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, 1997 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
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . 7
Item 4. Submission of Matters to a
Vote of Security Holders. . . . . . . . 7
PART II
Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters . . . . 7
Item 6. Selected Financial Data . . . . . . . . 8
Item 7. Management's Discussion and Analysis
of Financial Condition and
Results of Operations . . . . . . . . . 12
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk . . . . . 16
Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . 17
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . 41
PART III
Item 10. Director and Executive Officers . . . . 41
Item 11. Executive Compensation. . . . . . . . . 44
Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . 45
Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . 46
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . 46
SIGNATURES . . . . . . . . . . . . . . . . . . . . 49
i
<PAGE>
PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report. Capitalized
terms used herein, but not defined, have the same meanings as used in the
Notes.
The registrant, Carlyle Real Estate Limited Partnership-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 offering closed on
December 29, 1989. Subsequent to admittance to the Partnership, no holder
of Interests (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
affairs of the Partnership are expected to be wound up no later than
December 31, 1999 (sooner if the remaining property or the Partnership's
interest therein is sold in the near term), barring unforeseen economic
developments.
The Partnership has made the real property investments set forth in
the following table:
<PAGE>
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1997,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASECAPITAL 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)
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)
(b)(c)(d)
3. 18 Central
Shopping Center
East Brunswick,
New Jersey. . . 85,772 7/27/89 11/14/97 fee ownership of land
sq.ft. and improvements (f)
g.l.a.
4. Minimax 2
Industrial Property
Houston, Texas. 91,156 1/21/92 3/28/97 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(g)
5. Minimax 3 Industrial
Property
Houston, Texas. 128,270 1/21/92 3/28/97 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(g)
<PAGE>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1997,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASECAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
- ---------------------- ---------- ------------------------------ ---------------------
6. 1801 West Belt
Industrial Property
Houston, Texas. 110,621 1/21/92 3/28/97 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(g)
7. Pine Forest #17
Industrial Property
Houston, Texas. 170,558 1/21/92 3/28/97 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(g)
8. Silber #1 Industrial
Property
Houston, Texas. 184,500 2/26/93 3/28/97 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(g)
<PAGE>
<FN>
- ---------------
(a) The computation of this percentage for the remaining property
held at December 31, 1997 does not include amounts invested from sources
other than the original net proceeds of the public offering as described
above and in Item 7.
(b) Reference is made to the Notes and Schedule III of Item 8 filed
with this annual report for the current outstanding principal balances and
a description of the long-term mortgage indebtedness secured by the
Partnership's remaining real property investment.
(c) Reference is made to the Notes for a description of the joint
venture partnership or partnerships through which the Partnership has made
this real property investment.
(d) Reference is made to the Notes 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 filed with this annual report for further information
concerning real estate taxes and depreciation.
(f) The Partnership transferred title to the lender via a deed in
lieu of foreclosure. Reference is made to the Notes for a further
description of such event.
(g) The property has been sold. Reference is made to the Notes for
a further description of the sale of such real property investment.
</TABLE>
<PAGE>
The Partnership's remaining real property investment is subject to
competition from similar types of properties (including possibly properties
owned by affiliates of the General Partners or properties owned by certain
of the joint venture partners) in the vicinity in which it is located.
Such competition is generally for the retention of existing tenants.
Additionally, the Partnership is in competition for new tenants. Reference
is made to Item 7 below for a discussion of competitive conditions and
future renovation and capital improvement plans of the Partnership and its
remaining investment property. Approximate occupancy levels for the
properties owned during the past year 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 property in its market 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, the investment property held at December 31, 1997 is
adequately insured. Although there is earthquake insurance coverage for a
portion of the value of the Partnership's investment property, the
Corporate General Partner does not believe that such coverage for the
entire replacement cost of the investment property is available on economic
terms.
On March 28, 1997, the Partnership, through JMB/Warehouse, sold the
land and related improvements of the Houston Industrial Properties and
Silber #1. Reference is made to the Notes for a further description of the
transaction.
On November 14, 1997, the Partnership transferred title to the lender,
via a deed in lieu of foreclosure, to the 18 Central Shopping Center.
Reference is made to the Notes for a further description of the
transaction.
The Partnership currently has no employees.
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 or owned 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 1997 and 1996 for the Partnership's investment properties owned
during fiscal year 1997:
<PAGE>
<TABLE>
<CAPTION>
1996 1997
--------------------------------------------------
Principal At At At At At At At At
Business 3/31 6/30 9/3012/31 3/31 6/30 9/30 12/31
---------- ---- ---- --------- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Palm Desert Town
Center
Palm Desert,
California. . . . . . Retail 91% 92% 88% 89% 88% 86% 87% 88%
2. 18 Central Shopping
Center
East Brunswick,
New Jersey . . . . . Retail 92% 92% 92% 92% 92% 81% 81% N/A
3. Minimax 2,
Houston, Texas . . . Warehouse 100% 100% 100% 100% N/A N/A N/A N/A
4. Minimax 3,
Houston, Texas . . . Warehouse 100% 100% 100% 100% N/A N/A N/A N/A
5. 1801 West Belt
Houston, Texas . . . Warehouse 100% 100% 100% 100% N/A N/A N/A N/A
6. Pine Forest #17
Houston, Texas . . . Warehouse 100% 100% 100% 100% N/A N/A N/A N/A
7. Silber #1
Houston, Texas . . . Warehouse 93% 93% 100% 100% N/A N/A N/A N/A
- ----------
<FN>
Reference is made to Item 6, Item 7 and to the Notes for further information regarding property occupancy,
competitive conditions and tenant leases at the Partnership's investment properties.
An "N/A" indicates that the property was not owned by the Partnership or its joint venture at the end of the
quarter.
</TABLE>
<PAGE>
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 1996 and 1997.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTEREST
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1997, there were 8,483 record Holders of the
34,215.98876 Interests outstanding in 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, which may be granted or withheld in its
sole and absolute discretion. The rights of a transferee of Interests who
does not become a substituted Limited Partner will be limited to the rights
to receive his share of profits or losses and cash distributions from the
Partnership, and such transferee will not be entitled to vote such
Interests or have other rights of a Limited Partner. No transfer will be
effective until the first day of the next succeeding calendar quarter after
the requisite transfer form satisfactory to the Corporate General Partner
has been received by the Corporate General Partner. The transferee
consequently will not be entitled to receive any cash distributions or any
allocable share of profits or losses for tax purposes until such next
succeeding calendar quarter. Profits or losses from operations of the
Partnership for a calendar year in which a transfer occurs will be
allocated between the transferor and the transferee based upon the number
of quarterly periods in which each was recognized as the Holder of the
Interests, without regard to the results of the Partnership's operations
during particular quarterly periods and without regard to whether cash
distributions were made to the transferor or transferee. Profits or losses
arising from the sale or other disposition of Partnership properties will
be allocated to the recognized Holder of the Interests as of the last day
of the quarter in which the Partnership recognized such profits or losses.
Cash distributions to a Holder of Interests arising from the sale or other
disposition of Partnership properties will be distributed to the recognized
Holder of the Interests as of the last day of the quarterly period with
respect to which such distribution is made.
Reference is made to Item 6 below for a discussion of cash distribu-
tions made to the Holders of Interests.
Reference is made to the Notes for a discussion of the provisions of
the Partnership Agreement relating to cash distributions.
Reference is made to Item 7 for a discussion of unsolicited tender
offers received from unaffiliated third parties.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
DECEMBER 31, 1997, 1996, 1995, 1994 and 1993
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1997 1996 1995 1994 1993
------------ ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total income . . . . .$ 2,078,870 4,062,885 4,251,580 4,061,678 3,987,191
============ ========== ========== ========== ==========
Earnings (loss) before
gain on sale or dis-
position of investment
properties and extra-
ordinary items. . . .$ 216,576 (1,154,936) 107,435 (2,642,263) 482,781
Partnership's share of
gains on sale of invest-
ment properties includ-
ing property held by
unconsolidated venture 3,764,844 -- -- -- 261,656
Partnership's share of
extraordinary items . 940,668 -- -- -- --
------------ ---------- ---------- ---------- ----------
Net earnings (loss). .$ 4,922,088 (1,154,936) 107,435 (2,642,263) 744,437
============ ========== ========== ========== ==========
Net earnings (loss)
per limited partner
Interest (b):
Earnings (loss) before
gain on sale or
disposition of
investment properties
and extraordinary
items . . . . . . .$ 6.08 (32.40) 3.01 (74.12) 13.55
Partnership's share
of gains on sale
of investment
properties including
property held by
unconsolidated
venture . . . . . . 108.93 -- -- -- 7.57
Partnership's share
of extraordinary
items . . . . . . . 27.21 -- -- -- --
------------ ---------- ---------- ---------- ----------
$ 142.22 (32.40) 3.01 (74.12) 21.12
============ ========== ========== ========== ==========
<PAGE>
1997 1996 1995 1994 1993
------------ ---------- ----------- ---------- ----------
Total assets . . . . .$ 6,427,918 26,800,500 28,739,912 30,077,627 38,601,350
Long-term debt . . . .$ -- 6,916,941 16,895,434 17,219,023 17,509,219
Cash distributions
per Interest (c). . .$ 212.00 16.00 20.00 166.00 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.
(c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each Holder'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 Holders of Interests
subsequent to the close of the public offering have not resulted in taxable income to such Holders of Interests
and have therefore represented a return of capital.
</TABLE>
<PAGE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1997
<CAPTION>
Property
- --------
Palm Desert
Town Center a) The gross leasable area ("GLA") occupancy
rate and average base rent per square foot
as of December 31 for each of the last five
years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>
1993. . . . . 97% $18.90
1994. . . . . 97% 19.66
1995. . . . . 93% 21.39
1996. . . . . 89% 20.96
1997. . . . . 88% 21.47
<FN>
(1) Average base rent per square foot is based on GLA occupied
as of December 31 of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square FeetPer Annum Expiration DateRenewal Option(s)
------------------- -------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
None - No single tenant
occupies more than 10%
of the total gross
leasable area of the
building.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
c) The following table sets forth certain
information with respect to the expiration
of leases for the next ten years at the
Palm Desert Town Center:
Annualized Percent of
Number of Approx. Total Base Rent Total 1997
Year Ending Expiring GLA of Expiringof Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- -------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1998 14 25,021 $ 683,574 9.71%
1999 10 29,242 625,779 8.90%
2000 4 8,664 264,599 3.76%
2001 9 23,943 701,290 9.97%
2002 4 6,910 201,427 2.86%
2003 10 14,756 607,062 8.63%
2004 16 45,143 951,614 13.53%
2005 18 60,462 1,411,183 20.06%
2006 10 16,910 596,247 8.48%
2007 5 26,997 591,774 8.41%
<FN>
(1) Excludes leases that expire in 1998 for which
renewal leases or leases with replacement tenants
have been executed as of March 1, 1998.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the public offering as described in Item 1, the
Partnership had approximately $29,696,000 (after deducting selling expenses
and other offering costs) with which to make investments in income-
producing commercial and residential real property, to pay legal fees and
other costs (including acquisition fees) related to such investments and
for working capital reserves. A portion of the proceeds was utilized to
acquire the properties, described in Item 1 above.
During the second quarter of 1996, some of the Holders of Interests in
the Partnership received from an unaffiliated third party an unsolicited
offer to purchase up to 4.61% of the Interests in the Partnership at $160
per Interest. The Partnership recommended against acceptance of this offer
on the basis that, among other things, the offer price was inadequate. In
June 1996 such offer expired. Commencing in the third quarter of 1997 some
of the Holders of Interests in the Partnership received from unaffiliated
third parties an unsolicited offer to purchase up to 4.9% of the
outstanding Interests in the Partnership at $100 per Interest. Such offer
has been extended from time to time and is currently scheduled to expire in
early April 1998. The Special Committee recommended against acceptance of
each of these offers on the basis that, among other things, the offer price
was inadequate. As of the date of this report, the Partnership is aware
that 2.89% of the Interests have been purchased by all such unaffiliated
third parties either pursuant to such tender offers or through negotiated
purchases. It is possible that other offers for Interests may be made in
the future, although there is no assurance that any such offer will be
made, the terms of any such offer or whether any such offer will be
consummated, amended or withdrawn. The board of directors of JMB Realty
Corporation ("JMB"), the corporate general partner of the Partnership, has
established a special committee (the "Special Committee") consisting of
certain directors of JMB to deal with all matters relating to tender offers
for Interests in the Partnership, including any and all responses to such
tender offers. The Special Committee has retained independent counsel to
advise it in connection with any potential tender offers for Interests and
has retained Lehman Brothers Inc. as financial advisor to assist the
Special Committee in evaluating and responding to any additional potential
tender offers for Interests.
At December 31, 1997, the Partnership had cash and cash equivalents of
approximately $6,115,000. Such cash and cash equivalents are available for
capital improvements and working capital requirements. The Partnership and
its unconsolidated venture have currently budgeted in 1998 approximately
$177,000 for tenant improvements and other capital expenditures. The
Partnership's share of such items in 1998 is currently budgeted to be
approximately $19,000. Actual amounts expended in 1998 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 and whether the Palm Desert joint venture
proceeds with a possible expansion and restructuring. In addition, the
Partnership has entered into an agreement with the unaffiliated venture
partner in the Palm Desert joint venture pursuant to which the unaffiliated
joint venture has the option to purchase the Partnership's interest in the
Palm Desert joint venture as described below. In the event of a sale of
its interest pursuant to the exercise of such option, the Partnership would
not participate in, or be required to pay a share of the costs of, an
expansion of the mall and restructuring of the ground lease and mortgage
loan for Palm Desert.
The source of capital for tenant improvements and other capital
expenditures and for both short-term and long-term future liquidity and
distributions is expected to be through cash generated by the Partnership's
investment property, and from the sale of the property (or the
Partnership's interest therein). In such regard, reference is made to the
Partnership's property-specific discussions below.
<PAGE>
The primary source of the Partnership's cash flow from operations in
recent years has been from the Houston Industrial Properties and Silber #1.
As a result of the 1997 sale of the Houston Industrial Properties and
Silber #1 as noted below, 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. Future distributions of the Partnership will depend upon the
capital requirements of the Partnership and the joint venture as well as
the terms of any sale of the Palm Desert Town Center (or the Partnership's
interest therein). Any working capital reserves of the Partnership which
are not ultimately used for working capital purposes would be available for
future distributions.
The venture's mortgage obligation is a separate non-recourse mortgage
loan secured individually by the investment property and not a recourse
obligation of the Partnership, and the Partnership is 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.
PALM DESERT TOWN CENTER
The Partnership received 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 flow from the joint venture has been dependent upon the
operations of the property. Occupancy at the portion of the shopping
center in which the Partnership owns an interest decreased to 88% at
December 31, 1997, down from 89% at December 31, 1996. 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. The property has been producing cash flow.
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 expects that it
would utilize a portion of its available funds to pay for its share of
costs. However, the Partnership is also discussing with the unaffiliated
venture partner the possibility of a sale of the Partnership's interest in
the joint venture.
In this regard, the Partnership and Carlyle-XVI entered into an
agreement with the unaffiliated venture partner, effective January 1, 1998,
pursuant to which the Partnership and Carlyle-XVI granted the unaffiliated
venture partner an option to acquire their interests in the joint venture.
Pursuant to such option, the unaffiliated venture partner has the right
(but not the obligation) to purchase all (but not less than all) of the
Partnership's and Carlyle-XVI's interests in the joint venture by giving
notice of its exercise of the option during the term of the option, which
may extend through July 15, 1998. The aggregate purchase price for the
interests is $7,000,000. In consideration for the option, the unaffiliated
venture partner is required to pay $58,333 for each month of the option
term. The Partnership and Carlyle-XVI will share the consideration for the
<PAGE>
option and, if applicable, the purchase price in proportion to their
respective capital contributions to the joint venture (i.e., approximately
14.2% for the Partnership and approximately 85.8% for Carlyle-XVI).
Concurrently with the execution of the option agreement, the joint venture
made a distribution to the Partnership and Carlyle-XVI in the aggregate
amount of approximately $740,000 (of which the Partnership's share was
approximately $105,000), which represents undistributed net cash flow of
the joint venture through the end of 1997. All other funds and net cash
flow of the joint venture during the term of the option are to be held by
the joint venture for its use, and if the sale of the Partnership's and
Carlyle-XVI's interests closes pursuant to the option agreement, such funds
and net cash flow will inure to the benefit of the unaffiliated venture
partner. The unaffiliated venture partner agreed to pay deficits of the
joint venture incurred in the ordinary course of its business that arise or
accrue during the term of the option, to the extent that the joint
venture's funds and net cash flow are insufficient to cover such deficits.
The property is expected to operate near the break-even level during the
term of the option. In general, the Partnership, Carlyle-XVI and the
unaffiliated venture partner agreed not to sell or refinance the Palm
Desert Town Center or engage in other actions outside the ordinary course
of the joint venture's business, not to make any distribution of the joint
venture's funds to its partners except for the distribution to the
Partnership and Carlyle-XVI described above, and, unless consented to by
all of the partners in the joint venture, not to amend or modify existing
leases and other contracts, and not to enter into new leases or agreements,
affecting the property during the term of the option. The unaffiliated
venture partner may terminate the option by giving notice of termination to
the Partnership and Carlyle-XVI, and under certain extraordinary
circumstances involving a termination of the option, the Partnership and
Carlyle-XVI may be obligated to refund the option consideration. In the
event such a sale does occur, the Partnership and Carlyle-XVI would not
participate in, or be required to pay a share of the costs of, an expansion
of the mall and restructuring of the ground lease and mortgage loan for the
joint venture. The Partnership could thereafter distribute a majority of
the funds it currently holds as working capital reserves for the possible
payment of its share of such costs. There is no assurance that the option
will be exercised or that a sale of the Partnership's and Carlyle-XVI's
interest in the joint venture will occur. During the term of the option,
the unaffiliated venture partner is entitled to pursue a possible expansion
of the mall and restructuring of the ground lease and mortgage loan on its
own, provided that no contracts are made effective prior to the exercise of
the option and the close of escrow and no liability accrues to the
Partnership or Carlyle-XVI from the unaffiliated venture partner's actions.
18 CENTRAL SHOPPING CENTER
The first mortgage loan in the amount (including accrued interest) of
approximately $9,800,000 was scheduled to mature in December 1997. The
lender had informed the Partnership that the lender was not willing to
modify or extend the loan. The Partnership believed that the value of the
shopping center was less than the mortgage loan, and accordingly, the
Partnership had deferred any capital improvements and major repair projects
for the shopping center. On November 14, 1997, the Partnership transferred
title to the property to the lender in full satisfaction of the mortgage
loan. Reference is made to the Notes for a further description of the
transfer.
HOUSTON INDUSTRIAL PROPERTIES
On March 28, 1997, the joint venture, JMB/Warehouse, sold the land and
related improvements of the Houston Industrial Properties and Silber #1 for
$16,350,000. Reference is made to the Notes for a further description of
the sale.
<PAGE>
GENERAL
There are certain risks associated with the Partnership's remaining
investment (made through a joint venture) including the possibility that
the Partnership's joint venture partner might become unable or unwilling to
fulfill its financial or other obligations, or that such joint venture
partner may have economic or business interests or goals that are
inconsistent with those of the Partnership.
Due to existing market conditions, the Partnership has held its
remaining investment property longer than originally anticipated in an
effort to maximize the return of their investment to the Holders of
Interests. However, after reviewing the remaining property and the
marketplace in which it operates, the General Partners of the Partnership
expect to be able to conduct an orderly liquidation of its remaining
investment property 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 remaining property or the Partnership's interest therein is
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 investment property, aggregate distributions of
sale and refinancing proceeds received by the Holders of Interests over the
entire term of the Partnership will be significantly less than their
original investment of $1,000 per Interest.
RESULTS OF OPERATIONS
Significant fluctuations in the accompanying consolidated financial
statements not otherwise described below are primarily due to the sale of
the Houston Industrial Properties and Silber #1 in March 1997 and the
transfer of title to the 18 Central Shopping Center to the lender in
November 1997.
The increase in cash and cash equivalents at December 31, 1997 as
compared to December 31, 1996 is primarily due to the retention of a
portion of sales proceeds received from the 1997 sale of the Houston
Industrial Properties.
The increase in interest income for the year ended December 31, 1997
as compared to December 31, 1996 and the decrease in interest income for
the year ended December 31, 1996 as compared to the year ended December 31,
1995 is primarily due to the fluctuation in the average cash balance
invested by the Partnership in those years.
The decrease in depreciation expense for the year ended December 31,
1997 as compared to the year ended December 31, 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 depreciation expense for the year ended December 31,
1996 as compared to the year ended December 31, 1995 is primarily due to
the provisions for value impairment recorded in 1996 which reduced the net
carrying value of the 18 Central Shopping Center.
The increase in property operating expenses for the year ended
December 31, 1996 as compared to the year ended December 31, 1995 is
primarily due to recording a reserve for certain tenant accounts receivable
at the 18 Central Shopping Center and an increase in snow removal costs
resulting from severe winter weather experienced at the 18 Central Shopping
Center property, a portion of which was recorded as a special snow removal
assessment which was billed and collected from the tenants in 1996.
The decrease in management fees to corporate general partner for the
year ended December 31, 1997 as compared to the years ended December 31,
1996 and 1995 is due to a decrease in operating distributions paid by the
Partnership.
<PAGE>
The provision for value impairment in 1996 is due to recording a
provision to reduce the carrying value of the 18 Central Shopping Center.
The increase in the Partnership's share of operations of
unconsolidated venture for the year ended December 31, 1997 as compared to
the year ended December 31, 1996 and 1995 is primarily due to the Palm
Desert property being classified as held for sale or disposition as of
July 1, 1997, and therefore no longer subject to continued depreciation.
The gain on sale of investment property, net of venture partner's
share, for the year ended December 31, 1997 is due to the sale of the
Houston Industrial Properties and Silber #1 in March 1997.
The extraordinary items reported for the year ended December 31, 1997
represents the Partnership's share of pre-payment penalties resulting from
the extinguishment of debt related to the March 1997 sale of the Houston
Industrial Properties and Silber #1 and the gain on forgiveness of
indebtedness resulting from the transfer of title to the 18 Central
Shopping Center to the lender in November 1997.
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 remaining commercial property have escalation clauses
covering increases in the cost of operating and maintaining the property as
well as real estate taxes. Therefore, there should be little effect on
operating earnings if the property remains substantially occupied. In
addition, substantially all of the leases at the property contain
provisions which entitle the venture that owns the property to participate
in gross receipts of tenants above fixed minimum amounts.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
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, 1997 and 1996
Consolidated Statements of Operations, Years ended December 31,
1997, 1996 and 1995
Consolidated Statements of Partners' Capital Accounts (Deficits),
Years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows, Years ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements
Schedules not filed:
All schedules have been omitted as the required information is
inapplicable or the information is presented in the financial statements or
related notes.
<PAGE>
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. These consolidated financial
statements are the responsibility of the General Partners of the
Partnership. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XVII and consolidated venture at
December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1997, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 25, 1998
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
------
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . $ 6,115,185 4,841,921
Interest, rents and other receivables. . . . . . . . . . . 30,653 86,183
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . -- 14,867
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . -- 182,529
------------ -----------
Total current assets . . . . . . . . . . . . . . . 6,145,838 5,125,500
------------ -----------
Investment properties held for sale
or disposition . . . . . . . . . . . . . . . . . . . . . . -- 20,565,034
------------ -----------
Investment in unconsolidated venture, at equity. . . . . . . 282,080 278,653
Note receivable. . . . . . . . . . . . . . . . . . . . . . . -- 75,764
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . -- 421,992
Accrued rents receivable . . . . . . . . . . . . . . . . . . -- 333,557
------------ -----------
$ 6,427,918 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)
-----------------------------------------------------
1997 1996
------------ -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . $ -- 9,985,385
Accounts payable . . . . . . . . . . . . . . . . . . . . . 40,000 97,709
Accrued interest . . . . . . . . . . . . . . . . . . . . . -- 278,965
Accrued real estate taxes. . . . . . . . . . . . . . . . . -- 351,841
------------ -----------
Total current liabilities. . . . . . . . . . . . . 40,000 10,713,900
------------ -----------
Other liabilities. . . . . . . . . . . . . . . . . . . . . . -- 302,500
Tenant security deposits . . . . . . . . . . . . . . . . . . -- 63,395
Long-term debt, less current portion . . . . . . . . . . . . -- 6,916,941
------------ -----------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . 40,000 17,996,736
Venture partner's subordinated equity in venture . . . . . . -- 81,293
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative cash distributions. . . . . . . . . . . . . (238,785) (235,934)
Cumulative net losses. . . . . . . . . . . . . . . . . (266,889) (322,607)
------------ -----------
(485,674) (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 losses. . . . . . . . . . . . . . . . . (2,679,933) (7,546,303)
------------ -----------
6,873,592 9,261,012
------------ -----------
Total partners' capital accounts . . . . . . . . . 6,387,918 8,722,471
------------ -----------
$ 6,427,918 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
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . $ 1,765,401 3,825,139 3,966,280
Interest income. . . . . . . . . . . . . . 313,469 237,746 285,300
------------ ------------ ------------
2,078,870 4,062,885 4,251,580
------------ ------------ ------------
Expenses:
Mortgage and other interest. . . . . . . . 715,474 1,469,328 1,496,025
Depreciation . . . . . . . . . . . . . . . -- 630,743 710,637
Property operating expenses. . . . . . . . 681,379 1,372,999 1,142,665
Professional services. . . . . . . . . . . 70,211 100,147 158,633
Amortization of deferred expenses. . . . . 118,036 178,881 176,124
Management fees to corporate general
partner. . . . . . . . . . . . . . . . . 4,752 38,019 47,525
General and administrative . . . . . . . . 273,955 186,450 269,149
Provision for value impairment . . . . . . -- 1,103,533 --
------------ ------------ ------------
1,863,807 5,080,100 4,000,758
------------ ------------ ------------
215,063 (1,017,215) 250,822
Partnership's share of operations of uncon-
solidated venture . . . . . . . . . . . . . 3,427 (131,641) (137,178)
Venture partner's share of venture's
operations. . . . . . . . . . . . . . . . . (1,914) (6,080) (6,209)
------------ ------------ ------------
Earnings (loss) before gain on sale
or disposition of investment
properties and extraordinary items 216,576 (1,154,936) 107,435
Gain on sale or disposition of investment
properties, net of venture partner's share
of gain of $5,980. . . . . . . . . . . . . 3,764,844 -- --
------------ ------------ ------------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1997 1996 1995
------------ ------------ ------------
Earnings (loss) before
Partnership's share of
extraordinary items. . . . . . . 3,981,420 (1,154,936) 107,435
Extraordinary items:
Prepayment penalty on sale of investment
property, net of venture partner's share
of $820. . . . . . . . . . . . . . . . . (81,123) -- --
Gain on forgiveness of indebtedness. . . . 1,021,791 -- --
------------ ------------ ------------
Net earnings (loss). . . . . . . . $ 4,922,088 (1,154,936) 107,435
============ ============ ============
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gains on
sale or disposition of investment
properties and extraordinary items$ 6.08 (32.40) 3.01
Gain on sale or disposition of
investment property. . . . . . 108.93 -- --
Extraordinary items. . . . . . . 27.21 -- --
------------ ------------ ------------
$ 142.22 (32.40) 3.01
============ ============ ============
<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 PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
-------------------------------------------------- ---------------------------------------------------
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,
1994. . . . .$20,000(280,707) (1,382) (262,089) 29,696,495 (6,540,702)(11,657,359)11,498,434
Net earnings
(loss). . . . -- 4,297 -- 4,297 -- 103,138 -- 103,138
Cash distri-
butions
($20.00 per
limited
partnership
interest) . . -- -- (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
Net earnings
(loss). . . . -- (46,197) -- (46,197) -- (1,108,739) -- (1,108,739)
Cash distri-
butions
($16.00 per
limited
partnership
interest) . . -- -- (22,812) (22,812) -- -- (547,468) (547,468)
------- -------- -------- ---------- ---------- ---------- ---------------------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------------------------------ ----------- ---------------------------------------------
Balance
(deficit)
December 31,
1996. . . . .20,000 (322,607) (235,934) (538,541) 29,696,495 (7,546,303)(12,889,180)9,261,012
Net earnings
(loss). . . . -- 55,718 -- 55,718 -- 4,866,370 -- 4,866,370
Cash distri-
butions
($212 per
limited
partnership
interest) . . -- -- (2,851) (2,851) -- -- (7,253,790)(7,253,790)
------ -------- -------- ---------- ---------- ---------- ---------------------
Balance
(deficit)
December 31,
1997. . . . .$20,000(266,889) (238,785) (485,674) 29,696,495 (2,679,933)(20,142,970)6,873,592
======= ======== ======== ========== ========== ========== =====================
<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
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . $ 4,922,088 (1,154,936) 107,435
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . -- 630,743 710,637
Amortization of deferred expenses. . . . 118,036 178,881 176,124
Provision for value impairment . . . . . -- 1,103,533 --
Partnership's share of operations of
unconsolidated ventures. . . . . . . . (3,427) 131,641 137,178
Venture partner's share of venture's
operations, gain on sale of investment
property and extraordinary item. . . . 7,074 6,080 6,209
Extraordinary items. . . . . . . . . . . (939,848) -- --
Total gain on sale of investment property (3,770,824) -- --
Decrease in net assets due to the sale of
investment property. . . . . . . . . . 97,618 -- --
Changes in:
Interest, rents and other receivables. . (59,088) 118,335 (22,307)
Escrow deposits. . . . . . . . . . . . . 45,503 (19,518) (90,608)
Notes receivable . . . . . . . . . . . . 14,152 53,150 47,998
Accrued rents receivable . . . . . . . . 14,277 (46,839) 2,165
Accounts payable . . . . . . . . . . . . (35,886) 88,466 (346,061)
Accrued interest . . . . . . . . . . . . (75,059) 1,668 43,573
Accrued real estate taxes. . . . . . . . (213,929) 2,843 37,418
Security deposits. . . . . . . . . . . . (62,293) 3,444 --
----------- ----------- -----------
Net cash provided by
operating activities . . . . . . 58,394 1,097,491 809,761
----------- ----------- -----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996 1995
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases)
of short-term investments. . . . . . . . -- -- 396,561
Additions to investment properties . . . . (139,684) (96,097) (21,304)
Cash proceeds from sale of investment
property, net of selling expenses. . . . 8,922,472 -- --
Partnership's distributions from
unconsolidated ventures including
amounts relating to sale of
investment property. . . . . . . . . . . -- -- 23,368
Partnership's contributions to
unconsolidated ventures. . . . . . . . . -- -- (995)
Payment of deferred expenses . . . . . . . (17,790) (128,772) (108,544)
----------- ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . 8,764,998 (224,869) 289,086
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . (205,120) (316,697) (290,196)
Distributions to venture partners. . . . . (88,367) -- --
Distributions to limited partners. . . . . (7,253,790) (547,468) (684,353)
Distributions to general partners. . . . . (2,851) (22,812) (211,740)
----------- ----------- -----------
Net cash provided by (used in)
financing activities . . . . . . (7,550,128) (886,977) (1,186,289)
----------- ----------- -----------
Net increase (decrease) in
cash and equivalents . . . . . . 1,273,264 (14,355) (87,442)
Cash and cash equivalents,
beginning of the year. . . . . . 4,841,921 4,856,276 4,943,718
----------- ----------- -----------
Cash and cash equivalents,
end of the year. . . . . . . . . $ 6,115,185 4,841,921 4,856,276
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. $ 940,005 1,467,660 1,452,452
=========== =========== ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996 1995
----------- ----------- -----------
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
DECEMBER 31, 1997, 1996 AND 1995
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership holds (through a joint venture) an equity investment
in a shopping center located in Palm Desert, California. Business
activities consist of rentals to a variety of retail companies, and the
ultimate sale or disposition of such real estate. The affairs of the
Partnership are expected to be wound up no later than December 31, 1999
(sooner if the remaining property or the Partnership's interest therein is
sold in the near term), barring unforseen economic developments.
The accompanying consolidated financial statements include the
accounts of the Partnership and its majority-owned venture, JMB/Warehouse
Associates Limited Partnership ("JMB/Warehouse"). JMB/Warehouse sold its
investment properties on March 28, 1997 as discussed below. The effect of
all transactions between the Partnership and the 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/Hahn PDTC Associates ("Palm Desert").
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, 1997 and 1996 is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1997 1996
-------------------------------------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . $ 6,427,918 10,845,737 26,800,500 34,810,947
Partners' capital accounts
(deficits):
General partners. . . . . . (485,674) 163,280 (538,541) (1,076,248)
Limited partners. . . . . . 6,873,592 10,642,454 9,261,012 18,058,260
Net earnings (loss):
General partners. . . . . . 55,718 1,242,379 (46,197) (2,522)
Limited partners. . . . . . 4,866,370 (162,016) (1,108,739) (60,536)
Net earnings (loss) per
limited partnership
interest . . . . . . . . . . 142.22 (4.74) (32.40) (1.77)
============ =========== =========== ===========
</TABLE>
<PAGE>
The earnings (loss) per limited partnership interest for the years
ended December 31, 1997 and 1996 is based upon the limited partnership
interests outstanding at the end of each period. Deficit capital accounts
will result, through the duration of the Partnership, in net gain for
financial reporting and Federal income tax purposes.
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. These standards became
effective for reporting periods ending after December 15, 1997. As the
Partnership's capital structure has only general and limited partnership
interests, these statements do not have a significant impact on the
Partnership's consolidated financial statements.
Deferred organization costs were being amortized over a 60-month
period. Deferred loan costs are 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 $5,900,000 and $4,114,000 at December 31, 1997 and
1996, respectively) as cash equivalents, which includes investments in an
institutional mutual fund which holds U.S. Government obligations, with any
remaining amounts (generally with original maturities of one year or less)
reflected as short-term investments being held to maturity.
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.
Certain amounts in the 1995 and 1996 consolidated financial statements
have been reclassified to conform to the 1997 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.
The Partnership 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. In March 1997, the Partnership, through
JMB/Warehouse, sold the land and related improvements of the Houston
Industrial Properties. In November 1997, the Partnership transferred title
to the 18 Central Shopping Center via a deed in lieu of foreclosure to the
lender. The one remaining property owned at December 31, 1997, accounted
for on the equity method, is in operation.
<PAGE>
Depreciation on the investment property was provided over an estimated
useful life of 5-40 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.
Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
requires that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value cannot be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the property's carrying value and the
property's estimated fair value. The Partnership's policy is to consider a
property to be held for sale or disposition when the Partnership has
committed to 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.
The Partnership and its consolidated venture have previously committed
to sell or dispose of all their remaining investment properties.
Accordingly, all consolidated properties have been classified as held for
sale or disposition in the accompanying consolidated financial statements
as of the respective dates of such plans' adoption. The results of
operations for consolidated properties disposed of during the past three
years were $404,544, ($808,860) and $419,872, respectively, for the years
ended December 31, 1997, 1996 and 1995.
In addition, the accompanying consolidated financial statements
include $3,427, ($131,640) and ($137,177), respectively, of the
Partnership's share of total property operations of $32,900, ($1,263,650)
and ($1,447,928) for unconsolidated properties for the years ended
December 31, 1997, 1996 and 1995.
VENTURE AGREEMENTS - GENERAL
The Partnership at December 31, 1997 is party to one joint venture
agreement (Palm Desert) with Carlyle Real Estate Limited Partnership-XVI, a
partnership sponsored by the Corporate General Partner ("Carlyle - XVI")
and an unaffiliated venture partner. In addition, the Partnership was a
party to a joint venture agreement with an unaffiliated venture partner in
JMB/Warehouse which sold its properties in March 1997 and was terminated.
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. 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, 1997. 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. In March 1997, the Partnership,
through JMB/Warehouse, sold the five Houston Industrial Properties and
Silber #1.
<PAGE>
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.
INVESTMENT PROPERTIES
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
"Property") for a purchase price of $14,750,000, including the assumption
of a first mortgage loan of $10,500,000. 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 deposit of
$750,000, which is described more fully below.
The first mortgage loan secured by the property in the amount
(including accrued interest) of approximately $9,800,000 was scheduled to
mature in December 1997. The lender informed the Partnership that the
lender was not willing to modify or extend the loan. The Partnership
believed that the value of the shopping center was less than the mortgage
loan, and accordingly, the Partnership deferred any capital improvements
and major repair projects for the shopping center.
On November 14, 1997, the Partnership conveyed the title to the
Property to the lender in full satisfaction of the Partnership's mortgage
obligation.
As a result of the transfer of title to the lender, the Partnership no
longer has an ownership interest in the Property. Due to the Partnership's
1994 and 1996 provisions for value impairment of $2,638,820 and $1,103,533,
respectively, the Partnership did not recognize any significant gain or
loss on the transfer of title and recognized in 1997 an extraordinary gain
on forgiveness of indebtedness of approximately $1,022,000 for financial
reporting purposes. In addition, the Partnership recognized a loss of
approximately $2,216,000 for Federal income tax reporting purposes in 1997
with no significant amount of distributable proceeds.
An affiliate of the General Partners managed the Property for a fee
equal to 4% of base and percentage rents from the Property.
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
<PAGE>
improvements and allowances (the "Tenant Improvement Costs") and other
capital expenditures, as well as any operating deficits of Palm Desert
after December 1994, have been and are expected to be contributed to Palm
Desert 25% by the joint venture partner and 75% by the Partnership and
Carlyle - XVI in the aggregate.
The terms of the Palm Desert venture agreement provide that the
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 venture 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 $41,080,000 and $41,485,000
at December 31, 1997 and 1996, 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, 1997, 1996 and 1995 was $1,312,906, $1,293,112 and $1,261,322,
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.
<PAGE>
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 1997, 1996 and 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 1997, 1996 and 1995.
The Palm Desert agreement also provides that the annual cash flow, net
sale or refinancing proceeds and tax items distributed or allocated
collectively to the Partnership and Carlyle - 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 Partnership and Carlyle-XVI entered into an agreement with the
unaffiliated venture partner, effective January 1, 1998, pursuant to which
the Partnership and Carlyle-XVI granted the unaffiliated venture partner an
option to acquire their interests in the joint venture. Pursuant to such
option, the unaffiliated venture partner has the right (but not the
obligation) to purchase all (but not less than all) of the Partnership's
and Carlyle-XVI's interests in the joint venture by giving notice of its
exercise of the option during the term of the option, which may extend
through July 15, 1998. The aggregate purchase price for the interests is
$7,000,000. In consideration for the option, the unaffiliated venture
partner is required to pay $58,333 for each month of the option term. The
Partnership and Carlyle-XVI will share the consideration for the option
and, if applicable, the purchase price in proportion to their respective
capital contributions to the joint venture (i.e., approximately 14.2% for
the Partnership and approximately 85.8% for Carlyle-XVI). Concurrently
with the execution of the option agreement, the joint venture made a
distribution to the Partnership and Carlyle-XVI in the aggregate amount of
approximately $740,000 (of which the Partnership's share was approximately
$105,000), which represents undistributed net cash flow of the joint
venture through the end of 1997. All other funds and net cash flow of the
joint venture during the term of the option are to be held by the joint
venture for its use, and if the sale of the Partnership's and Carlyle-XVI's
interests closes pursuant to the option agreement, such funds and net cash
flow will inure to the benefit of the unaffiliated venture partner. The
unaffiliated venture partner agreed to pay deficits of the joint venture
incurred in the ordinary course of its business that arise or accrue during
the term of the option, to the extent that the joint venture's funds and
net cash flow are insufficient to cover such deficits. The property is
expected to operate near the break-even level during the term of the
option. In general, the Partnership, Carlyle-XVI and the unaffiliated
venture partner agreed not to sell or refinance the Palm Desert Town Center
or engage in other actions outside the ordinary course of the joint
venture's business, not to make any distribution of the joint venture's
funds to its partners except for the distribution to the Partnership and
Carlyle-XVI described above, and, unless consented to by all of the
partners in the joint venture, not to amend or modify existing leases and
other contracts, and not to enter into new leases or agreements, affecting
the property during the term of the option. The unaffiliated venture
partner may terminate the option by giving notice of termination to the
Partnership and Carlyle-XVI, and under certain extraordinary circumstances
involving a termination of the option, the Partnership and Carlyle-XVI may
be obligated to refund the option consideration. In the event such a sale
does occur, the Partnership and Carlyle-XVI would not participate in, or be
required to pay a share of the costs of, an expansion of the mall and
restructuring of the ground lease and mortgage loan for the joint venture.
The Partnership could thereafter distribute a majority of the funds it
currently holds as working capital reserves for the possible payment of its
share of such costs. There is no assurance that the option will be
exercised or that a sale of the Partnership's and Carlyle-XVI's interest in
<PAGE>
the joint venture will occur. During the term of the option, the
unaffiliated venture partner is entitled to pursue a possible expansion of
the mall and restructuring of the ground lease and mortgage loan on its
own, provided that no contracts are made effective prior to the exercise of
the option and the close of escrow and no liability accrues to the
Partnership or Carlyle-XVI from the unaffiliated venture partner's actions.
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.
HOUSTON INDUSTRIAL PROPERTIES
On March 28, 1997, the joint venture sold the Houston Industrial
Properties and Silber #1 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 recognized a gain of
approximately $3,678,000 for Federal income tax purposes in 1997 (of which
approximately $3,641,000 was 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, which expired on December 15, 1997. The joint venture did not
ultimately have any liability under such representations and warranties.
In this regard, the joint venture was liquidated after the expiration of
the survival period and after the distribution of the remaining funds to
the venture partners.
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, had a 99%
interest in JMB/Warehouse. The unaffiliated venture partner ("Warehouse"),
as a limited partner, had a 1% interest in JMB/Warehouse. The
JMB/Warehouse venture agreement provided that items of profit and loss and
distributions of net cash flow and net sale or refinancing proceeds were,
in general, allocated among the partners in accordance with their
respective ownership percentages.
JMB/Warehouse's initial aggregate cash investment in the Houston
Properties was approximately $3,475,000, of which the Partnership's share
was approximately $3,440,000. JMB/Warehouse's initial aggregate cash
investment in Silber #1 was approximately $2,190,000 of which the
Partnership's share was approximately $2,168,000. The balance of the
purchase prices for the Houston Properties and Silber #1 was represented by
non-recourse secured purchase money notes or first mortgage financing
funded or assumed at purchase in the aggregate amount of $7,788,045.
The properties were managed under an agreement pursuant to which the
manager managed the properties, collected all receipts from operations and,
to the extent available from such receipts, paid all expenses of the
properties for a 3% fee based upon a percentage of gross receipts from the
properties.
<PAGE>
<TABLE>
LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1997 and 1996:
<CAPTION>
1997 1996
----------- -----------
<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); remaining
balance of interest and principal was scheduled to be due
December 1, 1997, satisfied in November, 1997 upon
transfer of title to the 18 Central Shopping Center
to the lender. . . . . . . . . . . . . . . . . . . . . . . $ -- 9,882,863
Promissory note, scheduled to be due February 1, 1999,
secured by Minimax #2 in Houston, Texas; payable
monthly interest only at rates ranging from 7%
in 1994 to 11.2% to 1998 and 1999, repaid at sale
of the property in March 1997. . . . . . . . . . . . . . . -- 1,030,856
Promissory note, scheduled to be due February 1, 1999,
secured by Minimax #3 in Houston, Texas; payable
monthly interest only at rates ranging from 7% in
1994 to 11.2% in 1998 and 1999, repaid at sale
of the property in March 1997. . . . . . . . . . . . . . . -- 1,429,336
7% per annum promissory note, scheduled to be
due February 1, 1999, secured by 1801 West
Belt in Houston, Texas; payable monthly,
interest only; at rates ranging from 7%
in 1994 to 11.2% in 1998 and 1999,
repaid at sale of the property in March 1997 . . . . . . . -- 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 was
scheduled to be due, repaid at sale of the
property in March 1997 . . . . . . . . . . . . . . . . . . -- 2,064,575
<PAGE>
1997 1996
----------- -----------
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 was scheduled to be due, repaid at
sale of the property in March 1997 . . . . . . . . . . . . -- 950,690
------------ -----------
Total debt . . . . . . . . . . . . . . . . . . . . -- 16,902,326
Less current portion of long-term debt . . . . . . -- 9,985,385
------------ -----------
Total long-term debt . . . . . . . . . . . . . . . $ -- 6,916,941
============ ===========
</TABLE>
<PAGE>
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 of the proceeds (net
after expenses and liabilities and retained working capital) from the sale
or refinancing of a real property up to 3% of the selling price, and that
the remaining proceeds be distributed 85% to the Holders of Interests and
15% to the General Partners. However, prior to such distributions being
made, the Holders of Interests are entitled to receive 99% and the General
Partners 1% of net sale or refinancing proceeds until the Holders of
Interests (i) have received cash distributions of "sale proceeds" or
"refinancing proceeds" in an amount equal to the Holders' 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 Holders' 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. The Holders of Interests are expected to receive
from sales proceeds significantly less than the return level in (i) and
(ii) above over the entire term of the Partnership.
<PAGE>
TRANSACTIONS WITH AFFILIATES
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 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. The General Partners received operating distributions of $2,851 and
$22,811 for 1997 and 1996, respectively.
Certain of the Partnership's properties were 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 acted as the
property manager of the Houston Industrial Properties and Silber #1 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, 1997, 1996 and 1995 are as follows:
UNPAID AT
DECEMBER 31,
1997 1996 1995 1997
------- ------- -------- ------------
Property management
and leasing fees. . . $55,866 70,312 74,469 --
Management fees to
Corporate General
Partners. . . . . . . 4,752 38,019 38,020 --
Insurance commissions. 1,394 2,911 2,959 --
Reimbursement (at cost)
for accounting services 5,852 4,221 58,883 1,403
Reimbursement (at cost)
for portfolio manage-
ment services . . . . 25,060 17,403 19,595 7,483
Reimbursement (at cost)
for legal services. . 5,081 2,650 2,137 1,242
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses -- -- 69,830 --
------- ------- -------- ------
$98,005 135,516 265,893 10,128
======= ======= ======== ======
<PAGE>
INVESTMENT IN UNCONSOLIDATED VENTURE
Summary combined financial information for Palm Desert as of and for
the years ended December 31, 1997 and 1996 is as follows:
1997 1996
------------ -----------
Current assets . . . . . . . $ 2,212,411 1,369,711
Current liabilities. . . . . (1,948,707) (1,609,701)
------------ -----------
Working capital . . . . 263,704 (239,990)
------------ -----------
Other assets . . . . . . . . 3,381,628 3,274,898
Ventures partners' equity. . (4,443,740) (4,414,267)
Investment property, net . . 43,146,694 44,072,193
Other liabilities. . . . . . (1,443,677) (1,334,508)
Long-term debt . . . . . . . (40,622,529) (41,079,673)
------------ -----------
Partnership's capital . $ 282,080 278,653
============ ===========
Represented by:
Invested capital . . . . . $ 2,683,814 2,683,814
Cumulative cash distributions (616,253) (616,253)
Cumulative earnings (losses) (1,785,481) (1,788,908)
------------ -----------
$ 282,080 278,653
============ ===========
Total income . . . . . . . . $ 10,767,445 11,050,606
Expenses . . . . . . . . . . 10,734,545 12,314,256
------------ -----------
Net earnings (loss). . . . . $ 32,900 (1,263,650)
============ ===========
Partnership's share
of income (loss) . . . . . $ 3,427 (131,641)
============ ===========
Additionally, for the year ended December 31, 1995, total income was
$10,864,706, expenses were $12,312,635 and net loss was $1,447,929 for the
Palm Desert venture.
<PAGE>
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 1996 and 1997.
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, directly or indirectly, by
certain of its officers, directors, members of their families and their
affiliates. The Corporate General Partner has responsibility for all
aspects of the Partnership's operations, subject to the requirement that
sales of real property must be approved by the Associate General Partner of
the Partnership, ABPP Associates, L.P., an Illinois limited partnership,
with JMB as its sole general partner. The limited partners of the
Associate General Partner are generally officers, directors and affiliates
of JMB or its affiliates.
The Partnership 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 for
tenants and/or for the sale of property. 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:
<PAGE>
SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 3, 1998. 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 3,
1998. 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-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.-III ("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-
IV ("Mortgage Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income
Plus") and Carlyle Income Plus, L.P.-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.-VII ("JMB Income-VII"), JMB Income Properties, Ltd.-X
("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB
Income Properties, Ltd.-XII ("JMB Income-XII") and JMB Income Properties,
Ltd.-XIII ("JMB Income-XIII"). JMB is also the sole general partner of the
associate general 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")) 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 partner-
ships: the Partnership, Carlyle-VII, Carlyle-XI, Carlyle-XII,
Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, JMB Income-VII, JMB
Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage
Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle Income
Plus-II and IDS/BIG.
<PAGE>
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 60) 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 also a director of Urban Shopping Centers,
Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment
trust in the business of owning, managing and developing shopping centers.
He is a Certified Public Accountant.
Neil G. Bluhm (age 60) 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 also a principal of Walton Street Real Estate
Fund I, L.P. and a director of USC, Inc. He is a member of the Bar of the
State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 59) 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 56) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 64) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.
John G. Schreiber (age 51) 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 Advisors, L.P.,
an affiliate of the Blackstone Group, L.P. He is also a director of USC,
Inc., a trustee of Amli Residential Property Trust and a director of a
number of investment companies advised or managed by T. Rowe Price
Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 48) 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 50) 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 45) 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 49) 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 62) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
<PAGE>
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 the
Notes for a description of such transactions, distributions and
allocations. In 1997, the General Partners received $2,851 of
distributions and the Corporate General Partner earned management fees of
$4,752. The General Partners received a share of Partnership's profits for
tax purposes aggregating $1,242,379 in 1997.
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 1997
aggregating $1,394 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 1997 for the 18 Central Street Building in East
Brunswick, New Jersey. In 1997, such affiliate earned property management
fees of $55,866 for such services, of which all were paid as of
December 31, 1997.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses, salaries,
administrative, portfolio management, legal and accounting services
relating to the administration of the Partnership and the acquisition and
operation of the Partnership's real property investments. Such costs for
1997 were $35,993 for these services, of which $10,128 were unpaid as of
December 31, 1997.
<PAGE>
<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 (and Assignee
Interests therein)
Limited Partnership Corporate General 15.10836 Interests Less than 1%
Interests (and Assignee Partner, its officers (1)(2)(3)
Interests therein) 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 an officer or his relatives for which such officer has sole
investment and voting power as to such Interests so owned.
(3) Includes .6 Interests owned by an estate for which an officer acts as co-executor and is deemed to have
shared investment and voting power for such Interests.
No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
Reference is made to Item 10 for information concerning ownership of the Corporate General Partner.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.
</TABLE>
<PAGE>
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.A.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.
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.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.
<PAGE>
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.
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.
10-H.Deed in Lieu of Foreclosure Agreement relating to
the transfer of title to the 18 Central Shopping Center is hereby
incorporated herein by reference to the Partnership's report for November
14, 1997 on Form 8-K (File No. 0-17708) dated November 26, 1997.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule.
<PAGE>
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 report on Form 8-K has been 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
November 14, 1997 (describing the transfer of title to the 18th Central
Shopping Center) was filed. This report was dated November 26, 1997 and
includes a discussion of the transfer of title to the Property (Item 2) and
Narrative pro forma financial information with respect to the sale
(Item 7).
No annual report for the fiscal year 1997 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVII
By: JMB Realty Corporation
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 25, 1998
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, 1998
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1998
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1998
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1998
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1998
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 25, 1998
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 25, 1998
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1998
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------- ----
3.A. Amended and Restated Agreement
of Limited Partnership set forth
as Exhibit A to the Prospectus. Yes
3.B. Acknowledgement of rights and
duties of the General Partners
of the Partnership between
ABPP Associates, L.P. and
JMB Realty Corporation 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
<PAGE>
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------- ----
10-F. Copy of Purchase and Sale
Agreement and related documents
relating to the purchase of
Silber #1 Yes
10-G. Copy of sale documents relating
to the sale of Houston
Industrial Properties Yes
10-H. Copy of Deed in Lieu of Foreclosure
Agreement relating to 18 Central
Shopping Center Yes
21. List of Subsidiaries. No
24. Powers 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.
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 the Notes 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, 1997, 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 30th day of January, 1998.
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, 1997,
and any and all amendments thereto, the 30th day of January, 1998.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - 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, 1997, 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 30th day of January, 1998.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1997,
and any and all amendments thereto, the 30th day of January, 1998.
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, 1997 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-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,115,185
<SECURITIES> 0
<RECEIVABLES> 30,653
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,145,838
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,427,918
<CURRENT-LIABILITIES> 40,000
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 6,387,918
<TOTAL-LIABILITY-AND-EQUITY> 6,427,918
<SALES> 1,765,401
<TOTAL-REVENUES> 2,078,870
<CGS> 0
<TOTAL-COSTS> 799,415
<OTHER-EXPENSES> 348,918
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 715,474
<INCOME-PRETAX> 215,063
<INCOME-TAX> 0
<INCOME-CONTINUING> 216,576
<DISCONTINUED> 3,764,844
<EXTRAORDINARY> 940,668
<CHANGES> 0
<NET-INCOME> 4,922,088
<EPS-PRIMARY> 142.22
<EPS-DILUTED> 142.22
</TABLE>
