generally provided that any
allocation of profits or losses and distributions of cash flow, net sale
proceeds or net financing proceeds were to be distributed or allocated as
the case may be to the Partnership in proportion to its capital
contributions.
In connection with the sale of the property to JMB/Warner, the seller
had entered into a long-term triple net lease of the entire office complex,
which the seller has occupied since its construction. The lease provided
for an initial annual base rent of $7,947,000 with periodic increases in
the annual base rent equal to the lesser of (i) the periodic increase in a
consumer price index, or (ii) 5% per annum compounded over the period. In
general, the tenant was also obligated to pay the cost of property taxes
and operating and maintenance expenses (other than the cost of flood or
earthquake insurance) during the initial lease term and any renewal period.
Commencing in 1993, JMB/Warner was obligated to pay the cost of any
structural maintenance and repairs and any expenses for changes in the
office complex attributable to governmental compliance. As a result of the
sale of its interest, the Partnership was relieved of such obligations.
On November 2, 1993, JMB/Warner sold the Blue Cross Building to an
unaffiliated buyer for a sales price of $76,909,292 of which the
Partnership's share was $19,847,559. The sales price consisted of
$23,300,000 (before costs of sale) paid in cash at closing and the
assumption by the purchaser of the existing mortgage note having an unpaid
amount of $53,609,292. For financial reporting purposes, the Partnership
allocated approximately $735,000 of prorations to the purchase price. The
Partnership's share of net cash proceeds (before costs of sale and after
consideration of the prorations) was approximately $6,203,000, all of which
had been received by June 1994. As a result of the sale, the Partnership
recognized in 1993 gains of $261,656 and $639,298 for financial reporting
and Federal income tax purposes, respectively.
(c) Palm Desert
In December 1988, the Partnership, Carlyle - XVI, 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 - XVI acquired their interests in Palm
Desert, subject to a first mortgage loan with an outstanding principal
balance of approximately $43,500,000 (as described below), 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 $2,475,000. The
Partnership and the Carlyle - XVI'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 made
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-XVI as described below. Amounts required to pay the cost of tenant
improvements and allowances (the "Tenant Improvement Costs") and other
capital expenditures, as well as any operating deficits of Palm Desert
after December 1994, have been and are expected to be contributed to Palm
Desert 25% by the joint venture partner and 75% by the Partnership and the
Carlyle - XVI in the aggregate.
The terms of the Palm Desert agreement provide that Partnership and
Carlyle - XVI are entitled to receive out of net cash flow a current
preferred return and a cumulative preferred return, each based on a
negotiated rate of return on their respective initial capital contributions
(other than those used to pay closing costs). Such current preferred
return which the Partnership was entitled to receive through December 31,
1994 (as defined) was received. The Partnership, Carlyle - XVI and the
joint venture partner are entitled to a cumulative preferred return, based
on a negotiated rate of return on their respective contributions to pay the
Tenant Improvement Costs through December 1994 (the "Tenant Improvement
Cost Contributions"). All cumulative preferred returns are distributable
on an equal priority level; however they are subordinate to the receipt by
the Partnership and Carlyle - XVI of their respective current year
preferred return. Any remaining annual cash flow will be distributable 75%
to the Partnership and Carlyle - XVI and 25% to the joint venture partner
until the Partnership and Carlyle - XVI have received an amount equal to
their initial capital contributions (other than those used to pay closing
costs) plus a negotiated annual internal rate of return thereon and an
amount equal to their Tenant Improvement Cost Contributions, and thereafter
any remaining annual cash flow shall be distributable 50% to the
Partnership and Carlyle - XVI and 50% to the joint venture partner.
The Palm Desert agreement also provides that upon sale or refinancing
of the property, net sale or refinancing proceeds will be distributable
first to the Partnership, Carlyle - XVI 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 - XVI
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 - XVI's current and cumulative preferred returns
described above (not to exceed $1,700,000); fourth, 75% to the Partnership
and Carlyle - XVI and 25% to the joint venture partner until the
Partnership and Carlyle - XVI have received a negotiated annual internal
rate of return on their respective initial capital contributions (other
than those used to pay closing costs), and any remaining proceeds will be
distributable 50% to the Partnership and Carlyle - XVI and 50% to the joint
venture partner.
The portion of the shopping center owned by Palm Desert is currently
subject to a first mortgage loan from an institutional lender with an
outstanding principal balance of approximately $41,845,000 and $42,165,000
at December 31, 1995 and 1994, respectively. The loan provides for fixed
interest at the rate of 12% per annum and monthly payments of principal and
interest of $446,842 until January 1, 2019, when the loan will have been
fully amortized.
The land underlying the shopping center is owned by the lender under
the first mortgage loan. Palm Desert leases the land by assignment of an
existing ground lease which has a term through December 2038 and provides
for minimum annual rental payments of $900,000, as well as for additional
rental payments for each calendar year equal to 50% of the amount by which
certain of the ground lessee's gross receipts from the shopping center
exceed $6,738,256. Total ground rent expense for the years ended December
31, 1995, 1994 and 1993 was $1,261,322, $1,347,204 and $1,015,968,
respectively. The ground lease provides for two 10-year extensions at the
option of the lessee. The ground lease does not provide for any option on
the part of Palm Desert to purchase the land.
Operating profits and losses, in general, are allocable in proportion
to the amount of net cash flow distributed to the partners of Palm Desert,
or if there are no distributions of net cash flow, generally 75% to the
Partnership and Carlyle - XVI and 25% to the joint venture partner, except
that the deductions allocable with respect to certain expenses are
allocable to the partner whose contributions are used to pay such expenses.
For 1995, losses were allocated 75% to the Partnership and Carlyle - XVI
and 25% to the joint venture partner as there were no distributions made to
the partners for 1995. For 1994 and 1993, in accordance with the Palm
Desert Partnership Agreement, losses were allocated to the joint venture
partner to the extent that it had cumulatively contributed capital to fund
the Partnership's and Carlyle - XVI's preferred return less any losses
previously allocated to the joint venture partner as discussed above. The
remainder of the loss was allocated 75% to the Partnership and Carlyle -
XVI and 25% to the joint venture partner.
The Palm Desert agreement also provides that the annual cash flow, net
sale or refinancing proceeds and tax items distributed or allocated
collectively to the Partnership and Carlyle - XVI generally are
distributable or allocable between them based upon their respective
capital contributions. Such capital contributions are generally in the
percentages of approximately 14.2% for the Partnership and approximately
85.8% for Carlyle - XVI.
The shopping center is being managed pursuant to a long-term agreement
with an affiliate of the joint venture partner. The manager is paid a fee
equal to 3% of the base and percentage rents collected under tenant leases,
increasing to 4% of the base and percentage rents for those years that the
Partnership and Carlyle - XVI have received their current cash return and
all of their cumulative preferred return for current and previous periods.
In addition, under the terms of the management agreement, the manager or an
affiliate will be entitled to receive compensation for leasing services.
(d) JMB/Warehouse
On January 21, 1992, the Partnership and an unaffiliated entity formed
JMB/Warehouse to acquire and operate certain industrial properties located
in Houston, Texas. The Partnership, as sole general partner, has a 99%
interest in JMB/Warehouse. The unaffiliated venture partner ("Warehouse"),
as a limited partner, has a 1% interest in JMB/Warehouse. The
JMB/Warehouse venture agreement provides that items of profit and loss and
distributions of net cash flow and net sale or refinancing proceeds are, in
general, to be allocated among the partners in accordance with their
respective ownership percentages.
On January 21, 1992, JMB/Warehouse purchased Minimax #2, Minimax #3,
1801 West Belt and Pine Forest #17 (the "Houston Properties") for an
aggregate purchase price, excluding closing costs, of $9,182,830, of which
$2,394,728 was paid, in cash, at closing. In February 1993, JMB/Warehouse
purchased Silber #1, for a purchase price, excluding closing costs, of
$3,000,000 of which $2,000,000 was paid, in cash, at closing. In addition,
JMB/Warehouse expected to spend up to $874,000, in the aggregate, for
certain physical improvements and other capital costs relating to the
Houston Properties and Silber #1 which were identified at the time of
purchase. As of December 31, 1995, approximately $730,000 of such amounts
have been spent. Consequently, JMB/Warehouse's aggregate cash investment
in the Houston Properties is expected to be approximately $3,475,000,
excluding certain acquisition and closing costs, of which the Partnership's
share is approximately $3,440,000. JMB/Warehouse's aggregate cash
investment in Silber #1 is approximately $2,190,000 of which the
Partnership's share is approximately $2,168,000. The balance of the
purchase price for the Houston Properties was represented in part by three
JMB/Warehouse non-recourse purchase money notes that are secured,
individually, by Minimax #2, Minimax #3 and 1801 West Belt in the aggregate
amount of $4,400,057. JMB/Warehouse also assumed the existing mortgage
secured by Pine Forest #17, which had an outstanding loan balance of
$2,388,045 at closing. A portion of Silber #1's purchase price was funded
by a $1,000,000 first mortgage note bearing interest at a rate of 8.75% per
annum. In July 1993, JMB/Warehouse prepaid principal of $101,736, $141,321
and $152,802 on the Minimax #2, Minimax #3 and 1801 West Belt purchase
money notes, respectively. As a result of the pay down, the Partnership is
fully invested in real estate. Reference is made to note 4 below for
further details on the long-term debt.
The seller of Minimax #2, Minimax #3, 1801 West Belt and Silber #1 had
provided JMB/Warehouse with a rent guarantee for five tenant spaces with an
aggregate building area of approximately 146,318 square feet. Under the
rent guarantee, the seller remitted monthly rent guarantee payments, as
defined, to JMB/Warehouse for vacant space covered by the rent guarantee
through the earlier of (i) January 21, 1995; or (ii) the date at which rent
commences for a lease for such space. As of February 1994, the Partnership
has leased all of the space related to the rent guarantee. Therefore,
JMB/Warehouse was not entitled to rent guarantee payments for any
subsequent period. Rent guarantee payments received ($141,070 through
December 31, 1993 and an additional $33,210 received in 1994) have been
used to reduce the original purchase price on these properties.
The properties are managed under an agreement pursuant to which the
manager manages the properties, collects all receipts from operations and,
to the extent available from such receipts, pays all expenses of the
properties for a 3% fee based upon a percentage of gross receipts from the
properties.
<TABLE>
(4) LONG-TERM DEBT
(a) Long-term debt consists of the following at December 31, 1995 and 1994:
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
8.5% mortgage note; secured by the 18 Central Shopping
Center; balance payable in monthly installments of
$89,485 (including interest and principal); (interest
only payments of $74,375 were due monthly from
January 1, 1993 through December 1, 1993); remaining
balance of interest and principal due December 1, 1997. . . . . . . . . $10,106,224 10,311,445
Promissory note, due February 1, 1999, secured by
Minimax #2 in Houston, Texas; payable interest only;
payments of $6,607 (7%) are due monthly through
February 1, 1994; payments of $6,843 (7.25%) are
due monthly from March 1, 1994 through February 1,
1996; payments of $8,023 (8.5%) are due monthly
from March 1, 1996 through February 1, 1997;
payments of $8,966 (9.5%) are due monthly from
March 1, 1997 through February 1, 1998; payments
of $10,571 (11.2%) are due monthly from March 1,
1998 through February 1, 1999 when the principal
is due. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,030,856 1,030,856
Promissory note, due February 1, 1999, secured by
Minimax #3 in Houston, Texas; payable interest only;
payments of $9,162 (7%) are due monthly through
February 1, 1994; payments of $9,489 (7.25%)
are due monthly from March 1, 1994 through
February 1, 1996; payments of $11,125 (8.5%)
are due monthly from March 1, 1996 through
February 1, 1997; payments of $12,434 (9.5%)
are due monthly from March 1, 1997 through
February 1, 1998; payments of $14,659 (11.2%)
are due monthly from March 1, 1998 through
February 1, 1999 when the principal is due. . . . . . . . . . . . . . . 1,429,336 1,429,336
7% per annum promissory note, due February 1, 1999,
secured by 1801 West Belt in Houston, Texas;
payable interest only; payments of $9,898 (7%)
are due monthly through February 1, 1994;
payments of $10,252 (7.25%) are due monthly
from March 1, 1994 through February 1, 1996;
payments of $12,019 (8.5%) are due monthly
from March 1, 1996 through February 1, 1997;
payments of $13,433 (9.5%) are due monthly
from March 1, 1997 through February 1, 1998;
payments of $15,837 (11.2%) are due monthly
from March 1, 1998 through February 1, 1999
when the principal is due . . . . . . . . . . . . . . . . . . . . . . . 1,544,006 1,544,006
9.55% per annum promissory note, secured by Pine
Forest #17 in Houston, Texas; balance payable in
monthly installments of $23,322 (including interest
and principal) through November 1, 1999 when the
remaining balance of interest and principal is due. . . . . . . . . . . 2,143,148 2,214,593
8.75% mortgage note, secured by Silber #1 in Houston,
Texas; balance payable in monthly installments of
$8,221 (including principal and interest) through
March 1, 2000 when the remaining balance of interest
and principal is due. . . . . . . . . . . . . . . . . . . . . . . . . . 965,453 978,983
------------ -----------
Total debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 17,219,023 17,509,219
Less current portion of long-term debt. . . . . . . . . . . . . 323,589 290,196
------------ -----------
Total long-term debt. . . . . . . . . . . . . . . . . . . . . . $ 16,895,434 17,219,023
============ ===========
</TABLE>
Five-year maturities of long-term debt are summarized as follows:
1996. . . . . . . . $ 323,589
1997. . . . . . . . 9,986,072
1998. . . . . . . . 113,369
1999. . . . . . . . 4,004,198
2000. . . . . . . . 897,831
===========
(b) 18 Central Shopping Center
In March 1993, the Partnership modified and extended the mortgage note
secured by the 18 Central Shopping Center to reduce the accrual rate on the
loan which had matured December 1992. In addition, the modification also
provides the lender with additional interest equal to 50% of the "net sales
proceeds" or "net appraised proceeds" (each as defined) of the property,
subject to a minimum amount of $250,000 (or, if less, 100% of the "net
sales proceeds" or "net appraised proceeds") and a maximum amount of
$450,000 of additional interest, $250,000 of which has been reflected as
other liabilities in the accompanying Consolidated Financial Statements.
The Partnership will also be required to pay a loan extension fee of
$52,500, payable at maturity or prepayment of the loan which has also been
reflected as other liabilities in the accompanying Consolidated Financial
Statements. Prepayment of the loan is currently subject to a prepayment
charge generally equal to the greater of 1% of the loan amount prepaid or
the amount that equals the discounted value of the difference between the
yield that would be provided to maturity based upon the existing interest
rate of the mortgage loan, and the yield that would be provided to maturity
based upon the interest rate of U.S. Treasury obligations (as of the date
of prepayment) having the same maturity date as the mortgage loan. In
connection with the loan modification and extension, commencing in 1994 the
Partnership is required to deposit 95% of the "net cash flow" (as defined)
from the property up to $750,000 and 47.5% in excess of such amount in a
collateral account to be used for the payment of tenant improvement costs,
leasing commissions, other capital expenditures and operating deficits (as
of the date of this report, $93,750 was deposited and no amounts have been
funded from this account).
(5) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Holders
of Interests and 4% to the General Partners. Profits from the sale or
other disposition of investment properties will be allocated first to the
General Partners in an amount equal to the greater of the General Partners'
share of cash distributions of the proceeds of any such sale or other
disposition (as described below) or 1% of the total profits from any such
sales or other dispositions, plus an amount which will reduce the General
Partners' capital accounts deficits (if any) 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 will
generally be allocated 4% to the General Partners. The remaining sale or
other disposition profits and losses will be allocated to the Holders of
Interests.
The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership. "Net cash receipts" from operations of
the Partnership will be allocated 90% to the Holders of Interests and 10%
to the General Partners (of which 6.25% constitutes a management fee to the
Corporate General Partner for services in managing the Partnership).
Additionally, pursuant to the terms of the Partnership Agreement, the
General Partners deferred their share of net cash flow of the Partnership
due to them over a five-year period ending December 1994, to the receipt by
the Holders of Interests of a 5% per annum cumulative non-compounded return
on their Current Capital Accounts (as defined) through such five-year
period. These deferred amounts consisted of the Corporate General
Partner's management fees and the General Partners' distributive share of
net cash flow. In April 1995, the Partnership paid the cumulative combined
amount of such deferred distributions and management fees which aggregated
$188,928 and $314,875, respectively, to the General Partners. All amounts
deferred did not bear interest and were paid in full.
The Partnership Agreement provides that subject to certain conditions
the General Partners shall receive as a distribution from the sale of a
real property by the Partnership up to 3% of the selling price, and that
the remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, prior to such distributions being made, the Limited Partners are
entitled to receive 99% and the General Partners 1% of net sale or
refinancing proceeds until the Limited Partners (i) have received cash
distributions of "sale proceeds" or "refinancing proceeds" in an amount
equal to the Limited Partners' aggregate initial capital investment in the
Partnership and (ii) have received cumulative cash distributions from the
Partnership's operations which, when combined with "sale proceeds" or
"refinancing proceeds" previously distributed, equal a 6% annual return on
the Limited Partners' average capital investment for each year (their
initial capital investment as reduced by "sale proceeds" or "refinancing
proceeds" previously distributed) commencing with the first fiscal quarter
of 1990. Accordingly, related to the 3% distribution of sale proceeds
discussed above, receipt of up to approximately $595,000 of sale proceeds
from Blue Cross Building for the General Partners has been deferred (see
note 3(b)).
(6) LEASES
At December 31, 1995, the Partnership and its consolidated venture's
principal assets are one shopping center and five industrial warehouses.
The Partnership has determined that all leases are properly classified as
operating leases; therefore, rental income is reported when earned and the
cost of the properties, excluding the cost of the land, is depreciated over
the estimated useful lives. Leases with tenants range in term from five to
twenty years and provide for fixed minimum rent and partial reimbursement
of operating costs. In addition, leases with shopping center tenants
provide for additional rent based upon percentages of tenants' sales
volume. With respect to the Partnership's shopping center investments, a
substantial portion of the ability of retail tenants to honor their leases
is dependent upon the retail economic sector.
Cost and accumulated depreciation of the leased assets are summarized
as follows at December 31, 1995:
Shopping Center:
Cost. . . . . . . . . . . . . $12,796,449
Accumulated depreciation. . . (2,865,155)
-----------
9,931,294
-----------
Industrial Warehouses:
Cost. . . . . . . . . . . . . 13,436,388
Accumulated depreciation. . . (1,211,224)
-----------
12,225,164
-----------
$22,156,458
===========
Minimum lease payments including amounts representing executory costs
(e.g., taxes, maintenance, insurance) to be received in the future under
the operating leases are as follows:
1996. . . . . . . . $ 3,255,244
1997. . . . . . . . 2,754,546
1998. . . . . . . . 2,096,751
1999. . . . . . . . 1,353,146
2000. . . . . . . . 1,207,389
Thereafter. . . . . 2,826,437
-----------
$13,493,513
===========
(7) TRANSACTIONS WITH AFFILIATES
Pursuant to the terms of the Partnership Agreement (see note 5), the
General Partners deferred their share of net cash flow of the Partnership
due to them over a five-year period ending December 1994, to the receipt by
the holders of Interests of a 5% per annum cumulative non-compounded return
on their Current Capital Accounts (as defined) through such five-year
period. These deferred amounts consisted of the Corporate General
Partners' management fees and the remainder represented the General
Partners' distributive share of net cash flow. The cumulative amount of
such deferred distributions and management fees aggregated $488,595 at
December 31, 1994. Additionally, in the first quarter of 1995,
distributions and management fees of $15,208 relating to 1994 were
deferred. All amounts deferred did not bear interest and were paid in
1995. In addition, the General Partners received operating distributions
of $22,812 for 1995.
Affiliates of the General Partners are entitled to receive from the
Partnership acquisition fees in connection with the evaluation,
investigation, negotiation, selection and purchase of the Partnership's
investment properties, and properties which are not acquired by the
Partnership in an amount equal to 13.5% of the gross proceeds of the public
offering, subject to certain limitations. The amount of the aforementioned
fees paid to such affiliates was $3,307,500. With the acquisition of
Silber #1 in February 1993 (note 3(d)), the Partnership's investments in
real estate were fully specified. As a result of the Partnership's
investments and based upon certain provisions contained in the Partnership
Agreement of the Partnership, a portion of the acquisition fees previously
paid were reimbursed to the Partnership by the Corporate General Partner in
July 1993. The reimbursement was $383,952 and was reflected as other
income in the accompanying Consolidated Financial Statements.
Certain of the Partnership's properties are managed by affiliates of
the General Partners or their assignees for fees computed as a percentage
of certain rents received by the properties. In December 1994, one of the
affiliated property managers sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. In addition, certain of the management personnel of the property
manager became management personnel of the purchaser and its affiliates.
The successor to the affiliated property manager's assets is acting as the
property manager of the Houston Properties after the sale on the same terms
that existed prior to the sale.
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of December 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
UNPAID AT
DECEMBER 31,
1995 1994 1993 1995
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees (note 5) . . . . . . . . . $ 74,469 137,185 112,851 --
Management fees to Corporate
General Partners. . . . . . . . . . . . 38,020 38,022 71,292 --
Insurance commissions . . . . . . . . . . 2,959 2,959 3,375 --
Reimbursement (at cost) for
accounting services . . . . . . . . . . 58,883 75,477 46,618 --
Reimbursement (at cost) for
portfolio management
services. . . . . . . . . . . . . . . . 19,595 13,870 -- --
Reimbursement (at cost) for
legal services. . . . . . . . . . . . . 2,137 8,624 9,161 --
Reimbursement (at cost) for
administrative charges and
other out-of-pocket expenses. . . . . . 69,830 3,157 11,845 35,911
-------- -------- -------- ------
$265,893 279,294 255,142 35,911
======== ======== ======== ======
<FN>
The above table reflects that during 1995, the Partnership recognized and paid certain 1994 administrative
charges of approximately $27,615 that had not previously been reimbursed.
</TABLE>
Effective October 1, 1995, the Corporate General Partner of the
Partnership engaged independent third parties to perform certain
administrative services for the Partnership which were previously performed
by, and partially reimbursed to, affiliates of the General Partners. Use
of such third parties is not expected to have a material effect on the
operations of the Partnership.
(8) INVESTMENT IN UNCONSOLIDATED VENTURES
Summary combined financial information for Palm Desert (note 3) as of
and for the years ended December 31, 1995 and 1994 is as follows:
1995 1994
------------ -----------
Current assets. . . . . . . . . . $ 841,267 855,245
Current liabilities . . . . . . . (1,251,074) (1,116,134)
------------ -----------
Working capital. . . . . . . (409,807) (260,889)
------------ -----------
Other assets. . . . . . . . . . . 2,883,324 2,461,604
Ventures partners' equity . . . . (5,547,277) (6,859,653)
Investment property, net. . . . . 46,076,367 48,042,311
Other liabilities . . . . . . . . (1,106,951) (968,134)
Long-term debt. . . . . . . . . . (41,485,363) (41,845,394)
------------ -----------
Partnership's capital. . . . $ 410,293 569,845
============ ===========
Represented by:
Invested capital. . . . . . . . $ 2,683,814 2,682,819
Cumulative cash distributions . (616,253) (592,884)
Cumulative earnings . . . . . . (1,657,268) (1,520,090)
------------ -----------
$ 410,293 569,845
============ ===========
Total income. . . . . . . . . . . $ 10,864,706 10,786,976
Expenses applicable to
operating loss. . . . . . . . . 12,312,635 12,116,582
------------ -----------
Net operating loss. . . . . . . . (1,447,929) (1,329,606)
------------ -----------
Net earnings (loss) . . . . . . . $ (1,447,929) (1,329,606)
============ ===========
Partnership's share
of income (loss). . . . . . . . $ (137,178) (76,276)
============ ===========
Additionally, for the year ended December 31, 1993, total income was
$18,277,361, expenses applicable to operating loss were $18,450,284 and net
loss was $270,306 for the JMB/Warner (sold November 1993, note 3(b)) and
Palm Desert ventures.
<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B) (C)
------------------------- -------------- ------------------------------------
LAND,
BUILDINGS BUILDINGS BUILDINGS
AND AND AND
ENCUMBRANCE LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (C)
----------- ----------- ------------ --------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
18 Central
Shopping (C)
Center . . . . .$10,106,224 1,614,000 13,136,000 (1,953,551) 1,391,025 11,405,424 12,796,449
JMB/WAREHOUSE
Minimax #2. . . . 1,030,856 549,532 1,032,176 150,079 549,532 1,182,255 1,731,787
Minimax #3. . . . 1,429,336 770,123 1,487,867 115,005 770,123 1,602,872 2,372,995
Pine Forest . . . 2,143,148 688,076 2,484,240 433,496 688,076 2,917,736 3,605,812
1801 West
Belt . . . . . . 1,544,006 941,154 1,487,762 93,092 941,154 1,580,854 2,522,008
Silber #1 . . . . 965,453 495,692 2,477,864 230,230 495,692 2,708,094 3,203,786
----------- ---------- ---------- ----------- --------- ---------- ----------
Total. . . . .$17,219,023 5,058,577 22,105,909 (931,649) 4,835,602 21,397,235 26,232,837
=========== ========== ========== =========== ========= ========== ==========
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
18 Central Shopping
Center. . . . . . . . . . . . . . . $2,865,155 5/1/87 7/27/89 5-30 years $251,779
JMB/WAREHOUSE
Minimax #2. . . . . . . . . . . . . . 154,883 1968 1/22/92 5-30 years 40,744
Minimax #3. . . . . . . . . . . . . . 206,061 1968 1/22/92 5-30 years 55,302
Pine Forest . . . . . . . . . . . . . 359,870 1979 1/22/92 5-30 years 83,718
1801 West Belt. . . . . . . . . . . . 203,292 1982 1/22/92 5-30 years 71,731
Silber #1 . . . . . . . . . . . . . . 287,118 1973 2/26/93 5-30 years 97,503
---------- --------
Total. . . . . . . . . . . . . . . $4,076,379 $600,777
========== =======
<FN>
- ----------
Notes:
(A) The initial cost to Partnership represents the original purchase price of the property.
(B) The aggregate cost of real estate owned at December 31, 1995 for Federal income tax purposes was
approximately $28,905,537.
(C) In 1994, the Partnership recorded a provision for value impairment of $2,638,820 which was recorded as a
reduction to land and buildings and improvements. See Note 2.
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(D) Reconciliation of real estate owned at December 31, 1995, 1994 and 1993:
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period. . . . . $26,211,533 28,688,443 25,297,563
Additions during period . . . . . . . . 21,304 195,120 3,607,858
Purchase price and basis adjustment
(notes 2(b) and 3(d)) . . . . . . . . -- (33,210) (216,978)
Provision for value impairment. . . . . -- (2,638,820) --
----------- ---------- -----------
Balance at end of period. . . . . . . . $26,232,837 26,211,533 28,688,443
=========== ========== ===========
(E) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . $ 3,365,742 2,574,316 1,793,725
Depreciation expense. . . . . . . . . . 710,637 791,426 780,591
----------- ---------- -----------
Balance at end of period. . . . . . . . $ 4,076,379 3,365,742 2,574,316
=========== ========== ===========
</TABLE>
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII:
We have audited the financial statements of JMB/Hahn PDTC Associates,
L.P. (Palm Desert), an unconsolidated venture of Carlyle Real Estate
Limited Partnership - XVII (Partnership) as listed in the accompanying
index. In connection with our audits of the financial statements, we also
have audited the financial statement schedule listed in the accompanying
index. These financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
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 financial statements referred to above present
fairly, in all material respects, the financial position of Palm Desert, an
unconsolidated venture of Carlyle Real Estate Limited Partnership - XVII as
of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the years in the three-year period ended December
31, 1995, in conformity with generally accepted accounting principles.
Also in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 23, 1996
<TABLE>
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
------
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1). . . . . . . . . . . . . . . . . . . $ 377,755 313,783
Rents and other receivables, net of allowances
for doubtful accounts of approximately $619,000
and $585,000 for 1995 and 1994, respectively. . . . . . . . . . . . . 318,827 385,329
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,685 156,133
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 841,267 855,245
------------ -----------
Investment property, at cost (note 1) - Schedule III:
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . 60,100,323 60,061,137
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . 14,023,956 12,018,826
------------ -----------
Total investment property,
net of accumulated depreciation . . . . . . . . . . . . . . . 46,076,367 48,042,311
------------ -----------
Notes receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205,418 247,850
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559,909 434,303
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . . 2,117,997 1,779,451
------------ -----------
$ 49,800,958 51,359,160
============ ===========
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
1995 1994
------------ -----------
Current liabilities:
Current portion of long-term debt (note 3). . . . . . . . . . . . . . . $ 360,031 319,509
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 472,589 374,976
Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . . 418,454 421,649
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 1,251,074 1,116,134
------------ -----------
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . 47,951 78,407
Ground rent payable (note 4(b)) . . . . . . . . . . . . . . . . . . . . . 1,059,000 889,727
Long-term debt, less current portion (note 3) . . . . . . . . . . . . . . 41,485,363 41,845,394
Commitments and contingencies (notes 1, 2, 3 and 4)
------------ -----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 43,843,388 43,929,662
------------ -----------
Partners' capital accounts (note 2):
Carlyle-XVII:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . 2,683,814 2,682,819
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . . (1,657,268) (1,520,090)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . (616,253) (592,884)
------------ -----------
410,293 569,845
------------ -----------
Venture Partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . 36,700,292 36,557,046
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . . (13,057,603) (11,746,852)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . (18,095,412) (17,950,541)
------------ -----------
5,547,277 6,859,653
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . . . . . 5,957,570 7,429,498
------------ -----------
$ 49,800,958 51,359,160
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . $ 10,809,887 10,742,508 10,040,721
Interest income . . . . . . . . . . . . . . . . . . 54,819 44,468 42,033
------------ ------------ ------------
10,864,706 10,786,976 10,082,754
------------ ------------ ------------
Expenses:
Mortgage and other interest . . . . . . . . . . . . 5,049,425 5,075,720 5,123,160
Depreciation. . . . . . . . . . . . . . . . . . . . 2,005,130 2,006,856 2,003,272
Property operating expenses . . . . . . . . . . . . 5,123,396 4,836,927 4,712,584
Professional services . . . . . . . . . . . . . . . 32,711 74,279 54,786
Amortization of deferred expenses . . . . . . . . . 101,973 122,800 26,765
------------ ------------ ------------
12,312,635 12,116,582 11,920,567
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . $ (1,447,929) (1,329,606) (1,837,813)
============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
VENTURE
CARLYLE-XVII PARTNERS TOTAL
------------ ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1992. . . . . . . . . . . . . . $ 864,719 4,167,349 5,032,068
Capital contributions . . . . . . . . . . . . . . . . . -- 6,038,961 6,038,961
Cash distributions. . . . . . . . . . . . . . . . . . . (93,474) (579,486) (672,960)
Net earnings (loss) . . . . . . . . . . . . . . . . . . (31,650) (1,806,163) (1,837,813)
------------ ----------- -----------
Balance at December 31, 1993. . . . . . . . . . . . . . 739,595 7,820,661 8,560,256
Capital contributions . . . . . . . . . . . . . . . . . -- 871,808 871,808
Cash distributions. . . . . . . . . . . . . . . . . . . (93,474) (579,486) (672,960)
Net earnings (loss) . . . . . . . . . . . . . . . . . . (76,276) (1,253,330) (1,329,606)
------------ ----------- -----------
Balance at December 31, 1994. . . . . . . . . . . . . . 569,845 6,859,653 7,429,498
Capital contributions . . . . . . . . . . . . . . . . . 995 143,246 144,241
Cash distributions. . . . . . . . . . . . . . . . . . . (23,369) (144,871) (168,240)
Net earnings (loss) . . . . . . . . . . . . . . . . . . (137,178) (1,310,751) (1,447,929)
------------ ----------- -----------
Balance at December 31, 1995. . . . . . . . . . . . . . $ 410,293 5,547,277 5,957,570
============ =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . $ (1,447,929) (1,329,606) (1,837,813)
Items not requiring cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . 2,005,130 2,006,856 2,003,272
Amortization of deferred expenses . . . . . . . . . 101,973 122,800 26,765
Changes in:
Rents and other receivables,net. . . . . . . . . . 66,502 (90,887) 70,401
Prepaid expenses . . . . . . . . . . . . . . . . . 11,448 45,617 (68,081)
Accrued rents receivable . . . . . . . . . . . . . (338,546) (593,954) (231,937)
Accounts payable . . . . . . . . . . . . . . . . . 118,732 134,799 (96,132)
Ground rent payable. . . . . . . . . . . . . . . . 169,273 296,979 115,968
Accrued interest payable . . . . . . . . . . . . . (3,195) (2,835) (542,403)
Unearned rents . . . . . . . . . . . . . . . . . . (21,119) (179,638) 6,170
Tenant security deposits . . . . . . . . . . . . . (30,456) (770) (9,643)
------------ ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . . 631,813 409,361 (563,433)
------------ ----------- -----------
Cash flows from investing activities:
Additions to investment property. . . . . . . . . . . (39,186) (580) (38,741)
Payments on notes receivable. . . . . . . . . . . . . 42,432 44,274 120,896
Payment of deferred expenses. . . . . . . . . . . . . (227,579) (221,427) (158,786)
------------ ----------- -----------
Net cash used in investing activities . . . . (224,333) (177,733) (76,631)
------------ ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . (319,509) (283,548) (5,078,541)
Cash contributions from Carlyle-XVII. . . . . . . . . 995 -- --
Cash distributions to Carlyle-XVII. . . . . . . . . . (23,369) (93,474) (93,474)
Cash contributions from venture partners. . . . . . . 143,246 871,808 6,038,961
Cash distributions to venture partners. . . . . . . . (144,871) (579,486) (579,486)
------------ ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . . . (343,508) (84,700) 287,460
------------ ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . 63,972 146,928 (352,604)
Cash and cash equivalents,
beginning of the year . . . . . . . . . . . 313,783 166,855 519,459
------------ ----------- -----------
Cash and cash equivalents,
end of the year . . . . . . . . . . . . . . $ 377,755 313,783 166,855
============ =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . $ 5,052,620 5,078,555 5,665,563
============ =========== ===========
Non-cash investing and financing activities . . . . . $ -- -- --
============ =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
(1) OPERATIONS AND BASIS OF ACCOUNTING
The accompanying combined financial statements have been prepared for
the purpose of complying with Rule 3.09 of Regulation S-X of the Securities
and Exchange Commission. They include the accounts of the unconsolidated
joint venture, Palm Desert ("Venture"), in which Carlyle Real Estate
Limited Partnership-XVII ("Carlyle-XVII" or "Partnership") owns a direct
interest.
The Venture holds a direct equity investment in a regional shopping
mall in Palm Desert, California. Business activities consist of rentals to
a wide variety of commercial and retail companies, and the ultimate sale or
disposition of such real estate.
The records of the Venture are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying financial statements have been prepared from such records
after making appropriate adjustments to reflect the Venture's accounts in
accordance with generally accepted accounting principles. Such adjustments
are not recorded on the records of the Venture.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Statement of Financial Accounting Standards No. 95 requires the
Venture 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. The
Venture records amounts held in U.S. government obligations at cost which
approximates market. For the purposes of these statements, the
Partnership's policy is to consider all such amounts held with original
maturities of three months or less (none held at December 31, 1995 and
1994) as cash equivalents with any remaining amounts (generally with
original maturities of one year or less) reflected as short-term
investments being held to maturity.
Deferred expenses are comprised of deferred leasing costs, which are
amortized using the straight-line method over the terms of the related
leases, and financing costs, which are amortized over the term of the
related debt.
Depreciation on the investment properties has been provided over the
estimated useful lives of 5 to 30 years using the straight-line method.
Under the Partnership's impairment policy, provisions for value
impairment are recorded with respect to its investment property pursuant to
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." Therefore, the Partnership does not anticipate
any effect on its financial statements upon full adoption of SFAS 121 as
required in the first quarter of 1996.
The investment property has been pledged as security for the long-term
debt, for which there is no recourse to the Venture.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives.
Although certain leases provide for tenant occupancy during periods
for which no rent is due and/or increases in minimum lease payments over
the term of the lease, the Venture accrues prorated rental income for the
full period of occupancy on a straight-line basis.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments," requires all
entities to disclose the SFAS 107 value of all financial assets and
liabilities for which it is practicable to estimate. Value is defined in
the Statement as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The Venture believes the carrying amount of its
financial instruments classified as current assets and liabilities
(excluding current portion of long-term debt) approximates SFAS 107 value
due to the relatively short maturity of these instruments. There is no
quoted market value available for any of the Venture's other instruments.
The debt, with a carrying balance of $41,845,394, has been calculated to
have an SFAS 107 value of $58,104,098 by discounting the scheduled loan
payments to maturity. Due to restrictions on transferability and
prepayment and the inability to obtain comparable financing due to current
levels of debt, previously modified debt terms or other property-specific
competitive conditions, the Venture would be unable to refinance the
property to obtain such calculated debt amount reported. (See note 3.)
The Venture has no other significant financial instruments.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the venture partners rather than the
Venture.
(2) VENTURE AGREEMENT
A description of the venture agreement is contained in Note 3(c) of
Notes to Consolidated Financial Statements of Carlyle-XVII. Such note is
hereby incorporated herein by reference.
(3) LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1995 and
1994:
1995 1994
----------- ----------
12% per annum mortgage note; secured by
the Palm Desert Town Center; payable
in monthly installments of principal
and interest of $446,842 until paid
in full in January 2019. . . . . . . . . . . $41,845,394 42,164,903
Less current portion of
long-term debt. . . . . . . . . . . . 360,031 319,509
----------- ----------
Total long-term debt. . . . . . . . . . $41,485,363 41,845,394
=========== ==========
Five year maturities of long-term debt are as follows:
1996 . . . . . . . . . . $360,031
1997 . . . . . . . . . . 405,692
1998 . . . . . . . . . . 457,143
1999 . . . . . . . . . . 515,121
2000 . . . . . . . . . . 580,451
========
(4) LEASES
(a) As Property Lessor
At December 31, 1995, the Venture's principal asset is a shopping
mall. The Venture has determined that all leases relating to the property
are properly classified as operating leases; therefore, rental income is
reported when earned and the cost of the property, excluding cost of land,
is depreciated over the estimated useful life. Leases range in term from
one to 25 years and provide for fixed minimum rent and partial to full
reimbursement of operating costs.
Minimum lease payments including amounts representing executory costs
(e.g., taxes, maintenance, insurance), to be received in the future under
the above operating commercial lease agreements, are as follows:
1996 . . . . . . . . . . $ 7,053,695
1997 . . . . . . . . . . 6,773,298
1998 . . . . . . . . . . 6,220,007
1999 . . . . . . . . . . 5,184,121
2000 . . . . . . . . . . 4,793,987
Thereafter . . . . . . . 17,957,964
-----------
$47,983,072
===========
(b) As Property Lessee
The following lease agreement has been determined to be an operating
lease:
The Venture owns a leasehold interest which expires in December 2038
in the land underlying the Palm Desert Town Center. The ground lease
provides for annual rental payments of $900,000 plus 50% of certain gross
receipts of the shopping center above $6,738,256. In addition to cash
payments due, periodic ground rent expense reflects an adjustment equal to
50% of the net change in accrued rents receivable. Total ground rent
expense for the years ended December 31, 1995, 1994 and 1993 was
$1,261,327, $1,347,204 and $1,015,968, respectively. Actual cash payments
for 1995, 1994 and 1993 were $1,092,049, $1,050,000 and $900,000,
respectively.
Future minimum rental commitments under the lease are as follows:
1996 . . . . . . . . . . $ 900,000
1997 . . . . . . . . . . 900,000
1998 . . . . . . . . . . 900,000
1999 . . . . . . . . . . 900,000
2000 . . . . . . . . . . 900,000
Thereafter . . . . . . . 34,200,000
-----------
$38,700,000
===========
<TABLE>
SCHEDULE III
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST SUBSEQUENT GROSS AMOUNT AT WHICH CARRIED
TO VENTURE (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
------------------------- -------------- ------------------------------------
BUILDINGS LAND, BUILDINGS
AND BUILDINGS AND AND
ENCUMBRANCE LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (D)
----------- ----------- ------------ --------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Palm Desert
Town Center
Palm Desert
(Palm
Springs),
California. $41,845,394 -- (C) 59,184,329 915,994 -- 60,100,323 60,100,323
=========== =========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
SCHEDULE III
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(F) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Palm Desert
Town Center
Palm Desert
(Palm
Springs),
California . . . . . . . . . . . . . 14,023,956 1983 12/23/88 5-30 years 743,746
=========== ========
<FN>
Notes:
(A) The initial cost to the Venture represents the original purchase price of the property, including amounts
incurred subsequent to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1995 for Federal income tax purposes was
approximately $59,921,351.
(C) Property operated under ground lease; see Note 4(b).
</TABLE>
<TABLE>
SCHEDULE III
JMB/HAHN PDTC ASSOCIATES, L.P.
(AN UNCONSOLIDATED VENTURE OF CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
(D) Reconciliation of real estate owned:
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . . . . . $ 60,061,137 60,060,557 60,021,816
Additions during period . . . . . . . . . . . . . 39,186 580 38,741
------------ ------------ ------------
Balance at end of period. . . . . . . . . . . . . $ 60,100,323 60,061,137 60,060,557
============ ============ ============
(E) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . . . . . $ 12,018,826 10,011,970 8,008,698
Depreciation expense. . . . . . . . . . . . . . . 2,005,130 2,006,856 2,003,272
------------ ------------ ------------
Balance at end of period. . . . . . . . . . . . . $ 14,023,956 12,018,826 10,011,970
============ ============ ============
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with accountants during
fiscal years 1994 and 1995.
PART III
ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS
JMB Realty Corporation, a Delaware Corporation ("JMB") is the
Corporate General Partner and succeeded to all of the rights and
responsibilities of the prior Corporate General Partner. Substantially all
of the outstanding shares of JMB are owned by certain of its officers,
directors, members of their families and affiliates. The Corporate General
Partner has responsibility for all aspects of the Partnership's operations,
subject to the requirement that sales of real property must be approved by
the Associate General Partner of the Partnership, ABPP Associates, L.P.
Effective December 31, 1995 ABPP Associates, L.P. acquired all of the
partnership interests in Realty Associates-XVII, L.P., the Associate
General Partner, and elected to continue the business of Realty Associates-
XVII, L.P. ABPP Associates, L.P., an Illinois limited partnership with JMB
as its sole general partner, continues as the Associate General Partner.
The Associate General Partner shall be directed by a majority in interest
of its limited partners (who are generally officers, directors and
affiliates of JMB or its affiliates) as to whether to provide its approval
of any sale of real property (or any interest therein) of the Partnership.
The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services have been and may
in the future be provided to the Partnership or its investment properties
by affiliates of the General Partners, including property management
services and insurance brokerage services. In general, such services are
to be provided on terms no less favorable to the Partnership than could be
obtained from independent third parties and are otherwise subject to
conditions and restrictions contained in the Partnership Agreement. The
Partnership Agreement permits the General Partners and their affiliates to
provide services to, and otherwise deal and do business with, persons who
may be engaged in transactions with the Partnership, and permits the
Partnership to borrow from, purchase goods and services from, and otherwise
to do business with, persons doing business with the General Partners or
their affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.
The names, positions held and length of service therein of each
director and the executive and certain other officers of the Corporate
General Partner are as follows:
SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President and 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 5, 1996. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 5,
1996. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV
("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-
XVI"), JMB Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage
Partners, Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB
Income Properties, Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-X
("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB
Income Properties, Ltd.-XII ("JMB Income-XII") and JMB Income Properties,
Ltd.-XIII ("JMB Income-XIII"). JMB is also the sole general partner of the
associate general partner of most of the foregoing partnerships. Most of
the foregoing directors and officers are also officers and/or directors of
various affiliated companies of JMB including Arvida/JMB Managers, Inc.
(the general partner of Arvida/JMB Partners, L.P. ("Arvida")), Arvida/JMB
Managers-II, Inc. (the general partner of Arvida/JMB Partners, L.P.-II
("Arvida-II")) and Income Growth Managers, Inc. (the corporate general
partner of IDS/JMB Balanced Income Growth, Ltd. ("IDS/BIG")). Most of such
directors and officers are also partners, directly or indirectly, of
certain partnerships which are associate general partners in the following
real estate limited partnerships: the Partnership, Carlyle-VII, Carlyle-
IX, Carlyle-X, Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-
XV, Carlyle-XVI, JMB Income-VI, JMB Income-VII, JMB Income-IX, JMB
Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage
Partners, Mortgage Partners-II, Mortgage Partners-III, Mortgage
Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.
The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 58) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc.,
an affiliate of JMB that is a real estate investment trust in the business
of owning, managing and developing shopping centers. He is a Certified
Public Accountant.
Neil G. Bluhm (age 58) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 57) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Stuart C. Nathan (age 54) has been associated with JMB since July,
1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 62) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.
John G. Schreiber (age 49) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. He is also a director of Urban
Shopping Centers, Inc., an affiliate of JMB that is a real estate
investment trust in the business of owning, managing and developing
shopping centers as well as a director of a number of investment companies
advised or managed by T. Rowe Price Associates and its affiliates. Since
1994, Mr. Schreiber has also served as a Trustee of Amli Residential
Property Trust, a publicly-traded real estate investment trust that invests
in multi-family properties. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 46) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 48) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Gary Nickele (age 43) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Gailen J. Hull (age 47) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 60) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
Officers and the directors of the Corporate General Partner receive no
direct remuneration in such capacities from the Partnership. The
Partnership is required to pay a management fee to the Corporate General
Partner and the General Partners are entitled to receive a share of cash
distributions, and a share of profits or losses. Reference is made to Notes
5 and 7 for a description of such transactions, distributions and
allocations. In 1995, the General Partners received $22,812 of
distributions and the Corporate General Partner earned management fees of
$38,020. In addition, in 1995, the General Partners received previously
deferred management fees and their distributive shares of net cash flow
deferred from prior years in the aggregate amount of $503,803. The General
Partners received a share of Partnership loss for tax purposes aggregating
$180,256 in 1995. Such loss for tax purposes may benefit the General
Partners (or the partners thereof) to the extent such loss may be used to
offset taxable income from the Partnership or other sources.
The Partnership is permitted to engage in various transactions
involving the General Partners and their affiliates. The relationship of
the Corporate General Partner (and its directors and officers) to its
affiliates is set forth above in Item 10.
JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1995
aggregating $2,959 in connection with the provision of insurance coverage
for a real property investment of the Partnership. Such commissions are at
rates set by insurance companies for the classes of coverage provided.
An affiliate of the Corporate General Partner provided property
management services in 1995 for the 18 Central Street Building in East
Brunswick, New Jersey. In 1995, such affiliate earned property management
fees of $74,469 for such services, of which all were paid as of December
31, 1995.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses relating to
the administration of the Partnership and the acquisition and operation of
the Partnership's real property investments. In 1995, the Corporate
General Partner of the Partnership was due reimbursement for such
out-of-pocket expenses in the amount of $69,830, of which $35,911 were
unpaid as of December 31, 1995.
Additionally, the General Partners are also entitled to reimbursements
for administrative, legal and accounting services. Such costs for 1995
were $80,615 for these services, all of which were paid as of December 31,
1995.
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Corporate General Partner, its officers and directors, and the Associate General Partner own the
following Interests of the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership JMB Realty Corporation 14.11023 Interests (1) Less than 1%
Interests
Limited Partnership Corporate General 14.50836 Interests (1)(2) Less than 1%
Interests Partner, its officers
and directors, and
the Associate General
Partner as a group
<FN>
- ----------
(1) Includes 9.11023 Interests owned directly and 5 Interests owned by the Initial Limited Partner for which
JMB Realty Corporation, as its indirect majority shareholder, is deemed to have sole voting and investment power.
(2) Includes .39813 Interests owned by officers or their relatives for which an officer has sole investment
and voting power as to such Interests so owned.
No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, its affiliates or their management other
than those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) Exhibits.
3. Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, is hereby
incorporated by reference to Exhibit 3 to the Partnership's Report on Form
10-K for December 31, 1992 (File No. 0-17708) dated March 19, 1993.
4-A. Assignment Agreement set forth as Exhibit B to
the Prospectus, a copy of which is hereby incorporated by reference to
Exhibit 4-A to the Partnership's Report on Form 10-K for December 31, 1992
(File No. 0-17708) dated March 19, 1993.
4-B. through
4-D. Copies of documents relating to certain purchase
money notes secured by Minimax #2, Minimax #3 and 1801 West Belt are hereby
incorporated by reference to Exhibits 4-B through 4-D to the Partnership's
Form 10-K for December 31, 1992 (File No. 0-17708) dated March 19, 1993.
4-E. Copy of documents relating to the mortgage loan
secured by Pine Forest #17 are hereby incorporated by reference to Exhibit
4-E to the Partnership's Form 10-K for December 31, 1992 (File No. 0-17708)
dated March 19, 1993.
4-F. Copy of document relating to the conditional
consent letter agreement secured by the 18 Central Shopping Center are
hereby incorporated by reference to Exhibit 4-G to the Partnership's Form
10-K for December 31, 1992 (File No. 0-17708) dated March 19, 1993.
4-G. Copy of document relating to mortgage loan
secured by Silber #1 is hereby incorporated by reference to Exhibit 4-H to
the Partnership's Form 10-K for December 31, 1993 (File No. 0-17708) dated
March 25, 1994.
4-H. Copy of document relating to the modification of
the mortgage loan secured by 18 Central Shopping Center is hereby
incorporated by reference to Exhibit 4-I to the Partnership's Form 10-K for
December 31, 1993 (File No. 0-17708) dated March 25, 1994.
10-A. Copy of Agreement together with certain documents
relating to purchase of an interest in Palm Desert Town Center, Palm
Desert, California is hereby incorporated herein by reference to Post-
Effective Amendment No. 4 to the Partnership's Registration Statement on
Form S-11 (File No. 33-9607) dated February 28, 1989.
10-B. Copy of Agreement together with certain documents
relating to the purchase of the 18 Central Shopping Center, East Brunswick,
New Jersey is hereby incorporated herein by reference to Post-Effective
Amendment No. 7 to the Partnership's Registration Statement on Form S-11
(File No. 33-9607) dated July 31, 1989.
10-C. Copy of Purchase and Sale Agreement together with
the Lease Guarantee Agreement for Minimax #2, Minimax #3 and 1801 West Belt
are hereby incorporated by reference to Exhibit 10-E to the Partnership's
Form 10-K for December 31, 1992 (File No. 0-17708) dated March 19, 1993.
10-D. Copy of Purchase and Sale Agreement for the
acquisition of Pine Forest #17 is hereby incorporated by reference to
Exhibit 10-F to the Partnership's Form 10-K for December 31, 1992 (File No.
0-17708) dated March 19, 1993.
10-E. Copies of Limited Partnership Agreement and
Formation of Partnership Agreement relating to JMB/Warehouse Associates are
hereby incorporated by reference to Exhibit 10-G to the Partnership's Form
10-K for December 31, 1992 (File No. 0-17708) dated March 19, 1993.
10-F. Copy of Purchase and Sale Agreement for the
acquisition of Silber #1 is hereby incorporated by reference to Exhibit 10-
G to the Partnership's report for December 31, 1993 on Form 10-K (File No.
0-17708) dated March 25, 1994.
21. List of Subsidiaries.
24. Power of Attorney.
27. Financial Data Schedule.
Although certain additional long-term debt instruments of the
Registrant have been excluded from Exhibit 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) The following reports on Form 8-K were required or filed since
the beginning of the last quarter of the period covered by this report
None.
No annual report for the fiscal year 1995 or proxy material has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVII
By: JMB Realty Corporation
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Corporate General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 25, 1996
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1996
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1996
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1996
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1996
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 25, 1996
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 25, 1996
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1996
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------- ----
3. Amended and Restated Agreement
of Limited Partnership set forth
as Exhibit A to the Prospectus. Yes
4-A. Assignment Agreement, set forth
as Exhibit B to the Prospectus. Yes
4.B. through
4.D. Copies of documents relating to
the purchase money notes secured,
individually, by Minimax #2,
Minimax #3 and 1801 West Belt. Yes
4.E. Copies of documents relating to
the mortgage loan secured by
Pine Forest #17. Yes
4-F. Copy of document relating to the
conditional consent letter
agreement secured by the
18 Central Shopping Center Yes
4-G. Copy of document relating
to the mortgage loan secured
by Silber #1 Yes
4-H. Copy of document relating
to modification of the
mortgage loan secured by
18 Central Shopping Center. Yes
10-A. Copy of Agreement together
with certain documents relating
to purchase of an interest
in Palm Desert Town Center. Yes
10-B. Copy of Agreement together
with certain documents relating
to the purchase of the
18 Central Shopping Center. Yes
10-C. Copy of Purchase and Sale
Agreement together with
the Lease Guarantee Agreement
for Minimax #2, Minimax #3
and 1801 West Belt. Yes
10-D. Copy of Purchase and Sale
Agreement for the acquisition
of Pine Forest #17 Yes
10-E. Copies of Limited Partnership
Agreement and Formation of
Partnership Agreement relating
to JMB/Warehouse Associates. Yes
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------- ----
10-F. Copy of Purchase and Sale
Agreement and related documents
relating to the purchase of
Silber #1 Yes
21. List of Subsidiaries. No
24. Power of Attorney. No
27. Financial Data Schedule No
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a partner in the following joint ventures:
JMB/Hahn PDTC Associates, L.P., a Limited Partnership, which holds title to
Palm Desert Town Center located in Palm Desert, California; JMB/Warehouse,
a general partnership which holds title to Minimax 2, Minimax 3, 1801 West
Belt and Pine Forest #17 in Houston, Texas. The Partnership also owns a
50% interest in Carlyle/Palm Desert, Inc., a corporation that is a partner
in JMB/Hahn PDTC Associates, L.P.. Reference is made to Note 3 for a
summary 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 - XVII, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1995, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 5th day of February, 1996.
H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer
GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1995,
and any and all amendments thereto, the 5th day of February, 1996.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XVII, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1995, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 5th day of February, 1996.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
A. Lee Sacks
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1995,
and any and all amendments thereto, the 5th day of February, 1996.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<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, 1995 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-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,856,276
<SECURITIES> 0
<RECEIVABLES> 382,396
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,238,672
<PP&E> 26,232,837
<DEPRECIATION> 4,076,379
<TOTAL-ASSETS> 28,739,912
<CURRENT-LIABILITIES> 959,127
<BONDS> 16,895,434
<COMMON> 0
0
0
<OTHER-SE> 10,447,687
<TOTAL-LIABILITY-AND-EQUITY> 28,739,912
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<TOTAL-REVENUES> 4,251,580
<CGS> 0
<TOTAL-COSTS> 2,029,426
<OTHER-EXPENSES> 475,307
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,496,025
<INCOME-PRETAX> 250,822
<INCOME-TAX> 0
<INCOME-CONTINUING> 107,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,435
<EPS-PRIMARY> 3.01
<EPS-DILUTED> 3.01
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