SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1998 Commission file number 0-17708
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. . . . . . . . . . . . 10
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 12
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 13
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 35
PART III
Item 10. Director and Executive Officers. . . . . . . 35
Item 11. Executive Compensation . . . . . . . . . . . 38
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 39
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 40
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 40
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 44
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"), was a limited partnership formed October 9, 1986 and
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 shared in their portion of the benefits of
ownership of the Partnership's real property investments according to the
number of Interests held.
The Partnership was engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments had been held by fee title, leasehold estates and/or
through joint venture partnership interests. All of the Partnership's
investment in real estate have been sold. The Partnership's real property
investments were located throughout the nation and it had no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding
of the Partnership's business taken as a whole. At the sale of a
particular property, the net proceeds, if any, were generally distributed
or reinvested in existing properties rather than invested in acquiring
additional properties. The Partnership made a final liquidating cash
distribution to its Holders of Interests and General Partners, wound up its
affairs and terminated effective December 31, 1998. Reference is also made
to Item 7.
The Partnership has made the real property investments set forth in
the following table:
<PAGE>
<TABLE>
<CAPTION>
NAME, TYPE OF PROPERTY DATE OF SALE OR DISPOSITION
AND LOCATION SIZE PURCHASE DATE 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 12/29/98 fee ownership of
sq.ft. improvements and
g.l.a. ground leasehold
interest (through joint
venture partnership)
(a)(b)(e)
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 (c)
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)
(a)(d)
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)
(a)(d)
<PAGE>
NAME, TYPE OF PROPERTY DATE OF SALE OR DISPOSITION
AND LOCATION SIZE PURCHASE DATE 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)
(a)(d)
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)
(a)(d)
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)
(a)(d)
<PAGE>
<FN>
- ---------------
(a) Reference is made to the Notes for a description of the joint
venture partnership or partnerships through which the Partnership has made
this real property investment.
(b) 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 was situated.
(c) 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.
(d) The property was sold. Reference is made to the Notes for a
further description of the sale of such real property investment.
(e) The Partnership interest in the property was sold. Reference
is made to the Notes for a further description of the sale of the
Partnership's interest in the property.
</TABLE>
<PAGE>
The Partnership's real property investments were subject to competi-
tion 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 they were located. Such
competition was generally for the retention of existing tenants and in
competition for new tenants. Approximate occupancy levels for the property
owned during the past year are set forth in the table in Item 2 below to
which reference is hereby made. The Partnership maintained the suitability
and competitiveness of its property in its market primarily on the basis of
effective rents, tenant allowances and service provided to tenants.
On December 29, 1998, the Partnership and its affiliated venture
partner sold their interests in the Palm Desert joint venture to the
unaffiliated venture partner. Reference is made to the Notes for a further
description of the transaction.
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 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 business or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1998 and 1997 for the Partnership's remaining investment property
owned during fiscal year 1998:
<PAGE>
<TABLE>
<CAPTION>
1997 1998
------------------------- -------------------------
Principal At At At At At At At At
Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---------- ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Palm Desert Town
Center
Palm Desert,
California . . . . . . . . Retail 88% 86% 87% 88% 85% 84% 84% N/A
- ----------
<FN>
An "N/A" indicates that the property was not owned by the Partnership or its joint venture at the end of the
quarter.
</TABLE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
At its termination, the Partnership was not subject to any material
pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
fiscal years 1997 and 1998.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTEREST
AND RELATED SECURITY HOLDER MATTERS
Immediately prior to the termination of the Partnership, there were
7,960 record Holders of the 34,214.00856 Interests outstanding in the
Partnership. There had been no public market for Interests and it had not
been anticipated that a public market for Interests would develop. Upon
request, the Corporate General Partner provided information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price paid for the Interests, as well as any other economic
aspects of the transaction, was subject to negotiations by the investor.
On December 31, 1998, the Partnership made a final liquidating distribution
to its Holders of Interests and General Partners and subsequently
terminated effective December 31, 1998.
Reference is made to Item 6 for a discussion of cash distributions to
the Holders of Interests.
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, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION)
AND DECEMBER 31, 1997, 1996, 1995 AND 1994
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1998 1997 1996 1995 1994
------------ ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . $ 350,827 2,078,870 4,062,885 4,251,580 4,061,678
============ ========== ========== ========== ==========
Earnings (loss) before
gains on sale or dis-
position of investment
properties or interest
in investment property
of unconsolidated
venture and extra-
ordinary items . . . . . $ (211,898) 216,576 (1,154,936) 107,435 (2,642,263)
Partnership's share of
gains on sale or disposi-
tion of investment
properties . . . . . . . 7,700 3,764,844 -- -- --
Gain on sale and liquida-
tion of Partnership's
interest in uncon-
solidated ventures . . . 217,793 -- -- -- --
Extraordinary items . . . -- 940,668 -- -- --
------------ ---------- ---------- ---------- ----------
Net earnings (loss) . . . $ 13,595 4,922,088 (1,154,936) 107,435 (2,642,263)
============ ========== ========== ========== ==========
Net earnings (loss)
per limited partner
Interest (b):
Earnings (loss) before
gains on sale or
disposition of
investment properties
or interest in invest-
ment property of
unconsolidated venture
and extraordinary
items. . . . . . . . . $ (5.95) 6.08 (32.40) 3.01 (74.12)
Partnership's share of
gains on sale or dis-
position of investment
properties . . . . . . .22 108.93 -- -- --
<PAGE>
1998 1997 1996 1995 1994
------------ ---------- ----------- ---------- ----------
Gain on sale and
liquidation of
Partnership's
interest in uncon-
solidated ventures . . 6.30 -- -- -- --
Extraordinary
items. . . . . . . . . -- 27.21 -- -- --
Reallocation among
partners of gains
on sales . . . . . . . (19.21) -- -- -- --
------------ ---------- ---------- ---------- ----------
$ (18.64) 142.22 (32.40) 3.01 (74.12)
============ ========== ========== ========== ==========
Total assets. . . . . . . $ 4,264,520 6,427,918 26,800,500 28,739,912 30,077,627
Long-term debt. . . . . . $ -- -- 6,916,941 16,895,434 17,219,023
Cash distributions
per Interest (c)(d). . . $ 60.00 212.00 16.00 20.00 166.00
============ ========== ========== ========== ==========
<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.
(d) This amount does not include the final liquidating cash distribution of $4,183,005 ($122.26 per
Interest) to the Holders of Interests and $81,515 to the General Partners paid by the Partnership on December 31,
1998.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the public offering 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.
The board of directors of JMB Realty Corporation ("JMB"), the corporate
general partner of the Partnership, had 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 had retained independent counsel to advise it in
connection with any potential tender offers for Interests and had retained
Lehman Brothers Inc. through June 30, 1998, as financial advisor to assist
the Special Committee in evaluating and responding to potential tender
offers for Interests.
From 1996 through the third quarter of 1998, some of the Holders of
Interests in the Partnership received from unaffiliated third parties
unsolicited offers to purchase up to 4.9% of the outstanding Interests in
the Partnership at prices of $75 and $160 per Interest, respectively. Such
offers have expired. The Special Committee recommended against acceptance
of these offers on the basis that, among other things, the offer prices
were inadequate. Approximately, 6.08% of the outstanding Interests were
purchased by all unaffiliated third parties who made unsolicited offers for
Interests, either pursuant to all such tender offers or through negotiated
purchases.
In December 1998, the Partnership sold a small parcel of land for
$7,700, which was retained by the Partnership after the Partnership
conveyed the title of 18 Central Shopping Center to the lender in 1997.
Reference is made to the Notes.
The Partnership and Carlyle-XVI entered into an agreement with the
unaffiliated venture partner of Palm Desert, 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
(the "Option Agreement") . Pursuant to the Option Agreement, the
unaffiliated venture partner had the right (but not the obligation) to
purchase all (but not less than all) of the Partnership's and Carlyle-XVI's
interests in the joint venture by giving notice of its exercise of the
option during the term of the option, which was originally scheduled to
expire July 15, 1998 but was extended first through August 14, 1998
pursuant to a first amendment to the Option Agreement. The Option
Agreement also provided for certain rights and obligations of the
Partnership, Carlyle-XVI and the unaffiliated venture partner with respect
to the joint venture and its property during the option term. In
consideration for the option, and the first amendment to the option, the
unaffiliated venture partner was required to pay $58,333 for each month of
the option term. Pursuant to a second amendment to the Option Agreement,
the option term was extended through December 29, 1998, the unaffiliated
venture partner was required to pay $120,000 to the Partnership and
Carlyle-XVI and the aggregate purchase price for the interests was reduced
to $4,000,000. The Partnership and Carlyle-XVI received their allocable
shares of the consideration for the option of which the Partnership's share
was approximately $71,000. 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
<PAGE>
Partnership's share was approximately $105,000), which represented
undistributed net cash flow of the joint venture through the end of 1997.
All other funds and net cash flow of the joint venture during the term of
the option were held by the joint venture for its use. Upon the expiration
of the Option Agreement, the rights and obligations of the parties
subsequent to expiration of the Option Agreement were to be governed by the
terms of the joint venture partnership agreement without regard to changes
previously affected by the terms of the Option Agreement. On December 29,
1998, the Partnership and Carlyle-XVI sold their respective interests in
the joint venture pursuant to the Option Agreement for $4,000,000, of which
the Partnership's share was $569,000. Reference is made to the Notes.
In November 1998, the Partnership made a distribution of cash
generated from prior year operations to the Holders of Interests of
$2,052,840 ($60 per Interest) and $85,535 to the General Partners.
Pursuant to the terms of the Partnership Agreement, the General
Partners of the Partnership were required to contribute to the Partnership
$1,382, which represented the amount of all distributions it previously
received from sales and refinancing proceeds, and such amount was included
in the liquidating distribution made to the Holders of Interests. Such
contribution was required because the Holders of Interest had not received
distributions of net sale or refinancing proceeds equal to their initial
capital investment in the Partnership plus certain other distributions
constituting a specified return on their average capital investment (i.e.,
their initial capital investment as reduced by net sale or refinancing
proceeds previously distributed) commencing with the first fiscal quarter
of 1990.
The Partnership made a liquidating cash distribution in the aggregate
amount of $4,183,005 ($122.26 per Interest) to the Holders of Interests in
December 1998. In addition, the Partnership made a final cash distribution
out of net cash receipts (as defined) to its General Partners and paid a
management fee to its Corporate General Partner in the aggregate amount of
$217,373. The Partnership wound up its affairs and terminated effective
December 31, 1998.
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, the transfer
of title to the 18 Central Shopping Center to the lender in November 1997,
and the sale of the Partnership's interest in the Palm Desert Town Center
in December 1998.
The decrease in cash and cash equivalents at December 31, 1998 as
compared to December 31, 1997 is primarily due to the distribution in
November 1998 of $2,052,840 ($60 per Interest) to the Holders of Interests
and $85,535 to the General Partners.
The decrease in interest income for the year ended December 31, 1998
as compared to December 31, 1997 and the increase in interest income for
the year ended December 31, 1997 as compared to the year ended December 31,
1996 is primarily due to the fluctuation in the average cash balance
invested by the Partnership in those years.
The other income reported for the year ended December 31, 1998
primarily represents the Partnership's share of the consideration the
unaffiliated venture partner of the Palm Desert joint venture paid during
1998 pursuant to the Option Agreement.
The decrease in depreciation expense for the years ended December 31,
1998 and December 31, 1997 as compared to the year ended December 31, 1996
is due to the fact that the Partnership classified the 18 Central Shopping
Center, the Houston Industrial Properties and Silber #1 as held for sale or
disposition and therefore suspended depreciation of these assets as of
December 31, 1996 and October 1, 1996, respectively.
<PAGE>
The increase in management fees to corporate general partner for the
year ended December 31, 1998 as compared to the years ended December 31,
1997 and 1996 is due to an increase in operating distributions paid by the
Partnership and the final liquidating distribution paid by the Partnership.
The increase in general and administrative expense for the year ended
December 31, 1998 as compared to December 31, 1997 is primarily due to an
increase in certain costs due to the winding up of the Partnership. The
increase in general and administrative expense for the year ended
December 31, 1997 as compared to December 31, 1996 is due to an increase in
certain reimbursable costs to an affiliate of the General Partners and an
increase in accounting services to the Partnership.
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, 1998 as compared to
the years ended December 31, 1997 and 1996 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 gain on sale of investment property for the year ended
December 31, 1998 is due to the sale of a small outparcel of land retained
by the Partnership after the Partnership conveyed the title of 18 Central
Shopping Center to the lender in 1997.
The gain on sale and liquidation of Partnership's interest in
unconsolidated venture at December 31, 1998 is primarily due to the sale of
the Partnership's interest in the Palm Desert Town Center in December 1998.
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 in future periods is not applicable
since the Partnership wound up its affairs and terminated effective
December 31, 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership wound up its affairs and terminated in 1998. As a
result, there is no meaningful disclosure for this item.
YEAR 2000
The Partnership wound up its affairs and dissolved in 1998.
<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, 1998 (Immediately
prior to final liquidating distribution) and
December 31, 1997
Consolidated Statements of Operations, Year ended December 31,
1998 (Immediately prior to final liquidating distribution)
and years ended December 31, 1997 and 1996
Consolidated Statements of Partners' Capital Accounts (Deficits),
Year ended December 31, 1998 (Immediately prior to final
liquidating distribution) and years ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows, Year ended December 31,
1998 (Immediately prior to final liquidating distribution)
and years ended December 31, 1997 and 1996
Notes to Consolidated Financial Statements
Schedules not filed:
All schedules have been omitted as the required information is
inapplicable or the information is presented in the 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, 1998 (immediately prior to final liquidating distribution) and
December 31, 1997, and the results of their operations and their cash flows
for the year ended December 31, 1998 (immediately prior to final
liquidating distribution) and for the years ended December 31, 1997 and
1996, in conformity with generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
March 24, 1999
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL
LIQUIDATING DISTRIBUTION) AND DECEMBER 31, 1997
ASSETS
------
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 4,264,520 6,115,185
Interest, rents and other receivables . . . . . . . . . . . . . . . -- 30,653
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . 4,264,520 6,145,838
------------ -----------
Investment in unconsolidated venture, at equity . . . . . . . . . . . -- 282,080
------------ -----------
$ 4,264,520 6,427,918
============ ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1998 1997
------------ -----------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 40,000
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . -- 40,000
------------ -----------
Commitments and contingencies
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . 21,382 20,000
Cumulative cash distributions . . . . . . . . . . . . . . . . . (324,320) (238,785)
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . 384,453 (266,889)
------------ -----------
81,515 (485,674)
------------ -----------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . 29,696,495 29,696,495
Cumulative cash distributions . . . . . . . . . . . . . . . . . (22,195,810) (20,142,970)
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (3,317,680) (2,679,933)
------------ -----------
4,183,005 6,873,592
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . . . 4,264,520 6,387,918
------------ -----------
$ 4,264,520 6,427,918
============ ===========
<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
YEAR ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL
LIQUIDATING DISTRIBUTION) AND YEARS ENDED
DECEMBER 31, 1997 AND 1996
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $ -- 1,765,401 3,825,139
Interest income . . . . . . . . . . . . . . . . . 280,083 313,469 237,746
Other income. . . . . . . . . . . . . . . . . . . 70,744 -- --
------------ ------------ ------------
350,827 2,078,870 4,062,885
------------ ------------ ------------
Expenses:
Mortgage and other interest . . . . . . . . . . . -- 715,474 1,469,328
Depreciation. . . . . . . . . . . . . . . . . . . -- -- 630,743
Property operating expenses . . . . . . . . . . . -- 681,379 1,372,999
Professional services . . . . . . . . . . . . . . 140,079 70,211 100,147
Amortization of deferred expenses . . . . . . . . -- 118,036 178,881
Management fees to corporate general partner. . . 278,416 4,752 38,019
General and administrative. . . . . . . . . . . . 317,959 273,955 186,450
Provision for value impairment. . . . . . . . . . -- -- 1,103,533
------------ ------------ ------------
736,454 1,863,807 5,080,100
------------ ------------ ------------
(385,627) 215,063 (1,017,215)
Partnership's share of operations of uncon-
solidated venture. . . . . . . . . . . . . . . . . 173,729 3,427 (131,641)
Venture partner's share of venture's
operations . . . . . . . . . . . . . . . . . . . . -- (1,914) (6,080)
------------ ------------ ------------
Earnings (loss) before gains on sale
or disposition of investment
properties or interest in investment
property of unconsolidated venture
and extraordinary items . . . . . . . . (211,898) 216,576 (1,154,936)
Gains on sale or disposition of investment
properties, net of venture partner's share
of gain of $0 in 1998 and $5,980 in 1997. . . . . 7,700 3,764,844 --
Gain on sale and liquidation of Partnership's
interest in unconsolidated ventures . . . . . . . 217,793 -- --
------------ ------------ ------------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1998 1997 1996
------------ ------------ ------------
Earnings (loss) before
Partnership's share of
extraordinary items . . . . . . . . . . 13,595 3,981,420 (1,154,936)
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) . . . . . . . . . . . $ 13,595 4,922,088 (1,154,936)
============ ============ ============
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gains on
sale or disposition of investment
properties or interest in investment
property of unconsolidated venture
and extraordinary items . . . . . . . $ (5.95) 6.08 (32.40)
Gains on sale or disposition of
investment properties . . . . . . . . .22 108.93 --
Gain on sale and liquidation of
Partnership's interest in uncon-
solidated ventures. . . . . . . . . . 6.30 -- --
Extraordinary items . . . . . . . . . . -- 27.21 --
Reallocation among partners of gains
on sales. . . . . . . . . . . . . . . (19.21) -- --
------------ ------------ ------------
$ (18.64) 142.22 (32.40)
============ ============ ============
<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)
YEAR ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING
DISTRIBUTION) AND YEARS ENDED DECEMBER 31, 1997 AND 1996
<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,
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)
------- -------- -------- ---------- ---------- ---------- ----------- ----------
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)
------ -------- -------- ---------- ---------- ---------- ----------- ----------
<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,
1997 . . . . . .$20,000 (266,889) (238,785) (485,674) 29,696,495 (2,679,933) (20,142,970) 6,873,592
Contribution
from General
Partners . . . .1,382 -- -- 1,382 -- -- -- --
Net earnings
(loss) . . . . .-- 651,342 -- 651,342 -- (637,747) -- (637,747)
Cash distri-
butions
($60.00 per
limited
partnership
interest). . . .-- -- (85,535) (85,535) -- -- (2,052,840) (2,052,840)
------- -------- -------- ---------- ---------- ---------- ----------- ----------
Balance
(deficit)
December 31,
1998 . . . . . .$21,382 384,453 (324,320) 81,515 29,696,495 (3,317,680) (22,195,810) 4,183,005
======= ======== ======== ========== ========== ========== =========== ==========
<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
YEAR ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING
DISTRIBUTION) AND YEARS ENDED DECEMBER 31, 1997 AND 1996
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $ 13,595 4,922,088 (1,154,936)
Items not requiring (providing) cash or
cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . -- -- 630,743
Amortization of deferred expenses . . . . . . . -- 118,036 178,881
Provision for value impairment. . . . . . . . . -- -- 1,103,533
Partnership's share of operations of
unconsolidated ventures . . . . . . . . . . . (173,729) (3,427) 131,641
Venture partner's share of venture's
operations, gain on sale of investment
property and extraordinary item . . . . . . . -- 7,074 6,080
Extraordinary items . . . . . . . . . . . . . . -- (939,848) --
Total gains on sale of investment properties. . (7,700) (3,770,824) --
Gain on sale and liquidation of Partnership's
interest in unconsolidated ventures . . . . . (217,793) -- --
Decrease in net assets due to the sale of
investment property . . . . . . . . . . . . . -- 97,618 --
Changes in:
Interest, rents and other receivables . . . . . 30,653 (59,088) 118,335
Escrow deposits . . . . . . . . . . . . . . . . -- 45,503 (19,518)
Notes receivable . . . . . . . . . . . . . . . -- 14,152 53,150
Accrued rents receivable. . . . . . . . . . . . -- 14,277 (46,839)
Accounts payable. . . . . . . . . . . . . . . . (40,000) (35,886) 88,466
Accrued interest. . . . . . . . . . . . . . . . -- (75,059) 1,668
Accrued real estate taxes . . . . . . . . . . . -- (213,929) 2,843
Security deposits . . . . . . . . . . . . . . . -- (62,293) 3,444
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . (394,974) 58,394 1,097,491
----------- ----------- -----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997 1996
----------- ----------- -----------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . -- (139,684) (96,097)
Cash proceeds from sale of investment
property or interest in investment
property, net of selling expenses . . . . . . . 576,700 8,922,472 --
Partnership's distributions from
unconsolidated ventures . . . . . . . . . . . . 104,602 -- --
Payment of deferred expenses. . . . . . . . . . . -- (17,790) (128,772)
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . 681,302 8,764,998 (224,869)
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . -- (205,120) (316,697)
Contributions from general partners . . . . . . . 1,382 -- --
Distributions to venture partners . . . . . . . . -- (88,367) --
Distributions to limited partners . . . . . . . . (2,052,840) (7,253,790) (547,468)
Distributions to general partners . . . . . . . . (85,535) (2,851) (22,812)
----------- ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . (2,136,993) (7,550,128) (886,977)
----------- ----------- -----------
Net increase (decrease) in
cash and equivalents. . . . . . . . . . (1,850,665) 1,273,264 (14,355)
Cash and cash equivalents,
beginning of the year . . . . . . . . . 6,115,185 4,841,921 4,856,276
----------- ----------- -----------
Cash and cash equivalents,
end of the year . . . . . . . . . . . . $ 4,264,520 6,115,185 4,841,921
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . $ -- 940,005 1,467,660
=========== =========== ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997 1996
----------- ----------- -----------
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, 1998 (IMMEDIATELY PRIOR TO FINAL
LIQUIDATING DISTRIBUTION) AND DECEMBER 31, 1997 AND 1996
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership held (through a joint venture) an equity investment in
a shopping center located in Palm Desert, California. Business activities
consisted of rentals to a variety of retail companies, and the ultimate
sale of such real estate.
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 sold
its interest in Palm Desert on December 29, 1998 as discussed below.
The Partnership records were maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements had 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 year ended December
31, 1998 (immediately prior to final liquidating distribution) and the year
ended December 31, 1997 is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1998 1997
-------------------------------------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . $ 4,264,520 4,264,520 6,427,918 10,845,737
Partners' capital accounts
(deficits):
General partners . . . . . . . . 81,515 81,515 (485,674) 163,280
Limited partners . . . . . . . . 4,183,005 4,183,005 6,873,592 10,642,454
Net earnings (loss):
General partners . . . . . . . . 651,342 2,385 55,718 1,242,379
Limited partners . . . . . . . . (637,747) 113,460 4,866,370 (162,016)
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . . (18.64) 3.32 142.22 (4.74)
============ =========== =========== ===========
</TABLE>
<PAGE>
The earnings (loss) per limited partnership interest for the years
ended December 31, 1998 and 1997 is based upon the limited partnership
interests outstanding at the end of each period. Also, because earnings
(loss) was computed immediately prior to termination of the Partnership,
Holders of Interests may have an additional capital gain or loss on
termination depending on the Holders' basis for Federal income tax
purposes.
Deferred organization costs were being amortized over a 60-month
period. Deferred loan costs were amortized over the term of the related
loan. Deferred leasing fees were amortized using the straight-line method
over the terms stipulated in the related agreements.
The preparation of financial statements in accordance with GAAP
required the Partnership to make estimates and assumptions that affected
the reported or disclosed amount of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could have differed from those
estimates.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures were considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership recorded
amounts held in U.S. Government obligations at cost, which approximated
market. For the purposes of these statements, the Partnership's policy was
to consider all such amounts held with original maturities of three months
or less (none and approximately $5,900,000 at December 31, 1998 and 1997,
respectively) as cash equivalents, which included investments in an
institutional mutual fund which held 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 provided for tenant
occupancy during periods for which no rent was due and/or increases in
minimum lease payments over the term of the lease, rental income was
accrued for the full period of occupancy on a straight-line basis.
Certain amounts in the 1996 consolidated financial statements have
been reclassified to conform to the 1998 and 1997 presentation.
No provision for state or Federal income taxes had been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership had 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 and Silber #1. In November 1997, the Partnership
transferred title to the 18 Central Shopping Center via a deed in lieu of
foreclosure to the lender. In December 1998, the Partnership sold its
interest in the Palm Desert Town Center.
<PAGE>
Depreciation on the investment property had been provided over an
estimated useful life of 5-40 years using the straight-line method.
Maintenance and repair expenses were charged to operations as
incurred. Significant betterments and improvements were capitalized and
depreciated over their estimated useful lives.
Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
required that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value could not be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
would have been the difference between the property's carrying value and
the property's estimated fair value. The Partnership's policy was to
consider a property to be held for sale or disposition when the Partnership
had committed to a plan to sell or dispose of such property and active
marketing activity had commenced or was expected to commence in the near
term or the Partnership had 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" were no longer depreciated.
The Partnership and its consolidated venture had previously committed
to sell or dispose of all their remaining investment properties.
Accordingly, all consolidated properties had 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 $8,031, $404,544 and ($808,860), respectively, for the years
ended December 31, 1998, 1997 and 1996.
In addition, the accompanying consolidated financial statements
include $173,729, $3,427 and ($131,640), respectively, of the Partnership's
share of total property operations of $1,261,825, $32,900 and ($1,263,650)
for unconsolidated properties for the years ended December 31, 1998, 1997
and 1996.
VENTURE AGREEMENTS - GENERAL
The Partnership was 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 during 1998. On December 29, 1998, the Partnership and
Carlyle-XVI sold their interests in Palm Desert to the 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 provided, in general, that the
benefits and obligations of ownership, including tax effects, net cash
receipts and sale and refinancing proceeds and capital contribution
obligations were 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, 1998 prior to the termination of the Partnership. Under
certain circumstances, either pursuant to the venture agreements or due to
the Partnership's obligations as general partner, the Partnership may have
been required to make additional cash contributions to the ventures.
<PAGE>
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. In December 1998, the Partnership sold its interest in Palm
Desert.
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 in an escrow account to secure the seller's obligations to the
Partnership in connection with the sale and a master lease of the property
through July 1991.
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 had 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.
In December 1998, the Partnership sold a small parcel of land for
$7,700. The parcel was retained by the Partnership after the Partnership
conveyed the title of 18 Central Shopping Center to the lender in 1997.
The Partnership recognized gain on sale of the parcel of $7,700 for
financial reporting and tax purposes in 1998.
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.
<PAGE>
The Partnership and Carlyle - XVI acquired their interests in Palm
Desert, subject to a first mortgage loan with an outstanding principal
balance of approximately $43,500,000 (as described below), for an initial
aggregate contribution of approximately $17,400,000, all of which was paid
in cash at closing, of which the Partnership's share was $2,475,000. The
Partnership and the Carlyle - XVI's initial aggregate contribution was used
to make the distribution to the joint venture partner as described below
and to pay a portion of the closing costs. Except for amounts to be
contributed to Palm Desert to pay certain closing costs, the joint venture
partner was not required to make any capital contributions to Palm Desert
at closing. However, in consideration of a distribution from Palm Desert
at closing, the joint venture partner was obligated to make contributions
to Palm Desert to pay the $13,752,746 purchase price obligation of Palm
Desert to the seller of the shopping center, of which the final $4,826,906
was paid in January 1993. In addition, the joint venture partner made
contributions to Palm Desert through December 1994 to pay any operating
deficits and to pay a portion of the returns to the Partnership and
Carlyle-XVI as described below. Amounts required to pay the cost of tenant
improvements and allowances (the "Tenant Improvement Costs") and other
capital expenditures, as well as any operating deficits of Palm Desert
after December 1994, were 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 provided that the
Partnership and Carlyle - XVI were entitled to receive out of net cash flow
a current preferred return and a cumulative preferred return, each based on
a negotiated rate of return on their respective initial capital
contributions (other than those used to pay closing costs). Such current
preferred return which the Partnership was entitled to receive through
December 31, 1994 (as defined) was received. The Partnership, Carlyle -
XVI and the joint venture partner were entitled to a cumulative preferred
return, based on a negotiated rate of return on their respective
contributions to pay the Tenant Improvement Costs through December 1994
(the "Tenant Improvement Cost Contributions"). All cumulative preferred
returns were distributable on an equal priority level; however they were
subordinate to the receipt by the Partnership and Carlyle - XVI of their
respective current year preferred return. Any remaining annual cash flow
would have been distributable 75% to the Partnership and Carlyle - XVI and
25% to the joint venture partner until the Partnership and Carlyle - XVI
received an amount equal to their initial capital contributions (other than
those used to pay closing costs) plus a negotiated annual internal rate of
return thereon and an amount equal to their Tenant Improvement Cost
Contributions, and thereafter any remaining annual cash flow was
distributable 50% to the Partnership and Carlyle - XVI and 50% to the joint
venture partner.
The Palm Desert venture agreement also provided that upon sale or
refinancing of the property, net sale or refinancing proceeds would 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 had received a negotiated annual internal
rate of return on their respective initial capital contributions (other
than those used to pay closing costs), and any remaining proceeds were
distributable 50% to the Partnership and Carlyle - XVI and 50% to the joint
venture partner.
<PAGE>
The land underlying the shopping center was owned by the lender under
the first mortgage loan. Palm Desert leased the land by assignment of an
existing ground lease which had a term through December 2038 and provided
for minimum annual rental payments of $900,000, as well as for additional
rental payments for each calendar year equal to 50% of the amount by which
certain of the ground lessee's gross receipts from the shopping center
exceeded $6,738,256. Total ground rent expense for the years ended
December 31, 1998, 1997 and 1996 was $1,162,669, $1,312,906 and $1,293,112,
respectively. The ground lease provided for two 10-year extensions at the
option of the lessee. The ground lease did not provide for any option on
the part of Palm Desert to purchase the land.
Operating profits and losses, in general, were allocable in proportion
to the amount of net cash flow distributed to the partners of Palm Desert,
or if there were no distributions of net cash flow, generally 75% to the
Partnership and Carlyle - XVI and 25% to the joint venture partner, except
that the deductions allocable with respect to certain expenses were
allocable to the partner whose contributions were used to pay such
expenses. For 1997 and 1996 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 and 1996. For 1998, profits
were allocable to the Partners in proportions to the amount of net cash
flow distributed to the partners of Palm Desert.
The Palm Desert agreement also provided that the annual cash flow, net
sale or refinancing proceeds and tax items distributed or allocated
collectively to the Partnership and Carlyle - XVI generally were
distributable or allocable between them based upon their respective
capital contributions. Such capital contributions were 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 (the "Option
Agreement") . Pursuant to the Option Agreement, the unaffiliated venture
partner had the right (but not the obligation) to purchase all (but not
less than all) of the Partnership's and Carlyle-XVI's interests in the
joint venture by giving notice of its exercise of the option during the
term of the option, which was originally scheduled to expire July 15, 1998
but was extended first through August 14, 1998 pursuant to a first
amendment to the Option Agreement. The Option Agreement also provided for
certain rights and obligations of the Partnership, Carlyle-XVI and the
unaffiliated venture partner with respect to the joint venture and its
property during the option term. In consideration for the option and the
first amendment to the option, the unaffiliated venture partner was
required to pay $58,333 for each month of the option term. Pursuant to a
second amendment to the Option Agreement, the option term was extended
through December 29, 1998, the unaffiliated venture partner was required to
pay $120,000 to the Partnership and Carlyle-XVI and the aggregate purchase
price for the interests was reduced to $4,000,000. The Partnership and
Carlyle-XVI received their allocable shares of the consideration for the
option of which the Partnership's share was approximately $71,000.
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 represented undistributed net cash flow of
the joint venture through the end of 1997. All other funds and net cash
flow of the joint venture during the term of the option were held by the
joint venture for its use. Upon the expiration of the Option Agreement,
the rights and obligations of the parties subsequent to expiration of the
Option Agreement were to be governed by the terms of the joint venture
partnership agreement without regard to changes previously affected by the
terms of the Option Agreement.
<PAGE>
On December 29, 1998, the Partnership and Carlyle-XVI sold their
respective interests in the joint venture pursuant to the Option Agreement
for $4,000,000, of which the Partnership's share was $569,000. The sale
resulted in a gain to the Partnership in 1998 of approximately $216,000 for
financial reporting purposes and a gain on sale of approximately $556,000
for Federal income tax purposes. The Partnership had no liability for any
representations, warranties or covenants in connection with the sale of its
interest in the joint venture.
The shopping center was being managed pursuant to a long-term
agreement with an affiliate of the joint venture partner. The manager was
paid a fee equal to 3% of the base and percentage rents collected under
tenant leases, increasing to 4% of the base and percentage rents for those
years that the Partnership and Carlyle - XVI had 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 was entitled to receive compensation
for leasing services.
HOUSTON INDUSTRIAL PROPERTIES AND SILBER #1
On March 28, 1997, the joint venture sold the Houston Industrial
Properties (consisting of Minimax 2, Minimax 3, 1801 West Belt and Pine
Forest #17 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.
The joint venture was liquidated after the expiration of the
representations and warranties and 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
Industrial 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 Industrial 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 fee based upon a percentage of gross receipts from the
properties.
<PAGE>
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations were allocated 96% to the Holders
of Interests and 4% to the General Partners. Profits from the sale or
other disposition of investment properties were 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 would 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 were
generally to be allocated 4% to the General Partners. The remaining sale
or other disposition profits and losses were allocated to the Holders of
Interests. However, during 1998, a reallocation of current and prior years
gains on sales was made among the partners for financial reporting
purposes. Such reallocation did not have an effect on total assets, total
partners' capital or net earnings.
The General Partners were 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 were allocated 90% to the Holders of Interests and 10% to
the General Partners (of which 6.25% constituted a management fee to the
Corporate General Partner for services in managing the Partnership).
The Partnership Agreement provided that subject to certain conditions
the General Partners would receive as a distribution of the proceeds (net
after expenses and liabilities and retained working capital) from the sale
or refinancing of a real property up to 3% of the selling price, 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 were 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. If upon completion of the liquidation of the
Partnership and the distribution of all Partnership funds, the Holders of
Interests had not received the amounts in (i) and (ii) above, the General
Partners were required to return all or a portion of the 1% distribution of
net sale or refinancing proceeds described above up to an amount equal to
such deficiency in payments to the Holders of Interests pursuant to (i) and
(ii) above. The Holders of Interests received from sales proceeds
significantly less than the return level in (i) and (ii) above over the
entire term of the Partnership. Accordingly, in December 1998, the General
Partners were required to contribute to the Partnership $1,382 which
represented the amount of all distributions they previously received from
sales and refinancing proceeds, and such amount was included in the
liquidating distribution made to the Holders of Interests.
<PAGE>
TRANSACTIONS WITH AFFILIATES
The General Partners received operating distributions of $85,535,
$2,851 and $22,811 for 1998, 1997 and 1996, respectively. The General
Partners also received a final liquidating distribution of $81,515 in
December 1998. In addition, the General Partners were required to
contribute to the Partnership $1,382 which represented the amount of all
distributions they had previously received from sale or refinancing
proceeds and such amount was included in the liquidating distribution made
to the Holders of Interests.
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, was 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, 1998 (immediately prior to final
liquidating distribution) and December 31, 1997 and 1996 are as follows:
UNPAID AT
DECEMBER 31,
1998 1997 1996 1998
------- ------- -------- ------------
Property management
and leasing fees . . . . $ -- 55,866 70,312 --
Management fees to
Corporate General
Partners . . . . . . . . 278,416 4,752 38,019 --
Insurance commissions . . 192 1,394 2,911 --
Reimbursement (at cost)
for accounting services. 7,158 5,852 4,221 --
Reimbursement (at cost)
for portfolio manage-
ment services. . . . . . 21,930 25,060 17,403 --
Reimbursement (at cost)
for legal services . . . 5,868 5,081 2,650 --
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses . 11,921 -- -- --
-------- ------- -------- ------
$325,485 98,005 135,516 --
======== ======= ======== ======
<PAGE>
Pursuant to a winding up agreement between the Partnership and the
Corporate General Partner, in consideration of the Corporate General
Partner's assumption of residual liabilities of the Partnership upon its
termination, the Partnership paid the Corporate General Partner $7,183 and
transferred to the Corporate General Partner any residual rights to the
coverage and benefits of insurance on behalf of the Partnership and other
residual rights.
INVESTMENT IN UNCONSOLIDATED VENTURE
Summary combined financial information for Palm Desert (immediately
prior to the sale of the Partnership's interest in the property in December
1998) is as follows:
1998 1997
------------ -----------
Current assets. . . . . . . . . $ 2,289,942 2,212,411
Current liabilities . . . . . . (1,900,232) (1,948,707)
------------ -----------
Working capital. . . . . . 389,710 263,704
------------ -----------
Other assets. . . . . . . . . . 3,147,003 3,381,628
Ventures partners' equity . . . (4,887,907) (4,443,740)
Investment property, net. . . . 43,190,846 43,146,694
Other liabilities . . . . . . . (1,379,247) (1,443,677)
Long-term debt. . . . . . . . . (40,107,408) (40,622,529)
------------ -----------
Partnership's capital. . . $ 352,997 282,080
============ ===========
Represented by:
Invested capital. . . . . . . $ 2,683,814 2,683,814
Cumulative cash distributions (719,065) (616,253)
Cumulative earnings (losses). (1,611,752) (1,785,481)
------------ -----------
$ 352,997 282,080
============ ===========
Total income. . . . . . . . . . $ 10,684,757 10,767,445
Expenses. . . . . . . . . . . . 9,422,932 10,734,545
------------ -----------
Net earnings (loss) . . . . . . $ 1,261,825 32,900
============ ===========
Partnership's share
of income (loss). . . . . . . $ 173,729 3,427
============ ===========
Additionally, for the year ended December 31, 1996, total income was
$11,050,606, expenses were $12,314,256 and net loss was $1,263,650 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 1997 and 1998.
PART III
ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS
JMB Realty Corporation, a Delaware corporation ("JMB") was the
Corporate General Partner of the Partnership. 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 had responsibility for all aspects of the
Partnership's operations, subject to the requirement that sales of real
property were to be approved by the Associate General Partner of the
Partnership, ABPP Associates, L.P., an Illinois limited partnership, with
JMB as its sole general partner. The limited partners of the Associate
General Partner are generally officers, directors and affiliates of JMB or
its affiliates.
The Partnership was subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services were provided to
the Partnership or its investment properties by affiliates of the General
Partners, including property management services and insurance brokerage
services. In general, such services were to be provided on terms no less
favorable to the Partnership than could be obtained from independent third
parties and were otherwise subject to conditions and restrictions contained
in the Partnership Agreement. The Partnership Agreement permitted the
General Partners and their affiliates to provide services to, and otherwise
deal and do business with, persons who have been engaged in transactions
with the Partnership, and permitted the Partnership to borrow from,
purchase goods and services from, and otherwise to do business with,
persons doing business with the General Partners or their affiliates. The
General Partners and their affiliates may have been in competition with the
Partnership under certain circumstances, including 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 have been affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves and the determination
of the sources (i.e., offering proceeds, cash generated from operations or
sale proceeds) and uses of such reserves, the timing of expenditures and
the allocation of certain tax items under the Partnership Agreement, the
General Partners may have had a conflict of interest with respect to such
determinations.
The names, positions held and length of service therein of each
director and the executive and certain other officers of the Corporate
General Partner are as follows:
<PAGE>
SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 2, 1999. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 2,
1999. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"),
and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the
managing general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"),
JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties,
Ltd.-X ("JMB Income-X") and JMB Income Properties, Ltd.-XI ("JMB
Income-XI"). JMB is also the sole general partner of the associate general
partner of most of the foregoing partnerships. Most of the foregoing
directors and officers are also officers and/or directors of various
affiliated companies of JMB including Arvida/JMB Managers, Inc. (the
general partner of Arvida/JMB Partners, L.P. ("Arvida")). Most of such
directors and officers are also partners, directly or indirectly, of
certain partnerships which are or were associate general partners in the
following real estate limited partnerships, among others: the Partnership,
Carlyle-XI, Carlyle-XIII, Carlyle-XIV, Carlyle-XV, JMB Income-VII, JMB
Income-X, JMB Income-XI and Carlyle Income Plus-II.
<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 61) is an individual general partner of JMB
Income-V. Mr. Malkin has been associated with JMB since October, 1969.
Mr. Malkin is also a director of Urban Shopping Centers, Inc. an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is also a director of Chisox
Corporation, which is the general partner of a limited partnership that
owns the Chicago White Sox Major League Baseball team, and CBLS, Inc.,
which is the general partner of the general partner of a limited
partnership that owns the Chicago Bulls National Basketball Association
team. He is a Certified Public Accountant.
Neil G. Bluhm (age 61) is an individual general partner of JMB
Income-V. Mr. Bluhm has been associated with JMB since August, 1970. Mr.
Bluhm is also a principal of Walton Street Capital, L.L.C., which sponsors
real estate investment funds, and a director of Urban Shopping Centers,
Inc. He is a member of the Bar of the State of Illinois and a Certified
Public Accountant.
Burton E. Glazov (age 60) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
Mr. Glazov is currently retired. He is a member of the Bar of the State of
Illinois.
Stuart C. Nathan (age 57) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 65) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.
John G. Schreiber (age 52) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
which is engaged in the real estate investing business. He is also a
senior advisor and partner of Blackstone Real Estate Advisors, L.P., an
affiliate of the Blackstone Group, L.P. He is also a director of Urban
Shopping Centers, Inc., Host Marriott Corporation, The Brickman Group,
Ltd., which is engaged in the landscape maintenance business, and a
director of a number of investment companies advised or managed by T. Rowe
Price Associates, Inc. and its affiliates and a trustee of Amli Residential
Property Trust. He holds a Masters degree in Business Administration from
Harvard University Graduate School of Business.
H. Rigel Barber (age 50) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 51) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Gary Nickele (age 46) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Gailen J. Hull (age 50) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 63) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Officers and the directors of the Corporate General Partner received
no direct remuneration in such capacities from the Partnership. The
Partnership was required to pay a management fee to the Corporate General
Partner and the General Partners were entitled to receive a share of cash
distributions and a share of profits or losses. Reference is made to the
Notes for a description of such transactions, distributions and
allocations. In 1998, the General Partners received $167,050 of
distributions, including the final liquidating distribution, and the
Corporate General Partner earned management fees of $278,416. The General
Partners received a share of Partnership's profits for tax purposes
aggregating $2,385 in 1998.
In connection with the liquidation and termination of the Partnership,
the General Partners were required to contribute to the Partnership $1,382,
which represented the amount of all distributions they previously received
from sale and refinancing proceeds, and such amount was included in the
liquidating distribution made to the Holders of Interests. The General
Partners were required to contribute such amount because the Holders of
Interests had not received distributions of net sale or refinancing
proceeds equal to their initial capital investment in the Partnership plus
certain other distributions constituting a specified return on their
average capital investment for each year (i.e., their initial capital
investment as reduced by net sale or refinancing proceeds previously
distributed) commencing with the first fiscal quarter of 1990.
The Partnership was 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 1998
aggregating $192 in connection with the provision of insurance coverage for
professional liability provided for the Partnership. Such commissions were
at rates set by insurance companies for the classes of coverage provided.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses, 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
1998 were $46,877 which were all paid as of December 31, 1998.
Pursuant to a winding up agreement between the Partnership and the
Corporate General Partner, in consideration of the Corporate General
Partner's assumption of any residual liabilities of the Partnership upon
its termination, the Partnership paid the Corporate General Partner $7,183
and transferred to the Corporate General Partner any residual rights to the
coverage and benefits of insurance on behalf of the Partnership and other
residual rights.
<PAGE>
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group was known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership immediately prior to its liquidation.
(b) The Corporate General Partner, its officers and directors, and the Associate General Partner beneficially
owned the following Interests of the Partnership immediately prior to its liquidation:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership JMB Realty Corporation 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, was deemed to have shared voting and investment
power.
(2) Includes .39813 Interests owned by an officer or his relatives for which such officer had 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 was deemed to have
shared investment and voting power for such Interests.
No officer or director of the Corporate General Partner of the Partnership possessed a right to acquire
beneficial ownership of Interests of the Partnership.
Reference is made to Item 10 for information concerning ownership of the Corporate General Partner.
(c) There existed no arrangement, known to the Partnership, the operation of which may have resulted in a
change in control of the Partnership.
</TABLE>
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, 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.
<PAGE>
10-I. Palm Desert Option Agreement and Palm Desert
Agreement for Purchase and sale of Partnership Interests by the Partnership
and Carlyle-XVI relating to the unaffiliated venture partner's option to
purchase the Partnership and Carlyle-XVI's interest in the joint venture
dated March 11, 1998 are hereby incorporated by reference to the
Partnership's Report for March 31, 1998 on Form 10-Q (File No. 0-17708)
dated May 13, 1998.
10-J. First Amendment to Palm Desert Option Agreement,
and First Amendment to Palm Desert Agreement for Purchase and Sale of
Partnership Interests by the Partnership and Carlyle-XVI relating to the
unaffiliated venture partner's option to purchase the Partnership and
Carlyle-XVI's interest in the joint venture dated July 15, 1998 is hereby
incorporated by reference to the Partnership's Report for September 30,
1998 on Form 10-Q (File No. 0-17708) dated November 11, 1998.
10-K. Second Amendment to Palm Desert Option Agreement
and Second Amendment to Palm Desert Agreement for Purchase and Sale of
Partnership Interests by the Partnership and Carlyle-XVI relating to the
unaffiliated venture partner's option to purchase the Partnership and
Carlyle-XVI's interest in the joint venture dated December 28, 1998 is
hereby incorporated by reference to the Partnership's Report on Form 8-K
(File No. 0-17708) dated January 13, 1999.
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
On January 13, 1999, the Partnership filed a report on Form 8-K
with respect to the sale of its interest in the joint venture that owned
the Palm Desert Town Center on December 29, 1998. Such report on Form 8-K
included a description of the sale.
No annual report for the fiscal year 1998 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 22, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Corporate General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 22, 1999
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 22, 1999
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 22, 1999
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 22, 1999
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 22, 1999
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 22, 1999
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 22, 1999
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 22, 1999
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - 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
10-I. Palm Desert Option Agreement and
and Palm Desert Agreement for
Purchase and Sale of Partnership
Interests Yes
10-J. First Amendment to Palm Desert
Option Agreement and First
Amendment to Palm Desert
Agreement for Purchase and
Sale of Partnership Interests Yes
10-K. Second Amendment to Palm Desert
Option Agreement and Second
Agreement to Palm Desert
Agreement for Purchase and
Sale of Partnership Interests Yes
21. List of Subsidiaries. No
24. Powers of Attorney. No
27. Financial Data Schedule No
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership was 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 owned a 50% interest in Carlyle/Palm Desert,
Inc., a corporation that was 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, 1998, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 29th day of January, 1999.
H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer
GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1998,
and any and all amendments thereto, the 29th day of January, 1999.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - 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, 1998, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 29th day of January, 1999.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1998,
and any and all amendments thereto, the 29th day of January, 1999.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,264,520
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0
0
<OTHER-SE> 4,264,520
<TOTAL-LIABILITY-AND-EQUITY> 4,264,520
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<TOTAL-REVENUES> 350,827
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<OTHER-EXPENSES> 736,454
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (385,627)
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<EPS-PRIMARY> (18.64)
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