SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1997 Commission file #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
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
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . 13
PART II OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 16
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 6,085,870 4,841,921
Interest, rents and other receivables . . . . . . . . . . . . . . . 21,966 101,050
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 203,422 182,529
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . 6,311,258 5,125,500
------------ -----------
Investment properties held for sale or disposition. . . . . . . . . . 8,583,315 20,565,034
------------ -----------
Investment in unconsolidated venture, at equity . . . . . . . . . . . 217,942 278,653
Note receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 75,764
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 154,876 421,992
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . 233,591 333,557
------------ -----------
$ 15,500,982 26,800,500
============ ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 9,763,884 9,985,385
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 121,454 97,709
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 69,161 278,965
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . -- 351,841
Other current liabilities . . . . . . . . . . . . . . . . . . . . . 302,500 --
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . 10,256,999 10,713,900
------------ -----------
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . -- 302,500
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . -- 63,395
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 6,916,941
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . 10,256,999 17,996,736
Venture partner's subordinated equity in venture. . . . . . . . . . . 42,249 81,293
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative cash distributions . . . . . . . . . . . . . . . . . (238,785) (235,934)
Cumulative net earnings (losses). . . . . . . . . . . . . . . . (282,731) (322,607)
------------ -----------
(501,516) (538,541)
------------ -----------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . 29,696,495 29,696,495
Cumulative cash distributions . . . . . . . . . . . . . . . . . (20,142,970) (12,889,180)
Cumulative net earnings (losses). . . . . . . . . . . . . . . . (3,850,275) (7,546,303)
------------ -----------
5,703,250 9,261,012
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . 5,201,734 8,722,471
------------ -----------
$ 15,500,982 26,800,500
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1997 1996 1997 1996
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . $ 430,404 1,055,317 1,192,057 1,952,400
Interest income . . . . . . . . . . . . . . . 100,370 56,188 143,713 125,278
----------- ---------- ---------- ----------
530,774 1,111,505 1,335,770 2,077,678
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . 207,911 369,265 420,883 731,892
Depreciation. . . . . . . . . . . . . . . . . -- 178,342 -- 356,685
Property operating expenses . . . . . . . . . 187,280 386,093 487,616 704,914
Professional services . . . . . . . . . . . . 27,796 20,620 62,863 53,620
Amortization of deferred expenses . . . . . . 27,366 42,742 79,593 85,484
Management fees to corporate general partner. 4,752 19,010 4,752 19,010
General and administrative. . . . . . . . . . 71,038 47,315 133,735 133,158
----------- ---------- ---------- ----------
526,143 1,063,387 1,189,442 2,084,763
----------- ---------- ---------- ----------
Operating earnings (loss). . . . . . . . 4,631 48,118 146,328 (7,085)
Partnership's share of operations
of unconsolidated ventures. . . . . . . . . . (35,612) (56,851) (60,711) (88,126)
Venture partner's share of
venture's operations. . . . . . . . . . . . . (159) (1,776) (1,706) (3,089)
----------- ---------- ---------- ----------
Net operating earnings (loss) . . . . . (31,140) (10,509) 83,911 (98,300)
Gain on sale of investment property,
net of venture partner's
share of gain of $37,708. . . . . . . . . . . -- -- 3,733,116 --
----------- ---------- ---------- ----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1997 1996 1997 1996
----------- ---------- ----------- ----------
Net earnings (loss) before
Partnership's share of
extraordinary item. . . . . . . . . . (31,140) (10,509) 3,817,027 (98,300)
Extraordinary item, net of venture
partner's share of $820 . . . . . . . . . . . -- -- (81,123) --
----------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . . . $ (31,140) (10,509) 3,735,904 (98,300)
=========== ========== ========== ==========
Net earnings (loss) per limited
partnership interest:
Net operating earnings. . . . . . . . $ (.88) (.29) 2.35 (2.76)
Net gain on sale of investment property -- -- 108.01 --
Net extraordinary item. . . . . . . . -- -- (2.35) --
----------- ----------- ---------- ----------
$ (.88) (.29) 108.01 (2.76)
=========== =========== ========== ==========
Cash distributions per
limited partnership
interest. . . . . . . . . . . . . . . $ 212.00 8.00 212.00 8.00
=========== =========== ========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,735,904 (98,300)
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 356,685
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . 79,593 85,484
Partnership's share of operations of unconsolidated ventures. . . . . 60,711 88,126
Venture partner's share of venture's operations, gain on sale or
disposition of investment property and extraordinary item . . . . . 38,594 3,089
Total gain on sale of investment property . . . . . . . . . . . . . . (3,770,824) --
Extraordinary item. . . . . . . . . . . . . . . . . . . . . . . . . . 81,943 --
Net asset decrease in the sale of investment property . . . . . . . . 67,999 --
Changes in:
Interest, rents and other receivables . . . . . . . . . . . . . . . . . 26,171 73,460
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,758) (3,473)
Note receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,152 25,859
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . 7,790 370
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,629 44,039
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,898) (1,226)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . (351,841) (165,775)
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (62,381) --
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . (76,216) 408,338
------------ -----------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (95,720) (42,898)
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (28,593) (30,502)
Cash proceeds from sale of investment property,
net of selling expenses . . . . . . . . . . . . . . . . . . . . . . . . 8,922,472 --
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . 8,798,159 (73,400)
------------ -----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996
------------ ------------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (143,714) (154,889)
Distributions to venture partner. . . . . . . . . . . . . . . . . . . . . (77,639) --
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . (7,253,790) (273,761)
Distributions to general partners . . . . . . . . . . . . . . . . . . . . (2,851) (11,406)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . (7,477,994) (440,056)
------------ -----------
Net increase (decrease) in cash and cash equivalents . . . . . . 1,243,949 (105,118)
Cash and cash equivalents, beginning of year. . . . . . . . . . . 4,841,921 4,856,276
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 6,085,870 4,751,158
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 630,687 733,118
============ ===========
Non-cash investing and financing activities:
Total sales proceeds from sale of investment property:
Total sales proceeds, net of selling expenses . . . . . . . . . . . . $ 16,053,577 --
Prepayment penalties. . . . . . . . . . . . . . . . . . . . . . . . . (81,943) --
Payoff of mortgage loans and accrued interest . . . . . . . . . . . . (7,049,162) --
------------ -----------
Cash proceeds from sale of investment properties. . . . . . . . . $ 8,922,472 --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1996 which are
included in the Partnership's 1996 Annual Report on Form 10-K (File No. 0-
17708) dated on March 21, 1997, as certain footnote disclosures which would
substantially duplicate those contained in such audited financial
statements have been omitted from this report. Capitalized terms used but
not defined in this quarterly report have the same meaning as in the
Partnership's 1996 Annual Report on Form 10-K.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell or dispose of such property and active marketing activity has
commenced or is expected to commence in the near term or the Partnership
has concluded that it may dispose of the property by no longer funding
operating deficits or debt service requirements of the property thus
allowing the lender to realize upon its security. In accordance with SFAS
121, any properties identified as "held for sale or disposition" are no
longer depreciated.
As of or during the year ended December 31, 1996, all of the
Partnership's remaining consolidated properties were classified as held for
sale or disposition. The net results of operations for the six months
ended June 30, 1997 and 1996 for consolidated properties classified as held
for sale or disposition or sold or disposed of during the past two years
were $335,196 and $134,254, respectively.
During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. As the Partnership's
capital structure only has general and limited partnership interests, the
Partnership does not expect any significant impact on its consolidated
financial statements upon adoption of these standards when required at the
end of 1997.
Certain amounts in the 1996 consolidated financial statements have
been reclassified to conform with the 1997 presentation.
TRANSACTIONS WITH AFFILIATES
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 their employees and certain of their officers, and for
other direct expenses relating to the administration of the Partnership and
<PAGE>
the operation of the Partnership's investments. Fees, commissions and
other expenses required to be paid by the Partnership (and its consolidated
venture) to the General Partners and their affiliates as of June 30, 1997
and for the six months ended June 30, 1997 and 1996 were as follows:
Unpaid at
June 30,
1997 1996 1997
------- ------ -------------
Property management fees. . . $32,127 33,628 --
Management fees to
corporate general partner. . 4,752 19,010 --
Insurance commissions . . . . 2,892 671 --
Reimbursement (at cost) for
out-of-pocket salary and
salary-related expenses
related to the on-site
personnel and for other
costs for the Partnership
and its investment
properties . . . . . . . . . 15,916 31,186 15,916
------- ------- ------
$55,687 84,495 15,916
======= ======= ======
18 CENTRAL SHOPPING CENTER
Occupancy at the shopping center decreased to 81% at June 30, 1997,
down from 92% at March 31, 1997 and December 31, 1996, due to the lease
expiration of a tenant occupying approximately 10,000 square feet. Of the
approximately 25,000 square feet (approximately 29% of the portion of the
center owned by the Partnership) originally scheduled to expire in 1997,
the Partnership has renewed one lease of approximately 15,000 square feet.
Such renewal is at a market rent which is significantly lower than the rent
the tenant was previously paying. The Partnership is actively pursuing
replacement tenants for the vacant space. However, rents achieved upon
renewal or releasing of the space are expected to be at market rates that
are significantly lower than the previous rents received for this space.
In March 1993, the Partnership modified and extended to December 1,
1997 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 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 current liabilities and other liabilities in the
accompanying Consolidated Financial Statements at June 30, 1997 and
December 31, 1996, respectively. 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 current liabilities and
other liabilities in the accompanying Consolidated Financial Statements at
June 30, 1997 and December 31, 1996, respectively. 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
<PAGE>
$750,000 and 47.5% in excess of such amount to 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, $137,395 has been deposited and no amounts have been funded from
this account). The lender has a first priority interest in the collateral
account. In addition, the property requires certain capital and major
repair projects, including roof repairs or replacement, to be completed
over the next several years. Certain of these costs are to be paid out of
the deposits in the collateral account noted above.
The first mortgage loan in the principal amount of approximately
$9,883,000 is scheduled to mature in December 1997. The lender has
informed the Partnership that the lender is not willing to modify or extend
the loan. The Partnership believes that the value of the shopping center
is less than the mortgage loan, and the Partnership does not intend to
expend any additional funds of its own on the property. Accordingly, the
Partnership has deferred any capital improvements and major repair projects
for the shopping center. The Partnership expects that it will negotiate a
transfer of its ownership interest to the lender or that the lender will
seek to realize upon its security for the mortgage loan upon maturity in
December 1997. In either event, the Partnership would no longer have an
ownership interest in the property. Upon such transfer or disposition, due
to the prior $1,103,533 provision for value impairment recorded in
September 1996 for financial reporting purposes, the Partnership would
recognize an insignificant amount of gain for financial reporting purposes
and a loss of approximately $2,000,000 for Federal income tax purposes with
no distributable proceeds.
PALM DESERT TOWN CENTER
The Partnership received (through a joint venture with an
affiliate) its specified cash return relating to Palm Desert Town Center,
which was being funded in part by the unaffiliated venture partner through
December 31, 1994 pursuant to the terms of the applicable joint venture
agreement. Since the unaffiliated venture partner's funding obligation
expired at the end of 1994, the Partnership's share of cash is dependent
upon the operations of the property. Occupancy at the portion of the
shopping center in which the Partnership owns an interest decreased to 86%
at June 30, 1997. Sales at the center have been negatively impacted
during the last several quarters by new competition in the center's trade
area. The increased competition has resulted in lower effective rents upon
re-leasing of space. 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 addition, the property's operations have
been affected by tenant bankruptcies during the past year. The property is
operating at an approximately break-even level. The Partnership is
discussing the possibility of the sale of its interest in the joint venture
to the unaffiliated venture partner. Accordingly, the property has been
was classified as held for sale or disposition as of July 1, 1997, and
therefore, will not be subject to continued depreciation.
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 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 six months ended June 30, 1997 and 1996 was $547,716 and
$652,366, respectively.
The joint venture continues to consider a possible expansion of the
mall and restructuring of the ground lease and mortgage loan. In the event
that the joint venture decides to proceed, the Partnership may utilize a
portion of its available funds to pay for its share of costs. However, as
discussed above, the Partnership is also discussing with the unaffiliated
venture partner the possibility of a sale of the Partnership's interest in
the joint venture.
<PAGE>
HOUSTON INDUSTRIAL PROPERTIES
On March 28, 1997, the joint venture sold the Houston Industrial
Properties to an unaffiliated third party for $16,350,000 (before selling
expenses of approximately $296,000). Approximately $7,131,000 of sales
proceeds were utilized to retire the mortgage debt including a prepayment
penalty of approximately $81,900 (of which the Partnership's share of
approximately $81,000 is included as an extraordinary item in the
Partnership's 1997 consolidated financial statements). The sale resulted
in approximately $3,771,000 of gain for financial reporting purposes in
1997 (of which approximately $3,733,000 was allocated to the Partnership).
The joint venture expects to recognize a gain of approximately $3,678,000
for Federal income tax purposes in 1997 (of which approximately $3,641,000
will be allocated to the Partnership).
In connection with the sale of these properties, as is customary in
such transactions, the joint venture agreed to certain representations and
warranties, with a stipulated survival period to December 15, 1997.
Although it is not expected, the joint venture may ultimately have some
liability under such representations and warranties. In this regard, the
joint venture will not be liquidated until after the expiration of the
above-mentioned survival period and after the distribution of any remaining
funds to the venture partners.
INVESTMENT IN UNCONSOLIDATED VENTURE
Summary financial information for Palm Desert for the six months ended
June 30, 1997 and 1996 is as follows:
1997 1996
---------- ----------
Total income . . . . . . $5,040,523 5,277,655
Expenses applicable to
operating income . . . 5,623,305 6,123,601
---------- ----------
Net loss . . . . . . . . $ 582,782 845,946
========== ==========
Partnership's share
of loss. . . . . . . . $ 60,711 88,126
========== ==========
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1997
and for the three and six months ended June 30, 1997 and 1996.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investments.
On March 28, 1997, the joint venture through which the Partnership
owned an interest in the Houston Industrial Properties sold the properties
to an unaffiliated third party for $16,350,000. The Partnership made a
distribution to the Holders of Interests of $210 per Interest from the net
proceeds of this sale in May 1997. Since the subordination requirements of
the Partnership Agreement are not expected to be attained, no portion of
these sales proceeds were distributed to the General Partners.
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 or disposed of in the near term), barring unforeseen
economic developments. Although the Partnership does not expect to realize
any proceeds from a disposition of the 18 Central Shopping Center, it does
expect to realize net proceeds from the sale of its interest in Palm Desert
Town Center, its other remaining real estate investment. However,
aggregate sale distributions received by Holders of Interests over the
entire term of the Partnership will be significantly less than their
original investment of $1,000 per Interest. In connection with a sale or
other disposition (including a transfer of title to a lender) of the 18
Central Shopping Center, the Holders of Interests will be allocated gain
for Federal income tax purposes regardless of whether any proceeds are
distributable from such sale or other disposition.
As of June 30, 1997, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $6,086,000. Such cash and cash
equivalents are available for capital improvements and other working
capital requirements.
In May 1997, the Partnership made a distribution to the Holders of
Interests of cash generated from operations of $2.00 per Interest. The
primary source of the Partnership's cash flow from operations in recent
years has been from the Houston Industrial Properties. As a result of the
sale of the Houston Industrial Properties as noted above, the Partnership
does not anticipate making any further distributions of cash generated from
operations on a current basis. The Partnership currently plans to retain
the balance of cash and investments it holds for the working capital
requirements of the Partnership. The joint venture in Palm Desert Town
Center is currently not distributing cash flow to the Partnership or other
venture partners as the joint venture is reviewing redevelopment scenarios
which could require substantial capital investments. Future distributions
from sales or property operations will depend upon a combination of
operating cash flow from the Palm Desert Town Center and the longer term
capital requirements of the Partnership as well as the terms of any sale of
the Palm Desert Town Center (or the Partnership's interest therein). Any
funds so retained by the Partnership which are not ultimately used for
working capital purposes would be available for future distributions.
<PAGE>
RESULTS OF OPERATIONS
Significant fluctuations in the accompanying consolidated financial
statements are due to the sale of the Houston Industrial Properties in
March 1997.
The increase in cash and cash equivalents at June 30, 1997 as compared
to December 31, 1996 is primarily due to the retention of a portion of the
sales proceeds received from the sale of the Houston Industrial Properties
pending the expiration of the period for representations and warranties
made in connection with the sale, as discussed in the Notes to Consolidated
Financial Statements.
The increase in other current liabilities, and the corresponding
decrease in other liabilities, at June 30, 1997 as compared to December 31,
1996 is due to the reclassification of the lender's additional interest and
loan extension fee on the property secured by the 18 Central Shopping
Center as current due to the scheduled maturity of the loan in December
1997.
The increase in interest income for the three and six months ended
June 30, 1997 as compared to the three and six months ended June 30, 1996
is primarily due to a higher average cash balance invested by the
Partnership in 1997.
The decrease in depreciation expense for the three and six months
ended June 30, 1997 as compared to the three and six months ended June 30,
1996 is due to the fact that the Partnership classified both the 18 Central
Shopping Center and the Houston Industrial Properties as held for sale or
disposition and therefore suspended depreciation of these assets as of
December 31, 1996 and October 1, 1996, respectively.
The decrease in management fees to corporate general partner for the
three and six months ended June 30, 1997 as compared to the three and six
months ended June 30, 1996 is due to a decrease in operating distributions
paid by the Partnership.
The gain on sale of investment property, net of venture partner's
share, for the six months ended June 30, 1997 is due to the sale of the
Houston Industrial Properties in March 1997.
The extraordinary item reported for the six months ended June 30, 1997
represents the Partnership's share of pre-payment penalties resulting from
the extinguishment of debt related to the 1997 sale of the Houston
Industrial Properties.
<PAGE>
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties owned during 1997:
<CAPTION>
1996 1997
-------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Palm Desert Town Center
Palm Desert, California. . . 91% 92% 88% 89% 88% 86%
2. 18 Central Shopping Center
East Brunswick, New Jersey . 92% 92% 92% 92% 92% 81%
3. Minimax #2,
Houston, Texas . . . . . . . 100% 100% 100% 100% N/A N/A
4. Minimax #3,
Houston, Texas . . . . . . . 100% 100% 100% 100% N/A N/A
5. 1801 West Belt
Houston, Texas . . . . . . . 100% 100% 100% 100% N/A N/A
6. Pine Forest #17
Houston, Texas . . . . . . . 100% 100% 100% 100% N/A N/A
7. Silber #1
Houston, Texas . . . . . . . 93% 93% 100% 100% N/A N/A
<FN>
- ----------
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3-A. The Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus and the Assignment
Agreement set forth as Exhibit B to the Prospectus, copies of which are
hereby incorporated by reference to Exhibit 3 and Exhibit 4-A to the
Partnership's report for December 31, 1992 on Form 10-K (File No. 0-17708)
dated March 19, 1993.
3-B. Acknowledgement of rights and duties of the General
Partners of the Partnership between ABPP Associates, L.P. (a successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 are hereby incorporated by reference to Exhibit 3-B
to the Partnership's Report for September 30, 1996 on Form 10-Q as amended
(File No. 0-17708) dated November 8, 1996.
4-A. The Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus and the Assignment
Agreement set forth as Exhibit B to the Prospectus, copies of which are
hereby incorporated by reference to Exhibit 3 and Exhibit 4-A to the
Partnership's report for December 31, 1992 on Form 10-K (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
report for December 31, 1992 on Form 10-K (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 report for December 31, 1992 on Form 10-K (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-F to the Partnership's report for
December 31, 1992 on Form 10-K (File No. 0-17708) dated March 19, 1993.
4-G. Copy of documents relating to mortgage loan secured by
Silber #1 is hereby incorporated by reference to Exhibit 4-G to the
Partnership's report for December 31, 1993 on Form 10-K (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-H to the Partnership's report for December 31,
1993 on Form 10-K (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.
<PAGE>
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-C to the Partnership's
report for December 31, 1992 on Form 10-K (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-D to the Partnership's report for December 31, 1992 on Form 10-K
(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-E to the Partnership's report for
December 31, 1992 on Form 10-K (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.
10-G. Sale documents relating to the contract for sale by
the Partnership of its interest in the Houston Industrial Properties are
hereby incorporated by reference to the Partnership's report for March 28,
1997 on Form 8-K (File No. 0-17708) dated April 11, 1997.
27. Financial Data Schedule
(b) The following report on Form 8-K was filed since the beginning
of the last quarter of the period covered by this report.
The Partnership's Report on Form 8-K (File No. 0-17708)
for March 28, 1997 (describing the sale of its indirect interest in the
Houston Industrial Properties) was filed. This report was dated April 11,
1997 and includes a discussion of the sale (Item 2) and narrative pro forma
financial information with respect to the sale (Item 7).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: August 8, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: August 8, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,085,870
<SECURITIES> 0
<RECEIVABLES> 225,388
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,311,258
<PP&E> 8,583,315
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,500,982
<CURRENT-LIABILITIES> 10,256,999
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 5,201,734
<TOTAL-LIABILITY-AND-EQUITY>15,500,982
<SALES> 1,192,057
<TOTAL-REVENUES> 1,335,770
<CGS> 0
<TOTAL-COSTS> 567,209
<OTHER-EXPENSES> 201,350
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 420,883
<INCOME-PRETAX> 146,328
<INCOME-TAX> 0
<INCOME-CONTINUING> 83,911
<DISCONTINUED> 3,733,116
<EXTRAORDINARY> (81,123)
<CHANGES> 0
<NET-INCOME> 3,735,904
<EPS-PRIMARY> 108.01
<EPS-DILUTED> 108.01
</TABLE>
