Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: CARLYLE INCOME PLUS, LTD. - II
Commission File No. 0-17705
Form 10-Q
Gentlemen:
Transmitted, for the above-captioned registrant, is the
electronically filed executed copy of registrant's current
report on Form 10-Q for the quarter ended March 31, 1996.
Thank you.
Very truly yours,
CARLYLE INCOME PLUS, LTD.
By: JMB Realty Corporation
Corporate General Partner
By:
Gailen J. Hull, Senior Vice President
and Principal Accounting Officer
GJH/jt
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1996 Commission file
number 0-17705
CARLYLE INCOME PLUS, L.P.-II
(Exact name of registrant as specified in its charter)
Delaware 36-3555432
(State of organization) (I.R.S. Employer
Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-915-1987
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
____ _____
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . 16
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . 19
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE INCOME PLUS, L.P.-II
(a limited partnership)
and Consolidated Venture
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995
(Unaudited)
A s s e t s
--------------
<CAPTION>
March 31, December 31,
1996 1995
<S> --------- ------------
Current assets: <C> <C>
Cash and cash equivalents . .. . . . . . .. . $ 4,626,747 3,606,715
Interest, rents and
other receivables. . . . . . . . . . . . 42,577 54,610
Prepaid expenses . . . . . . . . . . . .. 4,794 11,986
-------- -------
Total current assets. . . . . . . . . . 4,674,118 3,673,311
-------- ---------
Investment property, at cost:
Land . . . . . . . . . . . . . . . . . . 4,586,545 4,586,545
Buildings and improvements . . . . . . . 16,797,562 16,793,928
-------- ----------
21,384,107 21,380,473
Less accumulated depreciation. . . . . . 4,090,901 3,945,031
-------- ----------
Total investment property, net of
accumulated depreciation. . . . .. . . 17,293,206 17,435,442
-------- ----------
CARLYLE INCOME PLUS, LP - II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
Investment in unconsolidated affiliated
corporation, at equity . . . . . . . . . . . . 24,006,936 24,284,252
Investment in unconsolidated
venture, at equity . . . . . . . . . . . . . 4,032,868 3,980,419
-------- ---------
$ 50,007,128 49,373,424
========== =========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
--------------------------------------------------------
Current liabilities:
Accounts payable . . . . . . . . . . . . $ 95,672 21,939
Amounts due to affiliates . . . . . . . 31,687 26,687
Accrued real estate taxes. . . . . . .. . 61,287 --
--------- -------
Total current liabilities . . . . . . . 188,646 48,626
--------- --------
Tenant security deposits. . .. . . . . . . . . . 105,882 107,369
--------- --------
Commitments and contingencies
Total liabilities . . . . . . . . . 294,528 155,995
--------- --------
Venture partner's subordinated equity
in venture . . . . . . . . . . . . . . . . . . . 5,593,343 5,523,770
Partners' capital accounts
(deficits):
CARLYLE INCOME PLUS, LP - II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
General partners:
Capital contributions . .. . . . . . . . 25,000 25,000
Cumulative net earnings . . . . . . . . 472,080 450,800
Cumulative cash distributions . . .. . . (771,032) (771,032)
--------- ---------
(273,952) (295,232)
--------- ---------
Limited partners (64,269.53 interests):
Capital contributions, net of
offering costs and
purchase discounts . . . . . . . . . 55,256,131 55,256,131
Cumulative net earnings . . . . . . . . 7,466,222 7,061,904
Cumulative cash distributions. . . . . (18,329,144) (18,329,144)
----------- -----------
44,393,209 43,988,891
Total partners' capital accounts. .44,119,257 43,693,659
---------- ----------
$50,007,128 49,373,424
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE INCOME PLUS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Income:
Rental income. . .. . . . . . . . . . . $ 832,786 821,018
Interest income. .. . . . . . . . . . . 66,040 55,295
-------- -------
898,826 876,313
-------- -------
Expenses:
Depreciation . .. . . . . . . . . . . . 145,870 143,158
Property operating expenses. .. . . . . 470,753 391,040
Professional services. . . . .. . . . . 28,000 25,000
General and administrative . .. . . . . 78,353 27,838
-------- -------
722,976 587,036
-------- -------
Operating earnings (loss). .. . . . . . 175,850 289,277
Partnership's share of earnings of
unconsolidated affiliated
corporation . .. . . . . . . . . . . . . . . . . 266,872 256,600
Partnership's share of
operations of unconsolidated
venture . . . . . . . . . . . . . . . . . . . . 52,449 75,972
CARLYLE INCOME PLUS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
Venture partner's share of
venture's operations . . . . .. . . . . . . . . (69,573) (89,938)
------- ------
Net earnings (loss). . . . . . . . . . $425,598 531,911
======= ========
Net earnings (loss) per limited
partnership interest .. . . . . . . . . . $ 6.29 7.86
======= ========
Cash distributions per limited partnership
interest . . . . . . . . . . . . . . $ -- 16.00
======= ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE INCOME PLUS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
-------- ------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . $ 425,598 531,911
Items not requiring (providing)
cash or cash equivalents:
Depreciation . . . . . . . . . . . 145,870 143,158
Partnership's share of earnings
of unconsolidated affiliated corporation,
net of dividends. . . . . . . . . 277,316 233,168
Partnership's share of operations of
unconsolidated venture, net of
distributions . . . . . . . . . . (52,449) 74,028
Venture partner's share of
venture's operations . . . . . . 69,573 89,938
Changes in:
Interest, rents and
other receivables . .. . . . . . . 12,033 13,158
Prepaid expenses . . .. . . . . . . 7,192 7,244
Accounts payable . . .. . . . . . . 73,733 26,002
Amounts due to affiliates . . . . . 5,000 (14,953)
Unearned rents . . . . . . . . . . -- 70,029
Accrued real estate taxes . . . . . 61,287 67,263
Tenant security deposits . . . . . (1,487) (2,861)
------- -------
Net cash provided by (used in)
operating activities. . .. . . . . 1,023,666 1,238,085
--------- ----------
CARLYLE INCOME PLUS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Cash flows from investing activities:
Net sales and maturities of
short-term investments. . . . . . . . . . . -- 1,811,024
Additions to investment properties (3,634) (62,720)
-------- --------
Net cash provided by (used in) investing
activities. . . . . . . . . . . . . . . . . (3,634) 1,748,304
-------- ---------
Cash flows from financing activities:
Distributions to venture
partner . . . . . . . . . . . . . . . . . . -- (139,500)
Distributions to limited partners -- (1,028,312)
Distributions to general
partners. . . . . . . . . . . . . . . . . . -- (54,122)
-------- --------
Net cash provided by (used in) financing
activities. . . . . . . . . . . . . . . . . -- (1,221,934)
-------- ----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . .1,020,032 1,764,455
Cash and cash equivalents,
beginning of year . . . . . . . . . . . .3,606,715 2,009,565
---------- ----------
CARLYLE INCOME PLUS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Cash and cash equivalents,
end of period . . . . . . . . . . $ 4,626,747 3,774,020
======== =========
Supplemental disclosure of
cash flow information:
Cash paid for mortgage and
other interest. . .. . . . . . . . . $ -- --
======== ==========
Non-cash investing and
financing activities. . . . . . . . $ -- --
======== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE INCOME PLUS LIMITED - II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
GENERAL
Readers of this quarterly report should refer to the
Partnership's audited financial statements for the year ended
December 31, 1995, which are included in the Partnership's 1995
Annual Report, as certain footnote disclosures which would
substantially duplicate those contained in such audited
financial statements have been omitted from this report.
The preparation of financial statements in accordance with
GAAP requires the Partnership to make estimates and assumptions
that affect the reported or disclosed amount of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
Statement of Financial Accounting Standards No. 121 was
adopted by the Partnership on January 1, 1996.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is
permitted to engage in various transactions involving the
Corporate General Partner and its affiliates including the
reimbursement for salaries and salary-related expenses of 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. Such costs
recognized by the Partnership for the three months ended March
31, 1996 and 1995 aggregated $34,297 and $8,629, respectively,
of which $31,687 was unpaid at March 31, 1996.
CARLYLE INCOME PLUS LIMITED - II
( A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 1996 and 1995
(Unaudited)
ASHBY APARTMENTS
The Ashby at McLean investment property is 97% occupied at
March 31, 1996. Two apartment complexes (one to contain 624
units, the other 594 units) are being developed in the Ashby
sub-market. These new properties are expected to compete
directly with The Ashby upon their projected completion and
occupancy in late 1996, which could adversely affect future cash
flow. The CIP/Ashby joint venture is conserving its working
capital in order to fund budgeted 1996 capital costs of
approximately $500,000.
1225 CONNECTICUT AVENUE
1225 Investment Corporation incurred approximately
$5,300,000 of anticipated tenant improvement costs, lobby
renovation and sprinkler system costs related to the lease
extension for Ernst & Young, as well as tenant improvement costs
for other tenants in 1994 and 1995. Such costs were paid during
1994 and 1995 from the net proceeds of approximately $5,300,000
from the January 1994 refinancing of the existing mortgage loan
secured by the property. The property remains 100% occupied at
March 31, 1996.
LANDINGS SHOPPING CENTER
During 1995, the JMB/Landings venture (the "venture")
negotiated a three-year lease renewal (through May 31, 1998)
with a tenant occupying 9,211 square feet (approximately 10%) of
the owned leasable space at The Landings Shopping Center. In
July 1995, this tenant's parent company filed for Chapter 11
bankruptcy protection. In January 1996, this tenant vacated its
CARLYLE INCOME PLUS LIMITED - II
( A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
space, at which time it was approximately $27,000 in arrears
with respect to its lease obligations. The venture is pursuing
its legal remedies concerning these arrearages, however,
collection of all or any of these past-due amounts is doubtful.
The venture is pursuing potential replacement tenants for this
space. Occupancy at the property decreased to 82% at March 31,
1996, from 95% at December 31, 1995 primarily as a result of the
aforementioned tenant vacating. The parent company of another
tenant (occupying approximately 12% of the owned leasable space
at the property) filed for Chapter 11 bankruptcy protection in
March 1996. Although this tenant continues to operate at this
location, approximately $48,000 in delinquent rents are due as
of the date of this report. The venture is pursuing its legal
remedies concerning these arrearages. In addition, tenant
leases representing approximately 10%, 22% and 25% of the
leasable space at the property are scheduled to expire in 1996,
1997 and 1998, respectively, not all of which are expected to be
renewed. The JMB/Landings joint venture is conserving its
working capital in order to fund budgeted 1996 capital and
tenant costs of approximately $100,000 and for potential future
costs in connection with the lease up of the vacant space at The
Landings Shopping Center.
<TABLE>
CARLYLE INCOME PLUS LIMITED - II
( A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 1996 and 1995
(Unaudited)
UNCONSOLIDATED INVESTMENTS - SUMMARY INFORMATION
JMB/LANDINGS
Summary income statement information for JMB/Landings Associates
for the three months ended March 31, 1996 and 1995 is as follows:
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Total income . . . . . . . . $ 269,945 328,155
========= =========
Operating earnings . . . . $ 104,898 151,944
========= =========
Partnership's share
of earnings. . . . . . . . . $ 52,449 75,972
=========== =========
CARLYLE INCOME PLUS LIMITED - II
( A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
March 31, 1996 and 1995
(Unaudited)
1225 CONNECTICUT AVENUE, N.W.
Summary income statements information for 1225 Investment
Corporation for the three months ended March 31, 1996 and 1996 is as follows:
1996 1995
--------- --------
Total income . . . . . . . $1,725,874 1,629,133
========= =========
Operating earnings . . . . $ 612,935 589,344
========= =========
Partnership's share of
earnings. . . . . . . . . . $ 266,872 256,600
========= =========
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1996 and for the three months ended March 31, 1996 and 1995.
<FN>
</TABLE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning the
Partnership's investments.
In an effort to reduce Partnership operating expenses, the
Partnership has elected to make semiannual rather than quarterly
distributions of available operating cash flow beginning in
November 1995. After reviewing the Partnership's properties and
marketplaces in which they operate, the General Partners of the
Partnership expect to be able to conduct an orderly liquidation
of its investment portfolio as quickly as practicable.
Therefore, the affairs of the Partnership are expected to be
wound up no later than December 31, 1999 (sooner if the
properties are sold in the nearer term), barring any unforeseen
economic developments.
RESULTS OF OPERATIONS
The increase in cash and cash equivalents at March 31, 1996 as
compared to December 31, 1995 is attributable primarily to the
Partnership's receipt of approximately $544,000 of dividends
from 1225 Connecticut in February 1996. An additional increase
in cash and cash equivalents is attributable to the operations
of the Partnership's consolidated venture, CIP/Ashby, during the
three months ended March 31, 1996. Additionally no operating
cash flow distributions were made by the Partnership during the
three months ended March 31, 1996 since the Partnership has
elected to make semiannual (in May and November) rather than
quarterly distributions.
The increase in accounts payable at March 31, 1996 as compared
to December 31, 1995 is due primarily to the timing of payments
of operating expenses at the Ashby at McLean Apartments.
The increase in accrued real estate taxes at March 31, 1996 as
compared to December 31, 1995 is due to the accrual of real
estate taxes at the Ashby at McLean Apartments, as mandated by
the real estate tax payment due dates in the jurisdiction in
which this property operates.
The increase in property operating expenses for the three
months ended March 31, 1996 as compared to the three months
ended March 31, 1995 is attributable primarily to an increase in
utilities and repairs and maintenance expenses at the Ashby at
McLean Apartments.
The increase in general and administrative expenses for the
three months ended March 31, 1996, as compared to the three
months ended March 31,1995 is attributable primarily to the
timing of the recognition of costs for certain outsourcing
services, recognition of certain prior year reimbursable costs
to affiliates of the General Partners and the timing of the
recognition of certain printing costs in 1996. <PAGE>
The decrease in Partnership's share of operations of
unconsolidated venture for the three months ended March 31, 1996
as compared to the three months ended March 31, 1995 is
attributable primarily to a decrease in occupancy and a
corresponding decrease in rental income at The Landings Shopping
Center.
The decrease in venture partner's share of venture's
operations for the three months ended March 31, 1996 as compared
to the three months ended March 31, 1995 is due primarily to
an increase in utilities and repairs and maintenance expenses at
the Ashby at McLean Apartments.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
<CAPTION>
The following is a listing of approximate occupancy levels
by quarter for the Partnership's investment properties:
1995 1996
-------------------------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. The Landings
Shopping Center
Sarasota,
Florida . . 93% 91% 88% 95% 82%
2. The Ashby at
McLean
McLean, Virginia. 97% 97% 98% 96% 97%
3. 1225 Connecticut
Washington,
D.C.. . . . . 100% 100% 100% 100% 100%
<FN>
</TABLE>
PART II. OTHER INFORMATION
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. The Prospectus of the Partnership dated May 24, 1988,
as supplemented August 1988, April 28, 1989, December
22, 1989, February 28, 1990 and June 5 1990 as filed
with the Commission pursuant to Rules 424 (b) and 424
(c), is hereby incorporated herein by reference to the
Partnership's report for December 31, 1993 on Form 10-K
(File No. 0-17705) dated March 25, 1994.
3.1 Agreement of Limited Partnership is set forth as
Exhibit A of the Partnership's Prospectus, which is
incorporated herein by reference to the Partnership's
Registration Statement on Form S-11 (File No. 33-19463
dated May 24, 1988.
4.1 Assignment Agreement, incorporated by reference to
Exhibit B to the Partnership's Prospectus
10.1- *Material Contracts
10.10
10.11 Closing statement dated January 28, 1994 relating to
the refinancing by 1225 Investment Corporation which
owns 1225 Connecticut Avenue in Washington, D.C., are
hereby incorporated by reference to the Partnership's
report for March 31, 1994 on Form 10-Q (File No. 0-
17705) dated May 11, 1994.
10.12 Secured promissory note dated January 28, 1994 in the
amount of $6,500,000 relating to the refinancing by
1225 Investment Corporation which owns 1225 Connecticut
Avenue in Washington, D.C., are hereby incorporated by
reference to the Partnership's report for March 31,
1994 on Form 10-Q (File No. 0-17705) dated May 11,
1994.
10.13 Secured promissory note dated January 28, 1994 in the
amount of $500,000 relating to the refinancing by 1225
Investment Corporation which owns 1225 Connecticut
Avenue in Washington, D.C., are hereby incorporated by
reference to the Partnership's report for March 31,
1994 on Form 10-Q (File No. 0-17705) dated May 11,
1994.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed for the quarter
covered by this report.
*Previously filed as exhibits to the Partnership's
Registration Statement (as amended) on Form S-11 (File No. 33-
194463) to the Securities Act of 1933.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CARLYLE INCOME PLUS, L.P.-II
BY: JMB Realty Corporation
(Corporate General Partner)
By: Gailen J. Hull,
Senior Vice President
Date: May 10, 1996
Pursuant to the requirements of the Securities Exchange Act
of1934, this report has been signed below by the following
person in the capacity and on the date indicated.
Gailen J. Hull,
Principal Accounting Officer
Date: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-Q FOR THE PERIOD ENDED MARCH 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000827086
<NAME> CARLYLE INCOME PLUS, L.P. - II
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,626,747
<SECURITIES> 0
<RECEIVABLES> 42,577
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,674,118
<PP&E> 21,384,107
<DEPRECIATION> 4,090,901
<TOTAL-ASSETS> 50,007,128
<CURRENT-LIABILITIES> 188,646
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 44,119,257
<TOTAL-LIABILITY-AND-EQUITY> 50,007,128
<SALES> 832,786
<TOTAL-REVENUES> 898,826
<CGS> 0
<TOTAL-COSTS> 616,623
<OTHER-EXPENSES> 106,353
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 175,850
<INCOME-TAX> 0
<INCOME-CONTINUING> 425,598
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 425,598
<EPS-PRIMARY> 6.29
<EPS-DILUTED> 6.29
</TABLE>
