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 September 30, 1994 Commission file number 0-16516
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(Exact Name of registrant as specified in its charter)
Illinois 36-3437938
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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 . . . . . . . . . . . . 22
PART II OTHER INFORMATION
Item 3. Defaults on Senior Securities . . . . . . . . . . . . . . . 27
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 28
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 29
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(UNAUDITED)
ASSETS
------
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
Current assets:
Cash and cash equivalents (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,142,080 286,137
Short-term investments (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,011,637 32,618,483
Interest, rents and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 502,765 1,010,293
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217,973 202,526
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,874,455 34,117,439
------------ ------------
Investment properties, at cost (note 2):
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,002,580 60,002,520
------------ ------------
60,002,580 60,002,520
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,517,112) (10,011,970)
------------ ------------
Total investment properties, net of
accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,485,468 49,990,550
Investment in unconsolidated ventures,
at equity (notes 1, 2 and 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,777,060 3,850,428
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412,052 335,676
Notes receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247,682 292,124
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,336,160 1,185,497
------------ ------------
$ 70,132,877 89,771,714
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt
(notes 2(e) and 2(f)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 310,112 283,548
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,198,745 901,810
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463,008 444,215
Amounts due to affiliates (note 5). . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,565,981
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,689 200,757
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,068,554 3,396,311
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,446 79,176
Investment in unconsolidated ventures,
at equity (notes 1, 2 and 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,187,406 17,120,620
Long-term debt, less current portion
(notes 2(e) and 2(f)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,928,883 42,164,903
------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,255,289 62,761,010
Venture partners' subordinated equity
in ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,678,114 5,766,754
Partners' capital accounts (deficits) (note 1):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,308,081) (2,979,118)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,277,094) (175,636)
------------ ------------
(4,565,175) (3,134,754)
------------ ------------
Limited partners:
Capital contributions, net of offering
costs and purchase discounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,541,353 120,541,353
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (77,647,662) (69,752,546)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,129,042) (26,410,103)
------------ ------------
764,649 24,378,704
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . . . . . . . . . . . . (3,800,526) 21,243,950
------------ ------------
Commitments and contingencies (notes 2 and 5)
$ 70,132,877 89,771,714
============ ============
<FN>
See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
Income:
Rental income . . . . . . . . . . . . . . . . . . . . $ 2,630,429 4,838,522 7,588,153 14,517,545
Interest income . . . . . . . . . . . . . . . . . . . 184,412 145,841 578,878 541,813
----------- ---------- ---------- ----------
2,814,841 4,984,363 8,167,031 15,059,358
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . . 1,280,647 2,573,969 3,834,170 7,742,747
Depreciation. . . . . . . . . . . . . . . . . . . . . 501,714 1,106,331 1,505,142 3,318,991
Property operating expenses . . . . . . . . . . . . . 1,049,570 1,156,092 3,428,924 3,481,461
Professional services . . . . . . . . . . . . . . . . 7,025 25,423 220,641 235,297
Amortization of deferred expenses . . . . . . . . . . 18,039 30,453 42,461 91,358
Management fees to corporate
general partner (note 5). . . . . . . . . . . . . . 38,986 82,844 116,957 248,532
General and administrative. . . . . . . . . . . . . . 40,168 68,642 191,743 232,954
----------- ---------- ---------- ----------
2,936,149 5,043,754 9,340,038 15,351,340
----------- ---------- ---------- ----------
Operating loss. . . . . . . . . . . . . . . . . 121,308 59,391 1,173,007 291,982
Partnership's share of loss from
operations of unconsolidated
ventures (notes 1, 2 and 5) . . . . . . . . . . . . 2,690,140 2,161,010 7,790,266 6,956,106
Venture partners' share of ventures'
operations. . . . . . . . . . . . . . . . . . . . . (188,147) 55,828 (739,194) 167,131
----------- ---------- ---------- ----------
Net operating loss. . . . . . . . . . . . . . . 2,623,301 2,276,229 8,224,079 7,415,219
Gain on sale of Partnership's invest-
ment in unconsolidated venture
(note 3(a)) . . . . . . . . . . . . . . . . . . . . . -- -- -- (2,627,427)
----------- ---------- ---------- ----------
Net loss. . . . . . . . . . . . . . . . . . . . $ 2,623,301 2,276,229 8,224,079 4,787,792
=========== ========== ========== ==========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
Net loss per limited part-
nership interest (note 1):
Net operating loss . . . . . . . . . . . . . $ 17.94 15.57 56.25 50.72
Gain on sale of Part-
nership's investment
in unconsolidated
venture. . . . . . . . . . . . . . . . . . -- -- -- (18.53)
----------- ---------- ---------- ----------
$ 17.94 15.57 56.25 32.19
=========== ========== ========== ==========
Cash distributions per
limited partnership
interest (note 1) . . . . . . . . . . . . . . $ 4.00 8.50 112.00 25.50
=========== ========== ========== ==========
<FN>
See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
1994 1993
------------ -----------
Cash flows from operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(8,224,079) (4,787,792)
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,505,142 3,318,991
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,461 91,358
Partnership's share of loss from operations of
unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,790,266 6,956,106
Venture partners' share of ventures' operations . . . . . . . . . . . . . . . . . . . . (739,194) 167,131
Gain on sale of partnership's investment in
unconsolidated venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (2,627,427)
Changes in:
Interest, rents and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . 507,528 206,853
Prepaid interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (1,297,901)
Other prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,447) (155,293)
Notes receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,442 97,292
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (150,663) (46,711)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296,935 86,478
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,793 (541,745)
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,565,981) 59,045
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (104,068) 2,206,400
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,730) 12,313
----------- ----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (602,595) 3,745,098
----------- ----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,606,846 (783,955)
Additions to investment property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (60) (68,717)
Partnership's distributions from unconsolidated ventures. . . . . . . . . . . . . . . . . 660,138 578,578
Partnership's contributions to unconsolidated ventures. . . . . . . . . . . . . . . . . . (310,250) (143,400)
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (118,837) (77,358)
----------- ----------
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . 18,837,837 (494,852)
----------- ----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993
----------- ----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . (209,456) (5,414,753)
Venture partners' distributions from venture. . . . . . . . . . . . . . . . . . . . . . . (1,151,655) (71,797)
Venture partners' contributions to venture. . . . . . . . . . . . . . . . . . . . . . . . 802,209 6,038,961
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,718,939) (3,578,872)
Distributions to general partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,101,458) (99,413)
----------- ----------
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . (17,379,299) (3,125,874)
----------- ----------
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 855,943 124,372
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . . . . . . . . . $ 3,815,377 9,040,648
=========== ==========
Non-cash investing and financing activities . . . . . . . . . . . . . . . . . . . . . . . $ -- --
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1993, which
are included in the Partnership's 1993 Annual Report on Form 10-K (File No.
0-16516) filed on March 25, 1994 (the "Annual Report"), as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated ventures, JMB/Warner
Center Associates ("JMB/Warner") (note 2(e)), JMB/Hahn PDTC Associates,
L.P. ("Palm Desert") (note 2(f)) and Carlyle-XVI Associates, L.P. (note
2(b)). The effect of all transactions between the Partnership and its
consolidated ventures has been eliminated. The Partnership, through
JMB/Warner, sold the Blue Cross Building in November 1993.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interests in JMB/Owings Mills Associates ("JMB/Owings"); 260 Franklin
Street Associates ("260 Franklin"); Villages Northeast Associates
("Villages Northeast"); JMB/NewPark Associates ("JMB/NewPark"); and its
indirect ownership of JMB/125 Broad Building Associates, L.P. ("JMB/125").
The Partnership, through JMB/Owings, sold its interest in Owings Mills Mall
in June 1993.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to reflect the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of the ventures as described
above. Such adjustments are not recorded on the records of the
Partnership. The effect of these items is summarized as follows for the
nine months ended September 30:
1994 1993
----------------------- -----------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net earnings
(loss) . . . . . . $(8,224,079) (6,117,512) (4,787,792) 3,021,387
Net earnings
(loss) per
limited
partnership
interest . . . . . $ (56.25) (46.86) (32.19) 20.67
=========== ========== ========== =========
The net earnings (loss) per limited partnership interest is based upon
the Interests outstanding at the end of each period. Deficit capital
accounts will result, through the duration of the Partnership, in the
recognition of net gain for financial reporting and income tax purposes.
Certain amounts in the 1993 consolidated financial statements have
been reclassified to conform to the 1994 presentation.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations at cost, which approximates
market. For the purposes of these statements, the Partnership's policy is
to consider all such amounts held with original maturities of three months
or less (none held at September 30, 1994 and December 31, 1993) as cash
equivalents with any remaining (generally with original maturities of one
year or less) amounts reflected as short-term investments being held to
maturity.
(2) VENTURE AGREEMENTS
(a) General
The Partnership at September 30, 1994 is party to five joint venture
agreements (JMB/Owings, JMB/125, 260 Franklin, Villages Northeast and
JMB/NewPark) directly or indirectly with Carlyle Real Estate Limited
Partnership - XV ("Carlyle-XV") (and for JMB/125, Carlyle Advisors, Inc.)
and two joint venture agreements (JMB/Warner and Palm Desert) with Carlyle
Real Estate Limited Partnership-XVII ("Carlyle-XVII"). Carlyle-XV and
Carlyle-XVII are each sponsored by the Corporate General Partner. The
terms of the affiliated joint venture agreements provide, in general, that
the benefits and obligations of ownership, including tax effects, net cash
receipts and net sale and refinancing proceeds and capital contribution
obligations are allocated or distributed, as the case may be, between the
Partnership and the affiliated partner in proportion to their respective
capital contributions to the affiliated venture. Pursuant to such
agreements, the Partnership made capital contributions aggregating
$137,865,218 through September 30, 1994. Under certain circumstances,
either pursuant to the venture agreements or due to the Partnership's
obligations as general partner, the Partnership may be required to make
additional cash contributions to the ventures.
The Partnership at September 30, 1994 owns interests through the above
ventures in three apartment complexes, two office buildings and two
shopping centers. In 1993, the Partnership, through JMB/Owings, sold its
interest in Owings Mills Shopping Center and, through JMB/Warner, sold the
Blue Cross Building.
There are certain risks associated with Partnership's investments made
through joint ventures, including the possibility that Partnership's joint
venture partners in an investment might become unable or unwilling to
fulfill their financial or other obligations, or that such joint venture
partners may have economic or business interests or goals that are
inconsistent with those of the Partnership.
(b) JMB/125
In December 1985, the Partnership, through the JMB/125 joint venture
partnership, acquired an interest in an existing joint venture partnership
("125 Broad") which owns a 40-story office building, together with a
leasehold interest in the underlying land, located at 125 Broad Street in
New York, New York. In addition to JMB/125, the other partners (the "O&Y
partners") of 125 Broad include O&Y 25 Realty Company L.P., Olympia & York
Broad Street Holding Company L.P. (USA) and certain other affiliates of
Olympia & York Developments, Ltd. ("O&Y").
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JMB/125 is a joint venture between Carlyle-XVI Associates, L.P. (in
which the Partnership holds a 99% limited partnership interest), Carlyle-XV
Associates, L.P. and Carlyle Advisors, Inc. The terms of the JMB/125
venture agreement generally provide that JMB/125's share of 125 Broad's
annual cash flow and sale or refinancing proceeds will be distributed or
allocated to the Partnership in proportion to its (indirect) approximate
40% share of capital contributions to JMB/125. In April 1993 JMB/125,
originally a general partnership, was converted to a limited partnership,
and the Partnership's interest in JMB/125, which previously had been held
directly, was converted to a limited partnership interest and was
contributed to Carlyle-XVI Associates, L.P. in exchange for a limited
partnership interest in Carlyle-XVI Associates, L.P. As a result of these
transactions, the Partnership currently holds, indirectly through Carlyle-
XVI Associates, L.P., an approximate 40% limited partnership interest in
JMB/125. The general partner in each of JMB/125 and Carlyle-XVI
Associates, L.P. is an affiliate of the Partnership. For financial
reporting purposes, profits and losses of JMB/125 are generally allocated
40% to the Partnership.
JMB/125 acquired an approximately 48.25% interest in 125 Broad for a
purchase price of $16,000,000, subject to a first mortgage loan of
$260,000,000 and a note payable to an affiliate of the joint venture
partners in the amount of $17,410,516 originally due September 30, 1989.
In June 1987, the note payable was consolidated with the first mortgage
loan forming a single consolidated note in the principal amount of
$277,410,516. The consolidated note bears interest at a rate of 10-1/8%
per annum payable in semi-annual interest only payments and matures on
December 27, 1995. JMB/125 has also contributed $14,055,500 to 125 Broad
to be used for working capital purposes and to pay an affiliate of O&Y for
its assumption of JMB/125's share of the obligations incurred by 125 Broad
under the "takeover space" agreement described below. In addition, JMB/125
contributed $24,222,042, plus interest thereon of approximately $1,089,992,
on June 30, 1986 for working capital purposes. Thus, JMB/125's original
cash investment (exclusive of acquisition costs) was $55,367,534, of which
the Partnership's share was approximately $22,147,000.
The land underlying the office building is subject to a ground lease
which has a term through June 2067 and provides for annual rental payments
of $1,075,000. The terms of the ground lease grant 125 Broad a right of
first refusal to acquire the fee interest in the land in the event of any
proposed sale of the land during the term of the lease and an option to
purchase the fee interest in the land for $15,000,000 at 10-year intervals.
The partnership agreement of 125 Broad, as amended, provides that the
O&Y partners are obligated to make advances to pay operating deficits
incurred by 125 Broad from the earlier of 1991 or the achievement of a 95%
occupancy rate of the office building through 1995. In addition, from
closing through 1995, the O&Y partners are required to make capital
contributions to 125 Broad for the cost of tenant improvements and leasing
expenses up to certain specified amounts and to make advances to 125 Broad
to the extent such costs exceed such specified amounts and such costs are
not paid for by the working capital provided by JMB/125 or the cash flow of
125 Broad. The amount of all costs for such tenant improvements and
leasing expenses over the specified amounts and the advances for operating
deficits from the earlier of the achievement of a 95% occupancy rate of the
office building or 1991 will be treated by 125 Broad as non-recourse loans
bearing interest, payable monthly, at the floating prime rate of an
institutional lender. The interest rate in effect at September 30, 1994
was 6.25% per annum. The amount of such outstanding O&Y partner non-
recourse loans was approximately $20,380,000 at September 30, 1994. Due to
a major tenant vacating in 1991, the property operated at a deficit in 1993
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
and is expected to operate at a deficit in 1994 and for the next several
years. Such deficits through 1995 are required to be funded by additional
loans from the O&Y partners, although as discussed below the O&Y partners
have been in default of such funding obligation since June 1992. The
outstanding principal balance and any accrued and unpaid interest on such
loans will be payable from 125 Broad's annual cash flow or net sale or
refinancing proceeds, as described below. Any unpaid principal of such
loans and any accrued and unpaid interest thereon will be due and payable
on December 31, 2000. JMB/125 and the O&Y partners are obligated to make
capital contributions, in proportion to their respective interests in 125
Broad, in amounts sufficient to enable 125 Broad to pay any excess
expenditures not required to be covered by the capital contributions or
advances of the O&Y partners described above.
The 125 Broad partnership agreement also provides that beginning in
1991, annual cash flow, if any, is distributable first to JMB/125 and to
the O&Y partners in certain proportions up to certain specified amounts.
Next, the O&Y partners are entitled to repayment of principal and any
accrued but unpaid interest on the loans for certain tenant improvements,
leasing expenses and operating deficits described above, and remaining
annual cash flow, if any, is distributable approximately 48.25% to JMB/125
and approximately 51.75% to the O&Y partners. In general, operating
profits or losses are allocable approximately 48.25% to JMB/125 and
approximately 51.75% to the O&Y partners, except for certain specified
items of profits or losses which are allocable to JMB/125 or the O&Y
partners.
The 125 Broad partnership agreement further provides that, in general,
upon sale or refinancing of the property, net sale or refinancing proceeds
(after repayment of the outstanding principal balance and any accrued and
unpaid interest on any loans from the O&Y partners described above) are
distributable approximately 48.25% to JMB/125 and approximately 51.75% to
the O&Y partners.
In the event of a dissolution and liquidation of 125 Broad, the terms
of the 125 Broad joint venture agreement provide that if there is a deficit
balance in the tax basis capital account of JMB/125, after the allocation
of profits or losses and the distribution of all liquidation proceeds, then
JMB/125 generally would be required to contribute cash to 125 Broad in the
amount of its deficit capital account balance. Taxable gain arising from
the sale or other disposition of 125 Broad's property would be allocated to
the joint venture partner or partners then having a deficit balance in its
or their respective capital accounts in accordance with the terms of the
125 Broad joint venture agreement. However, if such taxable gain is
insufficient to eliminate the deficit balance in its account in connection
with a liquidation of 125 Broad, JMB/125 would be required to contribute
funds to 125 Broad (regardless of whether any proceeds were received by
JMB/125 from the disposition of 125 Broad's property) to eliminate any
remaining deficit capital account balance.
The Partnership's liability for such contribution, if any, would be
its share, if any, of the liability of JMB/125 and would depend upon, among
other things, the amounts of JMB/125's and the O&Y partners' respective
capital accounts at the time of a sale or other disposition of 125 Broad's
property, the amount of JMB/125's share of the taxable gain attributable to
such sale or other disposition of 125 Broad's property and the timing of
the dissolution and liquidation of 125 Broad. In such event, the
Partnership could be required to sell or dispose of other assets in order
to satisfy an obligation to make such contribution. Although the amount of
such liability could be material, the Limited Partners of the Partnership
would not be required to make additional contributions of capital to
satisfy such obligation, if any, of the Partnership.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
As described above, the terms of the 125 Broad joint venture agreement
provide that the O&Y partners are obligated to advance to 125 Broad, in the
form of interest-bearing loans, amounts required to pay operating deficits
and capital improvement costs incurred during 1991 through 1995. O&Y and
certain of its affiliates have been involved in bankruptcy proceedings in
the United States and Canada and similar proceedings in England. During
1993, O & Y emerged from bankruptcy protection in Canada. In addition, a
reorganization of the management of the company's United States operations
has been completed, and certain O&Y affiliates are in the process of
renegotiating or restructuring various loans affecting properties in the
United States in which they have an interest. In view of the present
financial conditions of O&Y and its affiliates and the anticipated deficits
for the property, as well as the existing defaults of the O&Y partners, it
has appeared unlikely that the O&Y partners would meet their deficit
funding obligations.
In October 1993, 125 Broad entered into an agreement with Salomon
Brothers, Inc. to terminate its lease covering approximately 231,000 square
feet (17% of the building) at the property on December 31, 1993 rather than
its scheduled termination in January 1997. In consideration for the early
termination of the lease, Salomon Brothers, Inc. paid 125 Broad
approximately $26,500,000, plus interest thereon of approximately $200,000,
which 125 Broad in turn paid to its lender to reduce amounts outstanding
under the mortgage loan. In addition, Salomon Brothers, Inc. paid JMB/125
$1,000,000 in consideration of JMB/125's consent to the lease termination.
Due to the O&Y partners' failure to advance necessary funds to 125
Broad as required under the 125 Broad joint venture agreement, 125 Broad
defaulted on its mortgage loan in June 1992 by failing to pay approximately
$4,722,000 of the semi-annual interest payment due on the loan. The only
payment that has been made since was in October 1993 as described above.
As a result of this default, the loan agreement provides for a default
interest rate of 13-1/8% per annum on the unpaid principal amount. In
addition, during 1992 affiliates of O&Y defaulted on a "takeover space"
agreement with Johnson & Higgins, Inc. ("J&H"), one of the major tenants at
the 125 Broad Street Building, whereby such affiliates of O&Y agreed to
assume certain lease obligations of J&H at another office building in
consideration of J&H's leasing space in the 125 Broad Street Building. As
a result of this default, J&H has offset rent payable to 125 Broad for its
lease at the 125 Broad Street Building in the amount of approximately
$41,960,000 through September 30, 1994, and it is expected that J&H will
continue to offset amounts due under its lease corresponding to amounts by
which the affiliates of O&Y are in default under the "takeover space"
agreement. Due to the O&Y affiliates' default under the "takeover space"
agreement and the continuing defaults of the O&Y partners to advance funds
to cover operating deficits, as of September 30, 1994, the arrearage under
the mortgage loan had increased to approximately $70,660,000. As discussed
above, approximately $26,700,000 was remitted to the lender in October 1993
in connection with the early termination of the Salomon Brothers lease, and
was applied towards mortgage principal for financial reporting purposes.
Due to their obligations relating to the "takeover space" agreement, the
affiliates of O&Y are obligated for the payment of the rent receivable
associated with the J&H lease at the 125 Broad Street Building. Based on
the continuing defaults of the O&Y partners, 125 Broad has reserved the
entire $41,960,000 of rent offset by J&H and has also reserved
approximately $32,600,000 of accrued rents receivable relating to such J&H
lease, since the ultimate collectability of such amounts depends upon the
O&Y partners' and the O&Y affiliates' performance of their obligations.
The Partnership's share of such losses, approximately $2,572,000 and
$2,557,000 for the nine months ended September 30, 1994 and 1993,
respectively, is included in the Partnership's share of loss from
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
operations of unconsolidated ventures. JMB/125 has notified the O&Y
partners that their failure to advance funds to cover the operating
deficits constitutes a default under 125 Broad the joint venture agreement.
The O&Y partners had attempted to negotiate a restructuring of the mortgage
loan with the lender in order to reduce the significant operating deficits
which the property is expected to incur during 1994 and for the next
several years. The negotiations to restructure the loan were not
successful and the O&Y partners are now negotiating to transfer the
property to the lender.
JMB/125 and certain affiliates of O&Y have reached an agreement in
principle to settle their dispute regarding 125 Broad and its property.
Under the terms of this agreement in principle, JMB/125 would assign its
interest in 125 Broad to an affiliate of O&Y and release the O&Y partners
from any claims related to 125 Broad. In return, JMB/125 would receive a
promissory note in the principal amount of $5 million bearing simple
interest at 4.5% per annum with all principal and accrued interest due at
maturity in October 1999, subject to mandatory prepayments of principal and
interest or acceleration of the maturity date under certain circumstances.
In addition, JMB/125 would receive a release from any claims of certain O&Y
affiliates and would generally be indemnified against any liability as a
general partner of 125 Broad. Completion of the agreement in principle is
subject to the satisfaction of various conditions, including, among others,
obtaining the consent and cooperation of the mortgage lender for the
property, and there is no assurance that the transaction will be completed.
In the event the transaction is completed, affiliates of O&Y intend to file
a pre-arranged bankruptcy plan for reorganization of 125 Broad under
Chapter 11 of the Bankruptcy Code in order to facilitate 125 Broad's
transfer of the office building to the mortgage lender in satisfaction of
the mortgage debt and other claims. As a result, the transaction between
JMB/125 and the O&Y affiliates could be subject to challenge by certain
creditors resulting in changes or recission of the transaction. In the
event that the transaction is completed as currently contemplated and not
subsequently modified or rescinded, JMB/125 would no longer have an
ownership interest in the office building, which would result in net gain
for financial reporting and Federal income tax purposes to JMB/125 (and
through JMB/125 and the Partnership, to the Limited Partners) with no
distributable proceeds. JMB/125 would also be relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance.
Vacancy rates in the downtown Manhattan office market have increased
over the last few years. As a result, competition for tenants has
increased, which has resulted in lower effective rents. The increased
vacancy in the downtown Manhattan office market has resulted primarily from
layoffs, cutbacks and consolidations by many financial service companies
which, along with related businesses, dominate the submarket. This
resulted in uncertainty as to 125 Broad's ability to recover the net
carrying value of the investment property through future operations and
sale. As a matter of prudent accounting practice, a provision for value
impairment of such investment property of $14,844,420 was recorded as of
December 31, 1991. The Partnership's share of such provision was
$3,227,867 and was included in the Partnership's share of loss from
operations of unconsolidated ventures. Such provision was recorded to
reduce the net book value of the investment property to the then
outstanding balance of the related non-recourse financing and O&Y partner
loans.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The office building is being managed pursuant to a long-term agreement
with an affiliate of the O&Y partners. Under the terms of the management
agreement, the manager is obligated to manage the office building, collect
all receipts from operations and to the extent available from such receipts
pay all expenses of the office building. The manager is entitled to
receive a management fee equal to 1% of gross receipts of the property.
(c) 260 Franklin
In May 1986, the Partnership, through the 260 Franklin joint venture
partnership, acquired an interest in an office building in Boston,
Massachusetts known as the 260 Franklin Street Building.
The property is currently subject to a first mortgage loan in the
original principal amount of $75,000,000. 260 Franklin's original cash
investment (exclusive of acquisition costs) was approximately $35,000,000
of which the Partnership's share was approximately $10,500,000.
The affiliated joint venture reached an agreement with the lender to
modify the terms of the long-term mortgage note secured by the 260 Franklin
Street Building in December 1991. Beginning May 1991, the modified
mortgage note provides for monthly payments of interest only based upon the
then outstanding balance at a rate of 6% per annum through January 1992 and
8% per annum thereafter. Upon the scheduled or accelerated maturity, or
prepayment of the mortgage loan, the affiliated joint venture shall be
obligated to pay an amount sufficient to provide the lender with an 11% per
annum yield on the mortgage note from January 1, 1991 through the date of
maturity or prepayment. In addition, upon maturity (scheduled for December
1995) or prepayment, the affiliated joint venture is obligated to pay to
the lender a residual interest amount equal to 60% of the highest amount,
if any, of (i) net sales proceeds, (ii) net refinancing proceeds, or (iii)
net appraisal value, as defined. No amounts have been required to be
accrued for such contingent payments. The affiliated joint venture is
required to (i) escrow excess cash flow from operations (computed without a
deduction for property management fees and leasing commissions to an
affiliate), beginning in 1991, to cover future cash flow deficits, (ii)
make an initial contribution to the escrow account of $250,000, of which
the Partnership's share was $75,000, and (iii) make annual escrow
contributions, through January 1995, of $150,000, of which the
Partnership's share is $45,000. The escrow account ($4,921,208 at
September 30, 1994 including accrued interest) is to be used to cover the
cost of capital and tenant improvements and lease inducements ($1,056,831
used as of September 30, 1994) as defined, with the balance, if any, of
such escrowed funds available at the scheduled or accelerated maturity to
be used for the payment of principal and interest due to the lender as
described above.
(d) JMB/NewPark
In December 1986, the Partnership, through the JMB/NewPark joint
venture partnership, acquired an interest in an existing joint venture
partnership ("NewPark Associates") with the developer which owns an
interest in an existing enclosed regional shopping center in Newark,
California known as NewPark Mall.
JMB/NewPark acquired its 50% interest in NewPark Associates for a
purchase price of $32,500,000 paid in cash at closing, subject to an
existing first mortgage loan of approximately $23,556,000, and certain
loans from the joint venture partner of approximately $6,300,000.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On December 31, 1992, NewPark Associates refinanced the shopping
center with an institutional lender. The new mortgage note payable in the
principal amount of $50,620,219 is due on November 1, 1995. Monthly
payments of interest only of $369,106 were due through November 30, 1993.
Commencing on December 1, 1993 through October 30, 1995, principal and
interest are due in monthly payments of $416,351 with a final balloon
payment due November 1, 1995. Interest on the note payable accrues at
8.75% per annum. The joint venture has an option to extend the term of the
mortgage note payable to November 1, 2000 upon payment of a $250,000 option
fee and satisfaction of certain conditions as specified in the mortgage
note. A portion of the proceeds from the note payable were used to pay the
outstanding balance, including accrued interest, under the previous
mortgage note payable and the notes payable to the unaffiliated joint
venture partner. NewPark Associates commenced a renovation of NewPark Mall
in early 1993 and such renovation was completed later that year.
(e) JMB/Warner
On November 2, 1993, the Partnership through JMB/Warner sold its
interest in the Blue Cross Building (see note 3(b)).
In December 1987, the Partnership acquired through JMB/Warner an
interest in an existing five-structure office complex in Woodland Hills
(Los Angeles), California known as the Blue Cross Building. The
$90,000,000 purchase price of the property was paid in cash at closing.
During 1989, JMB/Warner obtained a permanent mortgage loan in the principal
amount of $55,000,000 secured by the Blue Cross Office Building.
In connection with the sale of the property to JMB/Warner, the seller
had entered into a triple net lease of the entire office complex, which the
seller had occupied since its construction. The obligations under such
lease were secured by certain collateral pledged by the seller/tenant which
was subsequently released. The lease had an initial term of 13-1/2 years
for certain space and 15-3/4 years for the remainder of the property with
three five-year renewal options. The lease provided for an initial annual
base rent of $7,947,000 with periodic increases in the annual base rent
equal to the lesser of (i) the periodic increase in a consumer price index,
or (ii) 5% per annum compounded over the period. In general, the tenant
was also obligated to pay the cost of property taxes and operating and
maintenance expenses (other than the cost of flood or earthquake insurance)
during the initial lease term and any renewal period. Commencing in 1993,
JMB/Warner was obligated to pay the cost of any structural maintenance and
repairs and any expenses for changes in the office complex attributable to
governmental compliance. As a result of the sale of its interest,
JMB/Warner was relieved of such obligations.
(f) Palm Desert
In December 1988, the Partnership, Carlyle-XVII and an affiliate of
the seller acquired, through Palm Desert, an interest in an existing,
enclosed regional shopping center known as Palm Desert Town Center in Palm
Desert, California and a leasehold interest in the underlying land.
The Partnership and Carlyle-XVII acquired their interests in Palm
Desert, subject to a first mortgage loan with an outstanding principal
balance of approximately $43,500,000, 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 approximately $14,925,000. The
Partnership's and Carlyle-XVII's initial aggregate contributions were used
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 periodic
contributions to Palm Desert to retire 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 has made and is obligated to make 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-XVII. Amounts
required to pay the cost of tenant improvements and allowances and other
capital expenditures, as well as any operating deficits of Palm Desert
after December 1994, are expected to be contributed to Palm Desert 25% by
the joint venture partner and 75% by the Partnership and Carlyle-XVII in
the aggregate. Reference is made to Note 3(h) of Notes to Consolidated
Financial Statements contained in the Partnership's 1993 Report on Form 10-
K for further information concerning the joint venture agreement.
The shopping center is being managed pursuant to a long-term agreement
with an affiliate of the joint venture partner. The manager is paid a fee
equal to 3% of the base and percentage rents collected under tenant leases,
increasing to 4% of the base and percentage rents for those years that the
Partnership and Carlyle-XVII have received their current cash return and
all of their cumulative preferred return for current and previous periods.
In addition, under the terms of the management agreement, the manager or an
affiliate will be entitled to receive compensation for leasing services.
(g) Villages Northeast
The Villages Northeast joint venture, through a joint venture with an
affiliate of the developer, refinanced the first mortgage loan secured by
the Dunwoody Crossing (Phase II) Apartments (formerly known as Post Crest)
located in Atlanta, Georgia. Effective October 6, 1992, the joint venture
obtained a $9,800,000 replacement loan from an institutional lender to
retire in full satisfaction the original first mortgage loan.
The new first mortgage loan, which is also collateralized by the
property, requires monthly payments of principal and interest (7.64% per
annum) of $73,316 beginning November 1, 1992 and continuing through
November 1, 1997, when the remaining balance is payable. The new lender
required the establishment of an escrow account for real estate taxes to be
deposited on a monthly basis.
An affiliate of the joint venture partner entered into an agreement to
manage the complexes through December 31, 2002 (subject to earlier
termination by either party upon 60 days' prior written notice) for a fee
equal to 5% of the gross revenues of the complexes. In August 1993, an
affiliate of the General Partners assumed management of the property for a
fee equal to 5% of the gross revenues of the complexes.
The first mortgage loan in the principal amount of approximately
$20,525,000 at September 30, 1994, secured by the Dunwoody Crossing Phase I
and III Apartments was scheduled to mature in October 1994. The joint
venture owning the property negotiated an extension of the mortgage loan
until December 15, 1994. The joint venture also reached an agreement in
principle with the current lender for a new loan. The venture has paid a
$645,000 refundable fee (funded by contributions by the Partnership and
Carlyle Real Estate Limited Partnership - XV) to secure the interest rate
on the proposed loan. This new loan would require monthly payments of
principal and interest (8.65% per annum) of $171,737 beginning January 15,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1995 and continuing through December 15, 1997, when the remaining balance
would be payable. There is no assurance that this proposed transaction
will be consummated on these or any other terms.
(3) SALE OF INVESTMENT PROPERTIES
(a) JMB/Owings
On June 30, 1993, JMB/Owings sold its partnership interest in Owings
Mills Limited Partnership ("OMLP"), which owns an allocated portion of the
land, building and related improvements of the Owings Mills Mall located in
Owings Mills, Maryland. The purchaser, O.M. Investment II Limited
Partnership, is an affiliate of the JMB/Owing's joint venture partner in
OMLP.
The sale price of the interest in OMLP was $9,416,000, all of which
was received in the form of a promissory note. In addition, the
Partnership and Carlyle-XV were relieved of their allocated portion of the
debt secured by the property. The promissory note (which is secured by a
guaranty from an affiliate of the purchaser and of the JMB/Owing's joint
venture partner in OMLP) bears interest at a rate of 7% per annum unless a
certain specified event occurs, in which event the rate would increase to
8% per annum for the remainder of the term of the note. The promissory
note requires principal and interest payments of approximately $109,000 per
month with the remaining principal balance of approximately $5,500,000 due
and payable on June 30, 1998. The monthly installment of principal and
interest would be adjusted for the increase in the interest rate if
applicable. Early prepayment of the promissory note may be required under
certain circumstances (as defined), including the sale or further
encumbrance of Owings Mills Mall.
The net cash proceeds and gain from sale of the interest in OMLP will
be allocated 50% to the Partnership and 50% to Carlyle-XV in accordance to
the JMB/Owings partnership agreement.
For financial reporting purposes, JMB/Owings recognized, on the date
of sale, gain of $5,254,855, of which the Partnership's share is
$2,627,427, attributable to JMB/Owings being relieved of its obligations
under the OMLP's partnership agreement pursuant to the terms of the sale
agreement. The Partnership has adopted the cost recovery method until such
time as the purchaser's initial investment is sufficient in order to
recognize gain under Statement of Financial Accounting Standards No. 66.
At September 30, 1994, the total deferred gain of JMB/Owings, including
principal and interest payments of $1,639,916 received through
September 30, 1994, is $10,205,722, of which the Partnership's share is
$5,102,861.
(b) JMB/Warner
On November 2, 1993, JMB/Warner sold the Blue Cross Building to an
unaffiliated purchaser for a sales price of $76,909,292, of which the
Partnership's share was $57,061,733. The sales price consisted of
$23,300,000 (before costs of sale) paid in cash at closing and the
assumption by the purchaser of the existing mortgage note having an unpaid
amount of $53,609,292. For financial reporting purposes, the Partnership
allocated approximately $735,000 of prorations to the purchase price. The
Partnership's share of net cash proceeds (before costs of sale and after
consideration of the prorations) was approximately $17,833,000. As a
result of the sale, the Partnership recognized in 1993 a loss of $299,039
and a gain of $1,837,983 for financial reporting and Federal income tax
purposes, respectively.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Included in the consolidated cash balances at December 31, 1993 was
approximately $1,055,000 of sales proceeds that had not been distributed to
the affiliated venture partner, Carlyle-XVII. These funds were distributed
in the second quarter of 1994.
(4) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Holders
of Interests and 4% to the General Partners. Profits from the sale or
other disposition of investment properties generally will be allocated
first to the General Partners in an amount equal to the greater of the
General Partners' share of cash distributions from the proceeds of any such
sale or other disposition (as described below) or 1% of the total profits
from any such sales or other dispositions, plus an amount which will reduce
deficits (if any) in the General Partners' capital accounts 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 generally will be allocated 4% to the General
Partners. The remaining sale or other disposition profits and losses will
be allocated to the Holders of Interests.
The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership or the General Partners' interests in
the Partnership. "Net cash receipts" from operations of the Partnership
will be allocated 90% to the Holders of Interests and 10% to the General
Partners (of which 6.25% constitutes a management fee to the Corporate
General Partner for services in managing the Partnership). However, for
the five year period through the end of 1992, the General Partners deferred
their allocation of "net cash receipts" to a stipulated return on capital
for the Holders of Interests. The deferred amounts are payable out of any
"net cash receipts" and "sales or refinancing proceeds" of the Partnership,
without interest at such times as the General Partners may determine.
The Partnership Agreement provides that, subject to certain
conditions, the General Partners shall receive as a distribution from the
sale of a real property by the Partnership up to 3% of the selling price,
and that the remaining proceeds (net after expenses and retained working
capital) be distributed 85% to the Holders of Interest and 15% to the
General Partners. However, prior to such distributions the Holders of
Interests are entitled to receive 99% and the General Partners 1% of net
sale or refinancing proceeds until the Holders of Interests (i) have
received cash distributions of "sale proceeds" or "refinancing proceeds" in
an amount equal to the Holders' of Interests 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' of Interests average capital investment
for each year (their initial capital investment as reduced by "sale
proceeds" or "refinancing proceeds" previously distributed) commencing with
the third fiscal quarter of 1987. The General Partners have elected to
waive their right to receive their distributive share of up to 3% of the
sale price of the Blue Cross Building.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(5) TRANSACTIONS WITH AFFILIATES
Certain of the Partnership's unconsolidated investment properties are
managed by affiliates of the General Partners. In October 1994, one of the
affiliated property managers agreed to sell substantially all of its assets
to an unaffiliated third party. In addition, substantially all of the
management personnel of the property manager will also become management
personnel of the purchaser or its affiliates if the sale is completed. The
sale is subject to certain closing conditions. In the event that the sale
is completed, it is expected that the successor to the affiliated property
manager's assets would act as the property manager of Dunwoody Crossing
Apartments (Phases I, II and III) and 260 Franklin Street Building after
the sale on the same terms that existed prior to the sale.
Fees, commissions and other expenses required to be paid by the
Partnership (or its consolidated ventures) to the General Partners and
their affiliates as of September 30, 1994 and for the nine months ended
September 30, 1994 and 1993 are as follows:
Unpaid at
September 30,
1994 1993 1994
-------- -------- -------------
Management fees to
Corporate General
Partner. . . . . . . . . . . . . . $116,957 248,532 --
Reimbursement (at cost)
for out-of-pocket
expenses and salaries
and salary related
expenses . . . . . . . . . . . . . 68,149 91,741 --
-------- ------- -------
$185,106 340,273 --
======== ======= =======
The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries (and salary related expenses) and direct
expenses of their officers and employees and direct expenses of the
Corporate General Partner and its affiliates while directly engaged in the
administration of the Partnership and operation of its properties. Such
costs relating to the administration of the Partnership were $63,775 and
$86,947 for the nine months ended September 30, 1994 and for the twelve
months ended December 31, 1993, respectively, all of which were paid as of
September 30, 1994.
The General Partners deferred their share of net cash flow of the
Partnership due to them over a five-year period ending December 1992, to
the receipt by the Holders of Interests of a 5% per annum cumulative non-
compounded return on their Current Capital Accounts (as defined) for such
five-year period. These deferred amounts consisted of the Corporate
General Partner's management fees and the General Partners' distributive
share of net cash flow. In July 1994, the Partnership paid the cumulative
combined amount of such deferred distributions and management fees which
aggregated $889,519 and $1,482,537, respectively, to the General Partners.
All amounts deferred did not bear interest and were paid in full.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(6) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
Summary income statement information for JMB/125, JMB/Owings (through
the date of sale - June 30, 1993) and 260 Franklin for the nine months
ended September 30, 1994 and 1993 is as follows:
1994 1993
----------- ----------
Total income. . . . . . . . . . . . . . . . . $36,291,391 37,268,194
=========== ==========
Operating loss. . . . . . . . . . . . . . . . $38,120,130 33,576,760
=========== ==========
Partnership's share
of loss . . . . . . . . . . . . . . . . . . $ 7,621,142 6,871,713
=========== ==========
Gain on sale of partner-
ship's investment
in unconsolidated
venture . . . . . . . . . . . . . . . . . . $ -- 2,627,427
=========== ==========
(7) 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 September 30,
1994 and for the three and nine months ended September 30, 1994 and 1993.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.
At September 30, 1994, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $1,142,000. Such funds and
short-term investments of approximately $14,012,000 are available for
distributions to partners, working capital requirements, and to fund
anticipated operating deficits at 260 Franklin to the extent not funded
from escrowed reserves. The Partnership and its consolidated ventures have
currently budgeted in 1994 approximately $503,500 for tenant improvements
and other capital expenditures. The Partnership's share of such items,
including its share of such items for its unconsolidated ventures, is
currently budgeted to be approximately $817,600. Actual amounts expended
may vary depending on a number of factors including actual leasing
activity, results of operations, liquidity considerations and other market
conditions over the course of the year. The source of capital for such
items and for both short-term and long-term future liquidity and
distributions is expected to be through working capital, cash generated by
the investment properties, through an obligation of a venture partner to
provide a preferred return of annual cash flow with respect to the Palm
Desert Town Center investment property through December 1994 and from the
sale and refinancing of such properties. Because the cash flow from the
Blue Cross Building was a significant portion of the Partnership's total
operating cash flow, beginning in 1994, Partnership distributions to
partners from operations were reduced.
The Partnership's and its ventures' mortgage obligations are non-
recourse. Therefore, the Partnership and its ventures are not obligated to
pay mortgage indebtedness unless the related property produces sufficient
net cash flow from operations or sale. However, for any particular
investment property that is incurring deficits, the Partnership or its
ventures may seek a modification of existing indebtedness and, in the
absence of a satisfactory debt modification, may decide, in light of the
then existing and expected future market conditions for such investment
property, not to commit additional funds to such investment property. This
would result in the Partnership no longer having an ownership interest in
such property and generally would result in gain for financial reporting
and Federal income tax purposes to the Partnership with no corresponding
distributable proceeds.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partner(s) in an investment might become unable
or unwilling to fulfill its (their) financial or other obligations, or that
such joint venture partner(s) may have economic or business interests or
goals that are inconsistent with those of the Partnership.
The first mortgage loan in the principal amount of approximately
$20,525,000 at September 30, 1994, secured by the Dunwoody Crossing Phase I
and III Apartments was scheduled to mature in October 1994. The joint
venture owning the property negotiated an extension of the mortgage loan
until December 15, 1994. The joint venture also reached an agreement in
principle with the current lender for a new loan. The venture has paid an
$645,000 refundable fee (funded by contributions by the Partnership and
Carlyle Real Estate Limited Partnership - XV) to secure the interest rate
on the proposed loan. This new loan would require monthly payments of
principal and interest (8.65% per annum) of $171,737 beginning January 15,
1995 and continuing through December 15, 1997, when the remaining balance
would be payable. There is no assurance that this proposed transaction
will be consummated on these or any other terms.
NewPark Associates commenced a renovation of NewPark Mall in early
1993 and such renovation was completed later that year. The excess
proceeds from the refinancing of NewPark Associates' loans are expected to
be sufficient to pay for substantially all of the renovation as well as
tenant improvement costs anticipated to be incurred in connection with
leasing vacant space at the mall. NewPark Mall may be subject to increased
competition from a new mall that is scheduled to open in the vicinity in
late 1994.
Concerning the 125 Broad Street Building, vacancy rates in the
downtown Manhattan office market have increased significantly over the last
few years. As vacancy rates rise, competition for tenants increases, which
results in lower effective rental rates. The increased vacancy rate in the
downtown Manhattan office market has resulted primarily from layoffs,
cutbacks and consolidations by many of the financial service companies
which, along with related businesses, dominate this submarket. The
Partnership believes that these adverse market conditions and the negative
impact on effective rental rates may continue over the next few years. The
current competitive market in downtown Manhattan has significantly affected
the 125 Broad Street Building, as the occupancy has decreased to 54% at
September 30, 1994 partially as a result of a major tenant vacating 395,000
square feet (30% of the building) at the expiration of its lease during
1991. Additionally, in October 1993, 125 Broad entered into an agreement
with Salomon Brothers, Inc. to terminate its lease covering approximately
231,000 square feet (17% of the building) at the property on December 31,
1993 rather than its scheduled termination in January 1997. In
consideration for the early termination of the lease, Salomon Brothers,
Inc. paid 125 Broad approximately $26,500,000, plus interest thereon of
approximately $200,000, which 125 Broad in turn paid to its lender to
reduce amounts outstanding under the mortgage loan. In addition, Salomon
Brothers, Inc. paid JMB/125 $1,000,000 in consideration of JMB/125's
consent to the lease termination. The property will be adversely affected
by low effective rental rates to be achieved upon releasing of the space.
The low effective rental rates coupled with the lower occupancy during the
releasing period are expected to result in the property operating at a
significant deficit in 1994 and for the next several years. The
unaffiliated venture partners (the "O&Y partners"), who are affiliates of
Olympia & York Developments, Ltd. ("O&Y"), are obligated to fund (in the
form of interest-bearing loans) operating deficits and costs of lease-up
and capital improvements through the end of 1995. However, as discussed
below, the O&Y partners are in default in respect to certain of their
funding obligations. Based on the facts discussed above and as described
more fully in Note 2(b), 125 Broad recorded a provision for value
impairment as of December 31, 1991 to reduce the net book value of the 125
Broad Street Building to the then outstanding balance of the related non-
recourse financing and O&Y partner loans due to the uncertainty of 125
Broad's ability to recover the net carrying value of the investment
property through future operations or sale.
O & Y and certain of its affiliates have been involved in bankruptcy
proceedings in the United States and Canada and similar proceedings in
England. Subsequent to December 31, 1992, O & Y emerged from bankruptcy
protection in Canada. In addition, a reorganization of the management of
the company's United States operations has been completed, and certain O&Y
affiliates are in the process of renegotiating or restructuring various
loans affecting properties in the United States in which they have an
interest. In view of the present financial condition of O&Y and its
affiliates and the anticipated deficits for the property as well as the
existing defaults of the O&Y partners discussed below, it has appeared
unlikely that the O&Y partners would meet their deficit funding
obligations.
The O&Y partners have failed to advance necessary funds to 125 Broad
as required under the 125 Broad joint venture agreement, and as a result,
125 Broad defaulted on its mortgage loan, which had an outstanding
principal balance of approximately $277,000,000, in June 1992 by failing to
pay approximately $4,722,000 of the semi-annual interest payment due on the
loan. The only payment that has been made since was in October 1993 as
discussed above. In addition, during 1992 affiliates of O&Y defaulted on a
"takeover space" agreement with Johnson & Higgins, Inc. ("J&H"), one of the
major tenants at the 125 Broad Street Building, whereby such affiliates of
O&Y agreed to assume certain lease obligations of J&H at another office
building in consideration of J&H's leasing space in the 125 Broad Street
Building. As a result of this default, J&H has offset rent payable to 125
Broad for its lease at the 125 Broad Street Building in the amount of
approximately $41,960,000 through September 30, 1994, and it is expected
that J&H will continue to offset amounts due under its lease corresponding
to amounts by which the affiliates of O&Y are in default under the
"takeover space" agreement. Due to the O&Y affiliates' default under the
"takeover space" agreement and the continuing defaults of the O&Y partners
to advance funds to cover operating deficits, as of September 30, 1994, the
arrearage under the mortgage loan had increased to approximately
$70,660,000. As discussed above, approximately $26,700,000 was remitted to
the lender in October 1993 in connection with the early termination of the
Salomon Brothers lease, and was applied towards the mortgage principal for
financial reporting purposes. Due to their obligations relating to the
"takeover space" agreement, the affiliates of O&Y are obligated for the
payment of the rent receivable associated with the J&H lease at the 125
Broad Street Building. Based on the continuing defaults of the O&Y
partners, 125 Broad has reserved the entire $41,960,000 of rent offset by
J&H and has also reserved approximately $32,600,000 of accrued rents
receivable relating to such J&H lease, since the ultimate collectability of
such amounts depends upon the O&Y partners' and the O&Y affiliates'
performance of their obligations. The Partnership's share of such losses
was approximately $2,572,000 and $2,557,000 for the nine months ended
September 30, 1994 and 1993, respectively, and is included in the
Partnership's share of loss from operations of unconsolidated ventures.
JMB/125 has notified the O&Y partners that their failure to advance funds
to cover the operating deficits constitutes a default under the 125 Broad
joint venture agreement. The O&Y partners had attempted to negotiate a
restructuring of the mortgage loan with the lender in order to reduce the
significant operating deficits which the property is expected to incur
during 1994 and for the next several years. The negotiations to
restructure the loan were not successful and the O&Y partners are now
negotiating to transfer the property to the lender.
JMB/125 and certain affiliates of O&Y have reached an agreement in
principle to settle their dispute regarding 125 Broad and its property.
Under the terms of this agreement in principle, JMB/125 would assign its
interest in 125 Broad to an affiliate of O&Y and release the O&Y partners
from any claims related to 125 Broad. In return, JMB/125 would receive a
promissory note in the principal amount of $5 million bearing simple
interest at 4.5% per annum with all principal and accrued interest due at
maturity in October 1999, subject to mandatory prepayments of principal and
interest or acceleration of the maturity date under certain circumstances.
In addition, JMB/125 would receive a release from any claims of certain O&Y
affiliates and would generally be indemnified against any liability as a
general partner of 125 Broad. Completion of the agreement in principle is
subject to the satisfaction of various conditions, including, among others,
obtaining the consent and cooperation of the mortgage lender for the
property, and there is no assurance that the transaction will be completed.
In the event the transaction is completed, affiliates of O&Y intend to file
a pre-arranged bankruptcy plan for reorganization of 125 Broad under
Chapter 11 of the Bankruptcy Code in order to facilitate 125 Broad's
transfer of the office building to the mortgage lender in satisfaction of
the mortgage debt and other claims. As a result, the transaction between
JMB/125 and the O&Y affiliates could be subject to challenge by certain
creditors resulting in changes or recission of the transaction. In the
event that the transaction is completed as currently contemplated and not
subsequently modified or rescinded, JMB/125 would no longer have an
ownership interest in the office building, which would result in net gain
for financial reporting and Federal income tax purposes to JMB/125 (and
through JMB/125 and the Partnership, to the Limited Partners) with no
distributable proceeds. JMB/125 would also be relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance.
The office market in the Financial District of Boston remains
competitive due to new office building developments and layoffs, cutbacks
and consolidations by financial service companies. The effective rental
rates achieved upon releasing have been substantially below the rates which
were received under the previous leases for the same space. In December
1991, the affiliated joint venture reached an agreement with the lender to
modify the long-term mortgage note secured by 260 Franklin Street Building.
The property is currently expected to operate at a deficit for 1994 and for
several years thereafter. The loan modification required that the
affiliated joint venture establish an escrow account for excess cash flow
from the property's operations (computed without a deduction for property
management fees and lease commissions to an affiliate) to be used to cover
the cost of capital and tenant improvements and lease inducements (as
defined), which are the primary components of the anticipated operating
deficits noted above, with the balance, if any, of such escrowed funds
available at the scheduled or accelerated maturity to be used for the
payment of principal and interest due to the lender. Beginning January 1,
1992, 260 Franklin began escrowing the payment of property management fees
and lease commissions owed to an affiliate of the Corporate General Partner
pursuant to the terms of the debt modification. The Partnership's share of
such fees and lease commissions is approximately $274,000 at September 30,
1994. In 1995, the leases of tenants occupying approximately 107,000
square feet (approximately 31% of the property) at the 260 Franklin Street
Building expire. It is anticipated that there would be significant cost
related to releasing this space. In addition, the long-term mortgage loan
matures January 1, 1996. If the affiliated joint venture is unable to
refinance or extend the mortgage loan, the Partnership may decide not to
commit any significant additional funds. This may result in the
Partnership no longer having an ownership interest in the property. This
would result in the Partnership recognizing a gain for financial reporting
purposes.
On November 2, 1993, the Partnership through JMB/Warner Center
Associates sold the Blue Cross Building to an unaffiliated buyer for a sale
price of $76,909,292, of which the Partnership's share was $57,061,733.
The sales price consisted of $23,300,000 (before costs of sale) paid in
cash at closing and the assumption by the purchaser of the existing
mortgage note having an unpaid amount of $53,609,292. Reference is made to
Note 3(b). In February 1994, the Partnership made cash distributions to
its Limited Partners that included $100 per Interest from proceeds received
in connection with the sale of the Blue Cross Building.
The Partnership received (through a joint venture with an affiliate)
its specified cash return relating to Palm Desert Town Center, which is
being funded by an unaffiliated venture partner through December 31, 1994
pursuant to the terms of the applicable joint venture agreement. In
addition, the Partnership is receiving cash distributions from operations
of the Dunwoody Crossings Apartments and NewPark Mall.
In June 1993, JMB/Owings sold its interest in the Owings Mills
Shopping Center for $9,416,000 represented by a purchase price note.
Reference is made to Note 3(a).
R.H. Macy's & Co., Inc. and affiliated entities, which are the owners
of Macy's, Bullock's and Bullock's Wilshire stores, filed for protection
under Chapter 11 of the Bankruptcy Act in January 1992. The Macy's stores
at Newpark Mall and Owings Mills Shopping Center and the Bullock's and
Bullock's Wilshire stores at Palm Desert Town Center have continued to
operate since the bankruptcy filing. The stores have continued to pay
their required contributions towards common area expenses since the filing.
It is not currently expected that the bankruptcy proceedings will have a
significant adverse impact on the Partnership. Palm Desert Town Center did
not incur any significant damage as a result of the January 1994 earthquake
in Southern California.
Though the economy has recently shown signs of improvement and
financing is generally becoming more available for certain types of higher-
quality properties in healthy markets, real estate lenders are typically
requiring a lower loan-to-value ratio for mortgage financing than in the
past. This has made it difficult for owners to refinance real estate
assets at their current debt levels unless the value of the underlying
property has appreciated significantly. As a consequence, and due to the
weakness of some of the local real estate markets in which the
Partnership's properties operate, the Partnership is taking steps to
preserve its working capital. Therefore, the Partnership is carefully
scrutinizing the appropriateness of any discretionary expenditures,
particularly in relation to the amount of working capital reserves it has
available. By conserving working capital, the Partnership will be in a
better position to meet future needs of its properties without having to
rely on external financing sources.
Due to the factors discussed above, it is likely that the Partnership
will hold certain of its investment properties longer than originally
anticipated in order to maximize the return of their investments to the
Limited Partners. Although the Partnership expects to distribute sale
proceeds from the disposition of the Partnership's remaining assets,
without a dramatic improvement in market conditions, Limited Partners will
receive significantly less than their original investment.
The General Partners had deferred through December 31, 1992, their
receipt of partnership management fees and distributions of net cash
generated from operations. Beginning in 1993, the General Partners are
receiving partnership management fees and distributions of net cash
generated from operations. The cumulative amount of such deferrals at June
30, 1994 was $2,372,056. Such amount does not bear interest and was paid
in full in July 1994. Reference is made to Note 5.
RESULTS OF OPERATIONS
The decrease in the aggregate of cash and cash equivalents and short-
term investments at September 30, 1994 as compared to December 31, 1993 is
primarily due to the distribution to the Limited Partners in February 1994
of $14,034,783 of sales proceeds from the Blue Cross Building sale.
The decrease in interest, rents and other receivables at September 30,
1994 as compared to December 31, 1993 is primarily due to the collection in
1994 of tenant expense reimbursements related to 1993 at Palm Desert Town
Center.
The increase in accounts payable at September 30, 1994 as compared to
December 31, 1993 is primarily due to the timing of payments of operating
expenses at Palm Desert Town Center.
The decrease in amounts due to affiliates at September 30, 1994 as
compared to December 31, 1993 is primarily due to the payment in full of
deferred management fees to the Corporate General Partner in July 1994.
Reference is made to Note 5.
The decrease in unearned rent at September 30, 1994 as compared to
December 31, 1993 is primarily due to the timing of rental collections at
Palm Desert Town Center.
The decrease in venture partners subordinated equity in ventures at
September 30, 1994 as compared to December 31, 1993 is primarily due to the
distribution of remaining sales proceeds in June 1994, from the Blue Cross
Building.
The decrease in rental income, mortgage and other interest,
depreciation, amortization of deferred expenses and venture partners' share
of ventures' operations for the three and nine months ended September 30,
1994 as compared to the three and nine months ended September 30, 1993 is
primarily due to the sale of the Blue Cross Building in November 1993.
Reference is made to Note 3(b).
The increase in interest income for the three and nine months ended
September 30, 1994 as compared to the three and nine months ended September
30, 1993 is primarily due to a modest increase in interest rates earned on
Partnership's cash equivalents and short-term investments held in U.S.
Government obligations during 1994.
The decrease in management fees to the Corporate General Partner for
the three and nine months ended September 30, 1994 as compared to the three
and nine months ended September 30, 1993 is due to a decrease in the
distribution paid to the partners, a portion of which is in the form of a
management fee to the Corporate General Partner.
The increase in the partnership's share of loss from operations of
unconsolidated ventures for the three and nine months ended September 30,
1994 as compared to the three and nine months ended September 30, 1993 is
primarily due to decreased revenue at the 125 Broad Street Building due to
lower occupancy in 1994.
The gain on sale of Partnership's investment in unconsolidated venture
for the nine months ended September 30, 1993 is due to the June, 1993 sale
of the Partnership's interest in Owings Mills. Reference is made to Note
3(a).
PART II. OTHER INFORMATION
ITEM 3. DEFAULTS ON SENIOR SECURITIES
The mortgage loan secured by the 125 Broad Street property is in
default at September 30, 1994 due to the partial payment of scheduled debt
service since June 1992. Reference is made to Note 2(b) (twelfth
paragraph) and the discussion of Liquidity and Capital Resources contained
in the Management's Discussions and Analysis of Financial Condition section
of this quarterly report for further information regarding the loan
default, which discussions are herein incorporated by reference.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment properties:
1993 1994
------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
1. Owings Mills Shopping Center
Owings Mills (Baltimore County),
Maryland . . . . . . . . . . . . . . . . . . . 93% N/A N/A N/A N/A N/A N/A
2. 125 Broad Street Building
New York, New York . . . . . . . . . . . . . . . 72% 72% 72% 54% 54% 54% 54%
3. 260 Franklin Street Building
Boston, Massachusetts. . . . . . . . . . . . . . 97% 98% 97% 99% 99% 99% 99%
4. Dunwoody Crossing (Phase I, II, and III)
Apartments
DeKalb County (Atlanta), Georgia (a) . . . . . . 94% 96% 93% 90% 91% 93% 91%
5. NewPark Mall
Newark (Alameda County), California. . . . . . . 71% 73% 80% 81% 80% 80% 80%
6. Blue Cross Office Building
Woodland Hills (Los Angeles),
California. . . . . . . . . . . . . . . . . . . 100% 100% 100% N/A N/A N/A N/A
7. Palm Desert Town Center
Palm Desert (Palm Springs),
California . . . . . . . . . . . . . . . . . . . 92% 94% 96% 97% 97% 95% 96%
<FN>
- - ------------------
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
(a) Formerly known as Post Crossing, Post Crest and Post Terrace Apartments, respectively.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4-A. The Amended and Restated Agreement of Limited Partnership and
the Assignment Agreement set forth as Exhibit B to the Prospectus, copies
of which are hereby incorporated by reference to Exhibit 3 and Exhibit 4-A
to the Partnership's report for December 31, 1992 on Form 10-K (File No. 0-
16516) dated March 19, 1993.
4-B. Documents relating to the loan modification of the mortgage loan
secured by the 260 Franklin Street Building is hereby incorporated by
reference to Exhibit 4-B to the Partnership's report for December 31, 1991
on Form 10-K (File No. 0-16516) dated March 27, 1992.
10-A. Escrow Deposit Agreement is hereby incorporated by reference to
Exhibit 10.1 to the Partnership's Amendment No. 1 to Form S-11 (File No.
33-3567) Registration Statement dated May 14, 1986.
10-B. Acquisition documents relating to the purchase by the
Partnership of an interest in the Owings Mills Shopping Center in Owings
Mills, Maryland, are hereby incorporated herein by reference to Exhibit
10.13 to Post-Effective Amendment No. 3 to the Form S-11 (File No. 33-3567)
Registration Statement of Carlyle Real Estate Limited Partnership-XV (File
No. 2-95382) dated March 13, 1986.
10-C. Additional acquisition documents relating to the purchase by the
Partnership of an interest in the Owings Mills Shopping Center in Owings
Mills, Maryland, are hereby incorporated herein by reference to Exhibit
10.2.1 to the Partnership's Post-Effective Amendment No. 2 on Form S-11
(File No. 33-3567) dated December 30, 1986.
10-D. Acquisition documents relating to the purchase by the
Partnership of an interest in the 125 Broad Street Building, New York, New
York, are hereby incorporated herein by reference to Exhibit 10.14 to Post-
Effective Amendment No. 3 to the Form S-11 Registration Statement of
Carlyle Real Estate Limited Partnership-XV (File No. 2-95382) dated March
13, 1986.
10-E. Acquisition documents relating to the purchase of an interest in
the 260 Franklin Street Building, Boston, Massachusetts, are hereby
incorporated herein by reference to Exhibit 10.4 to the Partnership's
Amendment No. 2 to Form S-11 (File No. 33-3567) dated July 25, 1986.
10-F. Additional acquisition documents relating to the purchase of an
interest in the 260 Franklin Street Building, Boston, Massachusetts, are
hereby incorporated herein by reference to Exhibit 10.4.1 to the
Partnership's Post-Effective Amendment No. 1 to Form S-11 (File No. 33-
3567) dated September 30, 1986.
10-G. Acquisition documents relating to the purchase by the
Partnership of an interest in the Post Crest Apartments, Post Terrace
Apartments, and Post Crossing Apartments in DeKalb County (Atlanta),
Georgia, are hereby incorporated herein by reference to Exhibit 10.5 to the
Partnership's Post-Effective Amendment No. 2 to Form S-11 (File No. 33-
3567) dated September 30, 1986.
10-H. Acquisition documents relating to the purchase by the
Partnership of an interest in NewPark Mall in Newark (Alameda County),
California, are hereby incorporated herein by reference to Exhibit 10.6 to
the Partnership's Post-Effective Amendment No. 2 to Form S-11 (File No. 33-
3567) dated December 30, 1986.
10-I. Acquisition documents (as amended) relating to the purchase by
the Partnership of an interest in the Blue Cross Office Building in
Woodland Hills (Los Angeles), California, dated December 8, 1987 are hereby
incorporated by reference to Exhibit 10-I to the Partnership's report for
December 31, 1987 on Form 10-K (File No. 0-16516) dated March 28, 1988.
10-J. Acquisition documents relating to the acquisition by the
Partnership of an interest in the Palm Desert Town Center in Palm Desert,
California, dated December 23, 1988 are hereby incorporated by reference to
Exhibit 1 to the Partnership's Form 8-K (File No. 0-16516) dated January 6,
1989.
10-K. First Amendment to Lease between JMB/Warner Center Associates
and Blue Cross of California dated February 7, 1989, is hereby incorporated
by reference to Exhibit 10-K to the Partnership's report for December 31,
1988 on Form 10-K (File No. 0-16516) dated March 24, 1989.
10-L. Copy of documents relating to the mortgage loan secured by the
Blue Cross Building, Woodland Hills (Los Angeles), California, dated
September 14, 1989 is hereby incorporated by reference to Exhibit 10-L to
the Partnership's report for December 31, 1989 on Form 10-K (File No. 0-
16516) dated March 28, 1990.
10-M. Copies of documents relating to JMB/125 Broad Building
Associates ownership interest in 125 Broad Street Building are hereby
incorporated by reference to the Partnership's Form 10-Q for September 30,
1993 (File No. 0-16516) dated November 11, 1993.
10-N. Sale document and exhibits thereto relating to the Partnership's
contract of sale of the Blue Cross Building in Woodland Hills, California
is hereby incorporated by reference to Exhibit 10-N to the Partnership's
Form 10-Q for September 30, 1993 (File No. 0-16516) dated November 11,
1993.
10-O. Takeover Agreement relating to the Johnson & Higgins space at
the 125 Broad Building is hereby incorporated by reference to the
Partnership's Form 10-Q for March 31, 1994 (File No. 0-16516) dated May 11,
1994.
10-P. First Amendment to Loan Documents relating to the mortgage loan
secured by Dunwoody Crossing Apartments (Phases I and III) is filed
herewith.
27. Financial Data Schedule of the Partnership for the period ended
September 30, 1994 is filed herewith.
(b) The following reports on Form 8-K were filed since the beginning of
the last quarter of the period covered by this report.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: November 10, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: November 10, 1994