SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Documents incorporated by reference: None
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings . . . . . . . . . . . . . 8
Item 4. Submission of Matters to a
Vote of Security Holders. . . . . . . . . . 8
PART II
Item 5. Market for the Partnership's Limited Partnership
Interests and Related Security Holder Matters 8
Item 6. Selected Financial Data . . . . . . . . . . 9
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . 72
PART III
Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . . 72
Item 11. Executive Compensation. . . . . . . . . . . 75
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . 77
Item 13. Certain Relationships and Related Transactions 78
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . 78
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 81
i
PART I
ITEM 1. BUSINESS
Unless otherwise indicated all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report.
The registrant, Carlyle Real Estate Limited Partnership-XVI (the
"Partnership"), is a limited partnership formed in December of 1985 and
currently governed by the Revised Uniform Limited Partnership Act of the
State of Illinois to invest in income-producing commercial and residential
real property. On August 27, 1986, the Partnership commenced an offering
to the public of $250,000,000 (subject to increase by up to $250,000,000)
of Limited Partnership Interests (and assignee interests therein)
("Interests") pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (No. 33-3567). A total of 140,342.82534 Interests
were sold to the public at $1,000 per Interest. The holders of 76,819.23
Interests were admitted to the Partnership in 1986 and the holders of
63,523.59534 Interests were admitted to the Partnership in 1987. The
offering closed on December 31, 1987. Subsequent to admittance to the
Partnership, no Holder of Interests (hereinafter, a "Holder" or "Holder of
Interests") has made any additional capital contribution. The Holders of
Interests of the Partnership share in their portion of the benefits of
ownership of the Partnership's real property investments according to the
number of Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or joint
venture partnership interests. The Partnership's real property investments
are located throughout the nation, and it has no real estate investments
located outside of the United States. A presentation of information about
industry segments, geographic regions, raw materials or seasonality is not
applicable and would not be material to an understanding of the
Partnership's business taken as a whole. Pursuant to the Partnership
Agreement, the Partnership is required to terminate on or before December
31, 2036. Accordingly, the Partnership intends to hold the real properties
it acquires for investment purposes until such time as sale or other
disposition appears to be advantageous. Unless otherwise described, the
Partnership expects to hold its properties for long-term investment. Due
to current market conditions, the Partnership is unable to determine the
holding period for such properties. At sale of a particular property, the
net proceeds, if any, are generally distributed or reinvested in existing
properties rather than invested in acquiring additional properties.
The Partnership has made the real property investments set forth in
the following table:
SALE DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
---------------------- ---------- -------- ---------------------- ---------------------
1. Owings Mills Shopping
Center
Owings Mills
(Baltimore County),
Maryland . . . . . 325,000 sq.ft. 12/31/85 6/30/93 fee ownership of land
g.l.a. and improvements
(through joint venture
partnerships) (c)(g)
2. 125 Broad Street
Building
New York, New York 1,336,000 sq.ft.12/31/85 11/15/94 fee ownership of
n.r.a. improvements and
ground leasehold
interest in land
(through joint venture
partnerships)
(b)(c)(d)(g)
3. 260 Franklin Street
Building
Boston,
Massachusetts. . . 348,901 sq.ft. 5/21/86 12% fee ownership of land
n.r.a. and improvements
(through joint venture
partnership) (b)(c)
4. Dunwoody Crossing
Apartments
(Phase I, II and III)(h)
DeKalb County (Atlanta),
Georgia . . . . . . 810 units 9/18/86 5% fee ownership of land
and improvements
(through joint venture
partnerships) (c)
5. NewPark Mall
Newark (Alameda County),
California . . . . 423,748 sq.ft. 12/2/86 2% fee ownership of land
g.l.a. and improvements
(through joint venture
partnerships) (c)
SALE DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
---------------------- ---------- -------- ---------------------- ---------------------
6. Blue Cross Building
Woodland Hills
(Los Angeles),
California . . . . 421,716 sq.ft. 12/18/87 11/2/93 fee ownership of land
n.r.a. and improvements
(through a joint
venture partnership)
(b)(c)(g)
7. Palm Desert Town
Center
Palm Desert
(Palm Springs),
California . . . . 373,000 sq.ft. 12/23/88 20% fee ownership of
n.r.a. improvements and
ground leasehold
interest in land
(through joint venture
partnership) (b)(c)(d)(f)
<FN>
-----------------------
(a) The computation of this percentage for properties held at
December 31, 1994 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.
(b) Reference is made to Note 3 of Notes to Combined Statements,
Note 4 and the Schedule III's to the Combined and Consolidated Financial
Statements filed with this annual report for the current outstanding
principal balances and a description of the long-term mortgage indebtedness
secured by certain of the Partnership's real property investments.
(c) Reference is made to Note 3 for a description of the joint
venture partnership or partnerships through which the Partnership has made
this real property investment.
(d) Reference is made to Notes 3(b) and 3(h) for a description of
the leasehold interests, under ground leases, in the land on which these
real property investments are situated.
(e) Reference is made to Item 8 - Schedule III to the
Consolidated and Combined Financial Statements filed with this annual
report for further information concerning real estate taxes and
depreciation.
(f) Reference is made to Item 6 - Selected Financial Data for
additional operating and lease expiration data concerning this investment
property.
(g) This property has been sold or disposed of. Reference is
made to Note 7 for further discussion of such sale.
(h) Formerly known as Post Crest, Post Terrace and Post Crossing
Apartments, respectively.
Reference is made to Note 8 and to Note 4 of Notes to Combined
Statements for a schedule of minimum lease payments to be received in each
of the next five years, and in the aggregate thereafter, under leases in
effect at certain of the Partnership's properties as of December 31, 1994.
The Partnership's real property investments are subject to competition
from similar types of properties (including, in certain areas, properties
owned or advised by affiliates of the General Partners) in the respective
vicinities in which they are located. Such competition is generally for
the retention of existing tenants. Additionally, the Partnership is in
competition for new tenants in markets where significant vacancies are
present. Reference is made to Item 7 below for a discussion of competitive
conditions of the Partnership and certain of its significant investment
properties. Approximate occupancy levels for the properties are set forth
in the table in Item 2 below to which reference is hereby made. The
Partnership maintains the suitability and competitiveness of its properties
in its markets primarily on the basis of effective rents, tenant allowances
and service provided to tenants. In the opinion of the Corporate General
Partner of the Partnership, all the investment properties held at December
31, 1994 are adequately insured. Although there is earthquake insurance
coverage for a portion of the value of the Partnership's investment
properties, the Corporate General Partner does not believe that such
coverage for the entire replacement cost of the investment properties is
available on economic terms.
In November 1994, effective as of October 31, 1994, JMB/125 Broad
Building Associates, L.P. ("JMB/125"), an Illinois limited partnership,
made an agreement with its venture partners in the 125 Broad Street Company
("125 Broad") to settle their dispute regarding 125 Broad and its property.
Pursuant to the agreement, JMB/125 assigned its approximate 48.25% interest
in 125 Broad, which owns the 125 Broad Street Building and a leasehold
interest in the underlying land located in New York, New York to an
affiliate of the venture partners and released the venture partners from
any claims of JMB/125 related to 125 Broad. The Partnership owns
indirectly an approximate 40% limited partnership interest in JMB/125. An
affiliate of the Partnership owns indirectly substantially all of the
remaining interest in JMB/125. In return for the assignment, JMB/125
received an unsecured 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 received a release from any
claims of certain affiliates of the venture partners and will generally be
indemnified against any liability as a general partner of 125 Broad.
JMB/125 was also relieved of any obligation to contribute cash to 125 Broad
in the amount of its deficit capital account balance. The venture partners
subsequently filed 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. In January 1995, the
plan for reorganization was approved by the bankruptcy court, was
consummated, and the bankruptcy case was concluded. Reference is made to
Item 7 and Notes 3(b) and 7(c) for a further discussion of this property.
The Partnership has no employees.
The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.
ITEM 2. PROPERTIES
The Partnership owns through joint venture partnerships the interests
in the properties referred to under Item 1 above to which reference is
hereby made for a description of said properties.
The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1994 and 1993 for the Partnership's investment properties owned
during 1994:
1993 1994
--------------------------------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
1. 125 Broad Street Building
New York, New York . . . Financial 72% 72% 72% 54% 54% 54% 54% N/A
2. 260 Franklin Street
Building
Boston, Massachusetts. . Financial 97% 98% 97% 99% 99% 99% 99% 99%
3. Dunwoody Crossing
(Phase I, II and III)
Apartments (a)
DeKalb County
(Atlanta), Georgia . . . Residential 94% 96% 93% 90% 91% 93% 91% 88%
4. NewPark Mall
Newark (Alameda County),
California . . . . . . . Retail 71% 73% 80% 81% 80% 80% 80% 81%
5. Palm Desert Town Center
Palm Desert
(Palm Springs),
California . . . . . . . Retail 92% 94% 96% 97% 97% 95% 96% 97%
<FN>
--------------------
Reference is made to Item 6, Item 7, Note 8 and Note 4 of Notes to Combined Statements for further
information regarding property occupancy, competitive conditions and tenant leases at the Partnership's investment
properties.
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
(a) Formerly known as Post Crest, Post Terrace and Post Crossing Apartments, respectively.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
fiscal years 1993 and 1994.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1994, there were 16,256 record Holders of Interests
of the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request,
the Corporate General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspects of the transaction, will be subject to negotiation by the
investor. There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Corporate General
Partner. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests. No transfer
will be effective until the first day of the next succeeding calendar
quarter after the requisite transfer form satisfactory to the Corporate
General Partner has been received by the Corporate General Partner. The
transferee consequently will not be entitled to receive any cash
distributions or any allocable share of profits or losses for tax purposes
until such next succeeding calendar quarter. Profits or losses from
operations of the Partnership for a calendar year in which a transfer
occurs will be allocated between the transferor and the transferee based
upon the number of quarterly periods in which each was recognized as the
holder of the Interests, without regard to the results of the Partnership's
operations during particular quarterly periods and without regard to
whether cash distributions were made to the transferor or transferee.
Profits or losses arising from the sale or other disposition of Partnership
properties will be allocated to the recognized holder of the Interests as
of the last day of the quarter in which the Partnership recognized such
profits or losses. Cash distributions to a holder of Interests arising
from the sale or other disposition of Partnership properties will be
distributed to the recognized holder of the Interests as of the last day of
the quarterly period with respect to which such distribution is made.
Reference is made to Item 6 below for a discussion of cash distribu-
tions made to the Holders of Interests.
Reference is made to Note 5 for a discussion of the provisions of the
Partnership Agreement relating to cash distributions.
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1994, 1993, 1992, 1991 AND 1990
(not covered by Independent Auditors' Report)
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
Total income . . . . . . $11,512,558 18,822,328 20,753,488 20,600,655 20,315,714
=========== ============ =========== =========== ===========
Operating loss . . . . . $(1,337,005) (547,401) (1,207,558) (1,909,707) (1,785,254)
Partnership's share of
loss from operations
of unconsolidated
ventures. . . . . . . . (8,305,706) (4,852,148) (14,384,114) (8,086,449) (8,903,059)
Venture partners' share
of ventures' operations 844,213 1,228,201 37,306 306,058 322,763
----------- ------------ ----------- ----------- -----------
Net operating loss . . . (8,798,498) (4,171,348) (15,554,366) (9,690,098) (10,365,550)
Gain on sale or
disposition of
Partnership's
investment in
unconsolidated venture. 20,162,696 2,627,427 -- -- --
Loss on sale of
investment property,
net of venture partner's
share . . . . . . . . . -- (299,039) -- -- --
----------- ------------ ----------- ----------- -----------
Net income (loss). . . . $11,364,198 (1,842,960) (15,554,366) (9,690,098) (10,365,550)
=========== ============ =========== =========== ===========
Net earnings (loss)
per interest(b):
Net operating loss . . $ (60.18) (28.53) (106.39) (66.28) (70.90)
Gain on sale or
disposition of Part-
nership's investment
in unconsolidated
venture . . . . . . . 142.23 18.53 -- -- --
Loss on sale of in-
vestment property,
net of venture
partner's share . . . -- (2.10) -- -- --
----------- ------------ ----------- ----------- -----------
Net income (loss). . . . $ 82.05 (12.10) (106.39) (66.28) (70.90)
=========== ============ =========== =========== ===========
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
Total assets . . . . . . $69,624,085 89,829,751 154,176,204 166,584,090 183,056,188
Long-term debt . . . . . $41,845,394 42,164,903 96,057,742 101,538,250 105,214,526
Cash distributions
per Interest (d) . . . $ 116.00 34.00 34.00 32.54(c) 13.72(c)
=========== ============ =========== =========== ===========
<FN>
-------------
(a) The above selected financial data should be read in conjunction with the consolidated financial
statements and the related notes appearing elsewhere in this annual report.
(b) The net loss per Interest is based on the number of Interests outstanding at the end of each period.
(c) Pursuant to the Partnership Agreement, certain Holders of Interests received preferred distributions in
an aggregate amount per Limited Partnership Interest equal to 25% of the Excess Suspended Loss (as defined), for
such Holder's Interests. In 1990, preferred distributions of either $26.28, $7.56, $1.04 or $0 per Interest were
paid to Holders of Interests. In February 1991, the remaining preferred distributions were made on such Interests
of either $2.96, $.82, $.07, or $0 per Interest to Holders of Interests. Such preferred distributions are not
included in cash distributions per Interest for the years ended December 31, 1991 and 1990.
(d) Cash distributions to the Limited Partners since the inception of the Partnership have not resulted in
taxable income to such Limited Partners and have therefore represented a return of capital. Each Partner's
taxable income (loss) from the Partnership in each year is equal to his allocable share of the taxable income
(loss) of the Partnership, without regard to the cash generated or distributed by the Partnership.
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF
DECEMBER 31, 1994
Property
--------
Palm Desert
Town Center a) The GLA occupancy rate and average base
rent per square foot as of December 31
for each of the last five years were
as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
1990 . . . . . 97% 18.40
1991 . . . . . 97% 19.21
1992 . . . . . 92% 19.51
1993 . . . . . 97% 18.90
1994 . . . . . 97% 19.66
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option
------------------- ----------- --------- ------------------------------
None - No single tenant
occupies more than 10% of
the total gross leasable
area of the building.
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Palm Desert Town Center:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
1995 22 67,756 $1,065,124 15.39%
1996 5 7,631 172,461 2.49%
1997 13 27,595 663,660 9.59%
1998 20 40,928 1,069,858 15.46%
1999 10 29,242 622,270 8.99%
2000 5 10,164 306,648 4.43%
2001 7 22,246 642,687 9.29%
2002 5 4,857 203,120 2.93%
2003 13 22,406 793,172 11.46%
2004 14 44,838 817,433 11.81%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 25, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On August 27, 1986, the Partnership commenced an offering of
$250,000,000 (subject to increase by up to $250,000,000) of limited
partnership interests (and assignee interests therein) pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933. The
offering terminated on December 31, 1987. A total of 140,342.82534
Interests were issued by the Partnership and assigned to the public at
$1,000 per Interest (fractional interests are due to a Distribution
Reinvestment Program).
After deducting selling expenses and other offering costs, the
Partnership had approximately $120,541,000 with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such invest-
ments and for working capital reserves. A portion of the proceeds was
utilized to acquire the properties described in Item 1 above.
At December 31, 1994, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $14,267,000. Such funds and
short-term investments of approximately $784,000 were available for
distributions to partners, capital improvements and working capital
requirements. Anticipated operating deficits at the 260 Franklin Street
office building are expected to be paid out of the unconsolidated joint
venture's restricted reserve account. The Partnership and its consolidated
ventures have currently budgeted in 1995 approximately $620,000 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 $616,000. 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 cash generated by the investment
properties and from the sale and refinancing of such properties. In such
regard, reference is made to the Partnership's property specific
discussions below and also to the Partnership's disclosure of certain
property lease expirations in Item 6. 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 personally
obligated to pay mortgage indebtedness. 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 taxable income 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 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 then reached an agreement with the
existing lender for a new loan, which requires monthly payments of
principal and interest (8.65% per annum) of $171,737 beginning February 15,
1995 and continuing through November 15, 1997, when the remaining balance
will be payable.
NewPark Associates commenced a renovation of NewPark Mall in early
1993 and such renovation was completed later that year. The approximate
$14 million of excess proceeds from the refinancing of NewPark Associates'
loans were sufficient to pay for substantially all of the renovation as
well as tenant improvement costs incurred to date in connection with
leasing vacant space at the mall. The mortgage note secured by the
property matures November 1, 1995. The mortgage can be extended until
November 1, 2000 upon payment of a $250,000 option fee and satisfaction of
certain conditions (which the Partnership currently expects to be able to
satisfy if required). The joint venture has commenced discussions with the
existing lender regarding an extension of the loan. However, there can be
no assurance that the joint venture will be able to obtain such an
extension. Reference is made to Note 3(f).
In November 1994, JMB/125 and certain affiliates of Olympia & York
Developments, Ltd. ("O&Y") reached an agreement to settle their dispute
regarding 125 Broad and its property. Under the terms of the agreement,
JMB/125 assigned its interest in 125 Broad to an affiliate of O&Y and
released its venture partners (the "O&Y partners") from any claims related
to 125 Broad. In return, JMB/125 received an unsecured 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 received a release from any claims of certain O&Y
affiliates and will generally be indemnified against any liability as a
general partner of 125 Broad. JMB/125 was also relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance. Affiliates of O&Y subsequently filed 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. In January 1995, the plan for reorganization was approved by
the bankruptcy court, was consummated, and the bankruptcy was concluded.
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 believed that these adverse market
conditions and the negative impact on effective rental rates would continue
over the next several years. The depressed market in downtown Manhattan
has significantly affected the 125 Broad Street Building as the occupancy
had decreased to 66%, at the date of assignment 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
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 would be
adversely affected by lower than originally expected effective rental rates
to be achieved upon re-leasing of the space. The low effective rental
rates coupled with the lower occupancy during the re-leasing period were
expected to result in the property operating at a significant deficit in
1995 and for the next several years. The O&Y partners were 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 were in default in respect to certain of
their funding obligations, and it appeared unlikely that the O&Y partners
would fulfill their obligations to 125 Broad and JMB/125. Releasing of the
vacant space would depend upon, among other things, the O&Y partners
advancing the costs associated with such releasing since JMB/125 did not
intend to contribute funds to 125 Broad to pay such costs. Based on the
facts discussed above and as described more fully in Note 3(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 the joint venture'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. 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 financial condition of O&Y and its affiliates and the anticipated
deficits for the property as well as the defaults of the O&Y partners, it
appeared unlikely that the O&Y partners would meet their financial and
other obligations to JMB/125 and 125 Broad.
The O&Y partners previously failed to advance necessary funds to 125
Broad as required under the joint venture agreement, and as a result, 125
Broad in June 1992 defaulted on its mortgage loan, which had an outstanding
principal balance of approximately $277,000,000 by failing to pay
approximately $4,722,000 of the semi-annual interest payment due on the
loan. 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 offset rent payable to 125
Broad for its lease at the 125 Broad Street Building in the amount of
approximately $43,500,000 through the date of assignment, and it was
expected that J&H would continue to offset amounts due under its lease
corresponding to amounts by which the affiliates of O&Y were in default
under the "takeover space" agreement. As a result of 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 the
date of assignment, the arrearage under the mortgage loan had increased to
approximately $69,447,000. However, 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 were 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 reserved the entire
rent offset by J&H, $14,900,000, $19,300,000 and $9,300,000 in 1994, 1993
and 1992, respectively, and also reserved approximately $32,600,000 of
accrued rents receivable relating to such J&H lease in 1992, since the
ultimate collectability of such amounts depended upon the O&Y partners' and
the O&Y affiliates' performance of their obligations. The Partnership's
share of such losses was approximately $2,900,000, $3,725,000 and
$8,106,000 for 1994, 1993 and 1992, respectively, and is included in the
Partnership's share of loss from operations of unconsolidated ventures.
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 re-leasing have been substantially below the rates
which were received under the previous leases for the same space. In
December 1991, 260 Franklin, the affiliated joint venture, reached an
agreement with the lender to modify the long-term mortgage note secured by
the 260 Franklin Street Building. The property is currently expected to
operate at a deficit for 1995 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 leasing commissions to
an affiliate) to be used to cover the cost of capital and tenant
improvements and lease inducements 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,
which is more fully described in Note 3(d), and accordingly, such fees and
commissions remained unpaid. The Partnership's share of such fees and
lease commissions is approximately $102,000 at December 31, 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 will be significant costs related to
re-leasing this space. In addition, the long-term mortgage loan matures
January 1, 1996. The Partnership will attempt to refinance or extend this
loan when it matures, but there can be no assurance that the Partnership
will be able to do so. If the Partnership 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 and Federal income tax purposes
with no distributable proceeds.
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 7(a).
The Partnership received (through joint ventures with affiliates) its
specified cash returns relating to the Owings Mills Shopping Center
(through the date of sale) and the Palm Desert Town Center through 1994,
which were funded by unaffiliated venture partners pursuant to the terms of
the joint venture agreements. In addition, the Partnership is receiving
cash distributions from operations of the Dunwoody Crossing Apartments and
NewPark Mall.
In January 1992, the prior parent organization of Macy's at NewPark
Mall and Bullock's and Bullock's Mens at Palm Desert Town Center had filed
for protection under Chapter 11 of the United States Bankruptcy Code. In
December 1994, Macy's, Bullock's and Bullock's Mens were acquired by
Federated Department Stores and were removed from protection under Chapter
11 of the United States Bankruptcy Code and the stores continue to operate
at the centers. The Partnership received through December 1994 preferred
returns of annual cash flow with respect to the Palm Desert Town Center
investment property through the obligations of its unaffiliated joint
venture partner. Since the preferred return period has expired as
discussed above, the Partnership's share of cash flow will be subject to
the operations of the property and may be lower than the return received in
previous years.
On November 2, 1993, the Partnership through JMB/Warner Center
Associates ("JMB/Warner") 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 7(b). In February 1994, the Partnership made cash
distributions to the Limited Partners that included $100 per Interest from
proceeds received in connection with the sale of the Blue Cross Building.
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.
The General Partners had deferred through December 31, 1992, their
receipt of 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 did not bear interest and was paid in
full in July 1994. Beginning in 1993, the General Partners are receiving
partnership management fees and distributions of net cash generated from
operations. Reference is made to Note 9.
Due to the factors discussed above and the general lack of buyers of
real estate today, it is likely that the Partnership may hold some of its
investment properties longer than originally anticipated in order to
maximize the recovery of its investments and any potential for returns
thereon. Also, in light of the current severely depressed real estate
markets, it currently appears that the Partnership's goal of capital
appreciation will not be achieved. Although the Partnership expects to
distribute from sale proceeds some additional portion of the Limited
Partners' original capital, without a dramatic improvement in market
conditions, the Limited Partners will receive significantly less than their
original investment.
RESULTS OF OPERATIONS
At December 31, 1992, the Partnership owned an interest in seven
operating investment properties. During 1993, the Partnership sold its
interests in the Blue Cross Building and the Owings Mills Shopping Center
(reference is made to Notes 7(a) and (b)). During 1994, the Partnership
assigned its interest in the 125 Broad Street Building (reference is made
to Note 7(c)). Reference is made to Notes 2 and 3 for a description of
agreements which the Partnership, either directly or through joint venture
partnerships, has entered into with sellers or affiliates of sellers of the
Partnership's properties for the operation and management of such
properties.
The increase in cash and cash equivalents and corresponding decrease
in short-term investments at December 31, 1994 as compared to December 31,
1993 is primarily due to the majority of the Partnership's investments in
U.S. Government obligations being classified as cash equivalents at
December 31, 1994 as compared to December 31, 1993. (Reference is made to
Note 1.) The decrease in the aggregate amount of cash and cash equivalents
and short-term investments and interest, rents and other receivables at
December 31, 1994 as compared to December 31, 1993 is primarily due to the
distribution of $14,034,783 in February 1994 relating to the sale of the
Blue Cross Building as discussed above.
The change in the asset, investment in unconsolidated ventures as of
December 31, 1994 as compared to December 31, 1993 is primarily due to
distributions from the Dunwoody Crossing Apartments in 1994.
The changes in the Partnership's liability investments in
unconsolidated ventures at December 31, 1994 as compared to December 31,
1993 and the gain on sale or disposition of Partnership's investment in
unconsolidated venture for the year ending December 31, 1994 is due to the
assignment of the Partnership's interest in the 125 Broad Street Building
as discussed above. The increase in Partnership's share of loss from
operations of unconsolidated ventures for the year ended December 31, 1994
as compared to the year ended December 31, 1993 and the decrease in the
Partnership's share of loss from operations of unconsolidated ventures and
gain on sale of Partnership's investment in unconsolidated venture for the
year ended December 31, 1993 as compared to the year ended December 31,
1992 is primarily due to the sale of the Partnership's interest in Owings
Mills and a decrease in the share of loss attributable to 125 Broad as a
result of the Salomon Brothers lease termination payment in 1993 as
discussed above. Reference is also made to Notes 3(b), 7(a) and (c).
The increase in accrued rents receivable and ground rent payable at
December 31, 1994 as compared to December 31, 1993 is due to rental income
accrued on a straight-line basis for certain tenants at Palm Desert Town
Center. Reference is made to Notes 1 and 8(b).
The increase in accounts payable at December 31, 1994 as compared to
December 31, 1993 is primarily due to the timing of payment of operating
expenses at Palm Desert Town Center.
The decrease in unearned rents at December 31, 1994 as compared to
December 31, 1993 is primarily due to the timing of receipt of rental
income at Palm Desert Town Center.
The decrease in amounts due to affiliates at December 31, 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 9.
The decrease in venture partners subordinated equity in ventures at
December 31, 1994 as compared to December 31, 1993 is primarily due to the
distribution of remaining sales proceeds, from the Blue Cross Building in
1994.
The decrease in rental income, mortgage and other interest and
depreciation for the year ended December 31, 1994 as compared to the year
ended December 31, 1993 and for December 31, 1993 as compared to December
31, 1992 is primarily due to the sale of the Blue Cross Building in
November 1993.
The decreases in interest income for the year ended December 31, 1993
as compared to the year ended December 31, 1992 is primarily due to the
Partnership earning lower interest rates on its interest bearing U.S.
Government obligations.
The decrease in management fees to the Corporate General Partner for
the year ended December 31, 1994 as compared to the years ended December
31, 1993 and 1992 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 venture partner's share of ventures' operations for
the years ended December 31, 1994 and 1993 as compared to the year ended
December 31, 1992 is primarily due to a change in the allocation in 1994
and 1993 of operating losses to the venture partner to JMB/PDTC Associates
in accordance with the venture agreement.
The loss on sale of investment property for the year ended December
31, 1993 is due to the sale of the Blue Cross Building in November 1994 as
discussed above.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
To the extent that inflation in future periods does have an adverse
impact on property operating expenses, the effect will generally be offset
by amounts recovered from tenants as many of the long-term leases at the
Partnership's commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes. Therefore, the effect on operating earnings
generally will depend upon whether the properties are substantially
occupied. In addition, substantially all of the leases at the Partner-
ship's shopping center investments contain provisions which entitle the
property owner to participate in gross receipts of tenants above fixed
minimum amounts.
Future inflation may also cause capital appreciation of the
Partnership's investment properties over a period of time to the extent
that rental rates and replacement costs of properties increase.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Operations, Years ended December 31, 1994, 1993
and 1992
Consolidated Statements of Partners' Capital Accounts (Deficits),
Years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows, Years ended December 31, 1994, 1993
and 1992
Notes to Consolidated Financial Statements
SCHEDULE
--------
Consolidated Real Estate and Accumulated
Depreciation . . . . . . . . . . . . . . . III
Schedules not filed:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or related notes.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Combined Balance Sheets, December 31, 1994 and 1993
Combined Statements of Operations, Years ended December 31, 1994, 1993
and 1992
Combined Statements of Partners' Capital Accounts (Deficits),
Years ended December 31, 1994, 1993 and 1992
Combined Statements of Cash Flows, Years ended December 31, 1994, 1993
and 1992
Notes to Combined Financial Statements
SCHEDULE
--------
Combined Real Estate and
Accumulated Depreciation . . . . . . . . . III
Schedules not filed:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the combined financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI:
We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XVI (a limited partnership) and Consolidated
Ventures as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XVI and Consolidated Ventures at
December 31, 1994 and 1993, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1994, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 27, 1995
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
1994 1993
------------ -----------
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . $ 14,266,786 286,137
Short-term investments (note 1). . . . . . . . . . . . . . . . . 783,716 32,618,483
Interest, rents and other receivables, net of allowances
for doubtful accounts of approximately $585,000 and
$880,000 at December 31, 1994 and 1993, respectively . . . . . 594,170 1,010,293
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . 156,909 202,526
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . 15,801,581 34,117,439
------------ ------------
Investment properties, at cost (notes 2, 3 and 7(b)) - Schedule III:
Buildings and improvements . . . . . . . . . . . . . . . . . . . 60,061,137 60,060,557
Less accumulated depreciation. . . . . . . . . . . . . . . . . . 12,018,826 10,011,970
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . 48,042,311 50,048,587
Investment in unconsolidated ventures, at equity
(notes 1, 3 and 10). . . . . . . . . . . . . . . . . . . . . . . 3,318,589 3,850,428
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . 434,303 335,676
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . 247,850 292,124
Accrued rents receivable (note 1). . . . . . . . . . . . . . . . . 1,779,451 1,185,497
------------ ------------
$ 69,624,085 89,829,751
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
DECEMBER 31, 1994 AND 1993
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . $ 319,509 283,548
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 391,070 309,062
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . 464,383 444,215
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . 21,119 200,757
Amounts due to affiliates (note 9) . . . . . . . . . . . . . . . 65,984 1,565,981
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . 1,262,065 2,803,563
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . 78,406 79,176
Ground rent payable (note 8(b)). . . . . . . . . . . . . . . . . . 889,727 592,748
Investment in unconsolidated ventures, at equity
(notes 1, 3 and 10). . . . . . . . . . . . . . . . . . . . . . . 5,669,281 17,120,620
Long-term debt, less current portion (note 4). . . . . . . . . . . 41,845,394 42,164,903
------------ ------------
Commitments and contingencies (notes 3, 4, 8 and 9)
Total liabilities. . . . . . . . . . . . . . . . . . . . 49,744,873 62,761,010
Venture partners' subordinated equity in ventures. . . . . . . . . 4,676,235 5,824,791
Partners' capital accounts (deficits) (note 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . (3,129,431) (2,979,118)
Cash distributions (note 9). . . . . . . . . . . . . . . . . (1,300,486) (175,636)
------------ ------------
(4,409,917) (3,134,754)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . . . . 120,541,353 120,541,353
Cumulative net losses. . . . . . . . . . . . . . . . . . . . (58,238,035) (69,752,546)
Cash distributions . . . . . . . . . . . . . . . . . . . . . (42,690,424) (26,410,103)
------------ ------------
19,612,894 24,378,704
------------ ------------
Total partners' capital accounts . . . . . . . . . . . . 15,202,977 21,243,950
------------ ------------
$ 69,624,085 89,829,751
============ ============
<FN>
See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
------------ ------------ ------------
Income:
Rental income. . . . . . . . . . . . . . . . . $10,747,381 18,045,896 19,745,429
Interest income. . . . . . . . . . . . . . . . 765,177 776,432 1,008,059
----------- ----------- -----------
11,512,558 18,822,328 20,753,488
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . 5,101,979 9,469,227 10,931,595
Depreciation . . . . . . . . . . . . . . . . . 2,006,856 4,021,646 5,080,004
Property operating expenses. . . . . . . . . . 4,913,419 4,873,173 4,819,900
Professional services. . . . . . . . . . . . . 281,667 291,195 314,656
Amortization of deferred expenses. . . . . . . 122,800 105,969 121,810
Management fees to corporate general
partner (note 9) . . . . . . . . . . . . . . 155,942 331,376 331,376
General and administrative . . . . . . . . . . 266,900 277,143 361,705
----------- ----------- -----------
12,849,563 19,369,729 21,961,046
----------- ----------- -----------
Operating loss. . . . . . . . . . . . . . (1,337,005) (547,401) (1,207,558)
Partnership's share of loss from operations
of unconsolidated ventures (notes 3 and 10). . (8,305,706) (4,852,148) (14,384,114)
Venture partners' share of ventures' operations
(note 3) . . . . . . . . . . . . . . . . . . 844,213 1,228,201 37,306
----------- ----------- -----------
Net operating loss. . . . . . . . . . . . (8,798,498) (4,171,348) (15,554,366)
Gain on sale or disposition of Partnership's
investment in unconsolidated venture
(note 7(a) and (c)). . . . . . . . . . . . . . 20,162,696 2,627,427 --
Loss on sale of investment property,
net of venture partner's share of gain of
$261,656 (note 7(b)) . . . . . . . . . . . . . -- (299,039) --
----------- ----------- -----------
Net income (loss) . . . . . . . . . . . . $11,364,198 (1,842,960) (15,554,366)
=========== =========== ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Net loss per limited partnership interest
(note 1):
Net loss. . . . . . . . . . . . . . . . $ (60.18) (28.53) (106.39)
Gain on sale or disposition of
Partnership's investment in
unconsolidated venture. . . . . . . . 142.23 18.53 --
Loss on sale of investment property . . -- (2.10) --
----------- ----------- -----------
Net earnings (loss) . . . . . . . $ 82.05 (12.10) (106.39)
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ ------------------------------------------------------
CONTRIBU-
TIONS, NET
OF OFFERING
COSTS AND NET
CONTRI- CASH PURCHASE INCOME CASH
BUTIONS NET LOSS DISTRIBUTIONS TOTAL DISCOUNTS (LOSS) DISTRIBUTIONS TOTAL
-------- ---------- ------------- -------- ----------- ---------- ------------------------
Balance
(deficit)
Decem-
ber 31,
1991. . . .$20,000(2,213,373) (26,517) (2,219,890)120,541,353 (53,120,965) (16,866,444) 50,553,944
Net loss . .-- (622,175) -- (622,175) -- (14,932,191) -- (14,932,191)
Cash distri-
butions
($34.00 per
limited
partnership
interest
(note 1)) .-- -- -- -- -- -- (4,771,829) (4,771,829)
------- ---------- ------- ---------- ----------- ----------- ----------- ----------
Balance
(deficit)
Decem-
ber 31,
1992. . . . 20,000(2,835,548) (26,517) (2,842,065)120,541,353 (68,053,156) (21,638,273) 30,849,924
Net loss . .-- (143,570) -- (143,570) -- (1,699,390) -- (1,699,390)
Cash distri-
butions
($34.00 per
limited
partnership
interest
(note 1)) .-- -- (149,119) (149,119) -- -- (4,771,830) (4,771,830)
------- ---------- ------- ---------- ----------- ----------- ----------- ----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS
------------------------------------------------ ------------------------------------------------------
CONTRIBU-
TIONS, NET
OF OFFERING
COSTS AND NET
CONTRI- CASH PURCHASE INCOME CASH
BUTIONS NET LOSS DISTRIBUTIONS TOTAL DISCOUNTS (LOSS) DISTRIBUTIONS TOTAL
-------- ---------- ------------- -------- ----------- ---------- ------------- -----------
Balance
(deficit)
Decem-
ber 31,
1993. . . .20,000 (2,979,118) (175,636) (3,134,754)120,541,353 (69,752,546) (26,410,103) 24,378,704
Net income
(loss). . . -- (150,313) -- (150,313) -- 11,514,511 -- 11,514,511
Cash distri-
butions
($116.00 per
limited
partnership
interest
(note 1)) . -- -- (1,124,850) (1,124,850) -- -- (16,280,321)(16,280,321)
------- ---------- ---------- ---------- ----------- ----------- ----------- ----------
Balance
(deficit)
Decem-
ber 31,
1994. . . .$20,000(3,129,431) (1,300,486) (4,409,917)120,541,353 (58,238,035) (42,690,424) 19,612,894
======= ========== ========== ========== =========== =========== =========== ==========
<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
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
------------ ----------- -----------
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . . . $11,364,198 (1,842,960) (15,554,366)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . 2,006,856 4,021,646 5,080,004
Amortization of deferred expenses. . . . . . . 122,800 105,969 121,810
Partnership's share of loss from operations
of unconsolidated ventures . . . . . . . . . 8,305,706 4,852,148 14,384,114
Venture partners' share of ventures'
operations and gain on sale. . . . . . . . . (844,213) (966,545) (37,306)
Loss on sale of investment property. . . . . . -- 37,383 --
Gain on sale or disposition of Partner-
ship's investment in unconsolidated
venture. . . . . . . . . . . . . . . . . . . (20,162,696) (2,627,427) --
Changes in:
Interest, rents and other receivables. . . . . . 416,123 (60,188) (637,366)
Prepaid expenses . . . . . . . . . . . . . . . . 45,617 (26,009) 36,101
Notes receivable . . . . . . . . . . . . . . . . 44,274 120,897 98,066
Accrued rents receivable . . . . . . . . . . . . (593,954) (231,937) (121,768)
Accounts payable . . . . . . . . . . . . . . . . 82,008 (99,046) 93,959
Accrued interest . . . . . . . . . . . . . . . . 20,168 (522,672) (347,802)
Amounts due to affiliates. . . . . . . . . . . . (1,499,997) 72,178 335,101
Unearned rents . . . . . . . . . . . . . . . . . (179,638) 6,170 (121,534)
Tenant security deposits . . . . . . . . . . . . (770) (9,644) (29,457)
Ground rent payable. . . . . . . . . . . . . . . 296,979 115,968 60,884
----------- ----------- ----------
Net cash provided by
(used in) operating
activities . . . . . . . . . . . . . . (576,539) 2,945,931 3,360,440
----------- ----------- ----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------ ----------- -----------
Cash flows from investing activities:
Cash proceeds from sale of investment
property, net of selling expenses
(note 7(b)). . . . . . . . . . . . . . . . . . -- 22,424,531 --
Net sales and maturities (purchase) of
short-term investments . . . . . . . . . . . . 31,834,767 (16,317,252) 1,066,913
Additions to investment properties . . . . . . . (580) (263,742) (499,896)
Payment of deferred expenses . . . . . . . . . . (221,427) (158,786) (57,679)
Partnership's distributions from
unconsolidated ventures. . . . . . . . . . . . 1,187,740 1,097,566 835,644
Partnership's contributions to
unconsolidated ventures. . . . . . . . . . . . (250,250) (30,990) (110,515)
----------- ----------- ----------
Net cash provided by
investing activities . . . . . . . . . 32,550,250 6,751,327 1,234,467
----------- ----------- ----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . (283,548) (5,480,508) (3,676,276)
Venture partners' distributions from venture . . (1,176,151) (5,652,116) (1,097,019)
Venture partners' contributions to venture . . . 871,808 6,056,277 4,744,958
Distributions to limited partners. . . . . . . . (16,280,321) (4,771,830) (4,771,829)
Distributions to general partners. . . . . . . . (1,124,850) (149,119) --
----------- ----------- ----------
Net cash used in financing activities. . (17,993,062) (9,997,296) (4,800,166)
----------- ----------- ----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . 13,980,649 (300,038) (205,259)
Cash and cash equivalents,
beginning of the year. . . . . . . . . 286,137 586,175 791,434
----------- ----------- ----------
Cash and cash equivalents,
end of the year. . . . . . . . . . . . $14,266,786 286,137 586,175
=========== =========== ==========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------ ----------- -----------
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest. . . . $ 5,081,811 9,991,899 11,279,397
=========== =========== ==========
Non-cash investing and financing activities:
Total sales price of investment property,
net of selling expenses. . . . . . . . . . . $ -- 76,033,823 --
Mortgage loan payable assumed by buyer . . . . -- (53,609,292) --
----------- ----------- ----------
Cash proceeds from sale of
investment property,
net of selling expenses. . . . . . . . $ -- 22,424,531 --
=========== =========== ==========
<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
DECEMBER 31, 1994, 1993 AND 1992
(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 3(g)) and JMB/Hahn PDTC Associates,
L.P. ("Palm Desert") (note 3(h)). The effect of all transactions between
the Partnership and its 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 (notes 3 and 10) 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
("JMB/125"). The Partnership through JMB/Owings, sold its interest in
Owings Mills Mall in June 1993. In November 1994, the Partnership through
its indirect ownership of JMB/125 assigned its interest in 125 Broad Street
Building.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying 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 for the years ended December 31, 1994 and 1993 is summarized
as follows:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
--------------------------------------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
Total assets . . . . . . . . . . . $69,624,085 83,120,637 89,829,751 89,977,915
Partners' capital accounts
(deficits):
General partners . . . . . . . (4,409,917) (2,701,818) (3,134,754) (4,260,046)
Limited partners . . . . . . . 19,612,894 37,383,376 24,378,704 44,254,461
Net earnings (loss):
General partners . . . . . . . (150,313) 2,683,078 (143,570) 183,474
Limited partners . . . . . . . 11,514,511 9,409,237 (1,699,390) 9,702,136
Net earnings (loss) per
limited partnership
interest . . . . . . . . . . . . 82.05 67.04 (12.10) 69.13
=========== ========== =========== ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The net loss per limited Partnership interest is based upon the number
of limited partnership interests outstanding at the end of the period.
Deficit capital accounts will result, through the duration of the
Partnership, in net gain for financial reporting and income tax purposes.
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 ($14,137,500 and none at December 31, 1994 and 1993, respectively)
as cash equivalents with any remaining amounts (generally with original
maturities of one year or less) reflected as short-term investments being
held to maturity.
Deferred expenses are comprised of loan fees which are amortized over
the term of the related loan and lease commissions which are amortized over
the terms of the related leases using the straight-line method.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives. Provisions for value impairment are
recorded with respect to the investment properties whenever the estimated
future cash flows from a property's operations and projected sale are less
than the property's net carrying value.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
prorated rental income for the full period of occupancy on a straight-line
basis.
Certain amounts in the 1993 and 1992 consolidated financial statements
have been reclassified to conform to the 1994 presentation.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
(2) INVESTMENT PROPERTIES
The Partnership has acquired, through joint ventures, interests in
three contiguous apartment complexes, three office buildings and three
shopping centers. During 1993, the Partnership, through JMB /Warner, sold
its interest in the Blue Cross Building and, through JMB/Owings, its
interest in Owings Mills Mall (notes 7(a) and (b)). During 1994, the
Partnership, through its indirect ownership of JMB/125 assigned its
interest in the 125 Broad Street Building (note 7(c)). All of the
properties owned at December 31, 1994 were in operation. The cost of the
investment properties represents the total cost to the Partnership or its
ventures plus miscellaneous acquisition costs.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Depreciation on the consolidated investment properties has been
provided over the estimated useful lives of 5 to 30 years using the
straight-line method.
The investment properties are pledged as security for the long-term
debt, for which generally there is no recourse to the Partnership.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at December 31, 1994 is party to five joint venture
agreements (JMB/Owings, JMB/125, 260 Franklin, Villages Northeast and
JMB/NewPark) with Carlyle Real Estate Limited Partnership - XV ("Carlyle-
XV") (and for JMB/125, Carlyle Advisors, Inc.), and two (JMB/Warner and
Palm Desert) with Carlyle Real Estate Limited Partnership-XVII ("Carlyle-
XVII"), all sponsored by the General Partners or their affiliates. The
terms of these affiliated partnerships 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
$137,805,218 through December 31, 1994.
Certain of these affiliated partnerships have entered into joint
venture agreements with unaffiliated joint venture partners. In general,
the unaffiliated joint venture partners, who are either the sellers (or
their affiliates) of the property investments acquired or parties which
have contributed an interest in the property developed, or were
subsequently admitted to the ventures, make no cash contributions to the
ventures, but their retention of an interest in the property, through the
joint venture, is taken into account in determining the purchase price of
the Partnership's interest, which is determined by arm's-length
negotiations. 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 has acquired, through the above ventures, three
apartment complexes, three office buildings and three shopping centers. In
1993, the Partnership through JMB/Owings sold its interest in Owings Mills
Mall and through JMB/Warner sold the Blue Cross Building (notes 7(a) and
(b)). In 1994, the Partnership through its indirect ownership of JMB/125
assigned its interest in the 125 Broad Street Building (note 7(c)).
Certain of the ventures' properties have been financed under various long-
term debt arrangements as described in note 4 and in note 3 of Notes to
Combined Financial Statements filed with this report.
There are certain risks associated with Partnership's investments made
through joint ventures, including the possibility that the Partnership's
joint venture partners in an investment might become unable or unwilling to
fulfill their financial or other obligations, or that such joint venture
partners may have economic or business interests or goals that are
inconsistent with those of the Partnership.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(b) JMB/125
In November 1994, the Partnership through its indirect ownership of
JMB/125 assigned its interest in the 125 Broad Street Building (note 7(c)).
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").
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 has 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 bore interest at a rate of 10-1/8% per
annum payable in semi-annual interest only payments and was to mature on
December 27, 1995. JMB/125 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 was subject to a ground lease
which has a term through June 2067 and provided for annual rental payments
of $1,075,000. The terms of the ground lease granted 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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The partnership agreement of 125 Broad, as amended, provided 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 were 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 were treated by 125 Broad as non-recourse loans
bearing interest, payable monthly, at the floating prime rate of an
institutional lender. Due to a major tenant vacating in 1991 and the O&Y
affiliates' default under the "takeover space" agreement, the property
operated at a deficit in 1994 and was expected to operate at a deficit for
the next several years. Such deficits were 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 were to 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 were to be due and
payable on December 31, 2000. JMB/125 and the O&Y partners were 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 covered by the capital contributions or advances of the
O&Y partners described above.
The 125 Broad partnership agreement also provided that beginning in
1991, annual cash flow, if any, was distributable first to JMB/125 and to
the O&Y partners in certain proportions up to certain specified amounts.
Next, the O&Y partners were 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, was distributable approximately 48.25% to JMB/125
and approximately 51.75% to the O&Y partners. In general, operating
profits or losses were 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 were allocable to JMB/125 or the O&Y
partners.
The 125 Broad partnership agreement further provided 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) were
distributable approximately 48.25% to JMB/125 and approximately 51.75% to
the O&Y partners.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
As a result of the assignment by JMB/125 of its interest in 125 Broad
to an affiliate of the O&Y partners and the release of JMB/125 of claims
related to 125 Broad, JMB/125 was relieved of any obligation to contribute
any additional amounts to 125 Broad, including any amount of its deficit
capital account to 125 Broad. Reference is made to note 7(c).
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 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' previous failure to advance necessary funds
to 125 Broad as required under the joint venture agreement, 125 Broad in
June 1992 defaulted on its mortgage loan by failing to pay approximately
$4,722,000 of the semi-annual interest payment due on the loan. As a
result of this default, the loan agreement provided 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 offset rent payable to 125 Broad for its
lease at the 125 Broad Street Building in the amount of approximately
$43,500,000 through the date of its assignment, and it was expected that
J&H would continue to offset amounts due under its lease corresponding to
amounts by which the affiliates of O&Y were in default under the "takeover
space" agreement. As a result of 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 the date of assignment,
the arrearage under the mortgage loan had increased to approximately
$69,447,000. 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 were 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 provided loss reserves for the entire rent offset by
J&H, $14,900,000, $19,300,000 and $9,300,000 in 1994, 1993 and 1992,
respectively, and also reserved approximately $32,600,000 in 1992 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 $2,875,000, $3,725,000 and $8,106,000 for the
years ended December 31, 1994, 1993 and 1992, respectively, and is included
in the Partnership's share of loss from operations of unconsolidated
venture.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The office building was 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
was entitled to receive a management fee equal to 1% of gross receipts of
the property.
(c) JMB/Owings
On June 30, 1993, JMB/Owings sold its interest in Owings Mills
Shopping Center (note 7(a)).
In December 1985, the Partnership, through the JMB/Owings joint
venture partnership, acquired an interest in an existing joint venture
partnership ("Owings Mills") which owns an interest in an enclosed regional
shopping center which was completed in July 1986.
JMB/Owings acquired its interest in Owings Mills for an initial
capital contribution of $500,000, subject to the interim mortgage loan of
approximately $60,000,000 (maximum commitment $99,000,000). In July 1987,
the permanent mortgage loan funded in the amount of $99,000,000, of which
$90,000,000 represents financing of the venture and $9,000,000 represents
financing of an affiliate of the joint venture partners with respect to its
leasehold interest in the ground lease described below. JMB/Owings made
additional capital contributions of $1,300,000 and $3,000,000 in December
1986 and July 1987, respectively. JMB/Owings was obligated to pay
operating deficits of the shopping center incurred for the period from
commencement of the shopping center operations (July 1986) through March
31, 1987, and JMB/Owings paid an affiliate of the developer a fee of
$2,200,000 in December 1986 in consideration of its assumption of
JMB/Owings's obligation to fund such operating deficits. Thus,
JMB/Owings's original cash investment was $7,000,000, of which the
Partnership's share was $3,500,000.
Operating profits and losses of Owings Mills, in general, were
allocable 40% to JMB/Owings and 60% to the joint venture partners.
JMB/Owings had a cumulative preferred interest in net cash receipts
(as defined) from the property. Such preferential interest related to a
negotiated rate of return on contributions made by JMB/Owings. Such
preferential interest was received through June 1993. After JMB/Owings
received its preferential return, the joint venture partners were entitled
to a non-cumulative return on their interest in Owings Mills; additional
net cash receipts were to be shared in a ratio relating to the various
ownership interests of JMB/Owings and its joint venture partners.
JMB/Owings also had preferred positions (related to JMB/Owings's cash
investment in Owings Mills) with respect to distribution of net sale or
refinancing proceeds from Owings Mills.
Owings Mills had entered into a long-term ground lease under which it
has leased approximately 79 acres of the land owned by Owings Mills to an
affiliate of the joint venture partners. In general, all rent and proceeds
of the sale of sub-parcels received by Owings Mills pursuant to the ground
lease would have been distributable to the joint venture partners.
The shopping center was managed by an affiliate of the developer under
a long-term agreement for a fee equal to 3-1/2% of the gross receipts of
the property.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(d) 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.
An affiliate of the General Partner managed the property until
December 1994 for a fee computed at 3% of the property's gross receipts.
Beginning January 1, 1992, 260 Franklin Street is escrowing the payment of
property management fees and leasing commissions to the affiliate pursuant
to the terms of the debt modification described below. The property is
currently managed by the purchaser of the affiliates assets on the same
terms. Reference is made to Note 6.
The office market in the Financial District of downtown Boston remains
competitive due to new office building developments and layoffs, cutbacks
and consolidations by many of the financial service companies which, along
with related businesses, dominate this sub-market. Due to the competitive
nature of the Boston office market, various rental concessions and lower
effective rates have been required to facilitate leasing at the property.
This resulted in uncertainty as to 260 Franklin's ability to recover the
net carrying value of the investment property through future operations and
sales. As a matter of prudent accounting practice, a provision for value
impairment of such investment property of $17,120,734 was recorded as of
December 31, 1990. The Partnership's share of such provision was
$5,136,220. 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. The property is currently expected to operate at a
deficit for 1995 and for several years thereafter. 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 will be significant cost related to re-leasing this
space. In addition, the long-term mortgage loan matures January 1, 1996.
The Partnership will attempt to refinance this loan when it matures, but
there can be no assurance the Partnership will be able to obtain such
financing. If the Partnership 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.
260 Franklin 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. The modified mortgage note currently provides for
monthly payments of interest only based upon the then outstanding balance
at a rate of 8% per annum. Upon the scheduled or accelerated maturity, or
prepayment of the mortgage loan, 260 Franklin 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 (January 1,
1996) or prepayment. In addition, upon maturity or prepayment, 260
Franklin 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. 260
Franklin is required to (i) escrow excess cash flow from operations,
beginning in 1991, to cover future cash flow deficits, (ii) make an initial
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 is to be used to cover the cost of capital and tenant
improvements and lease inducements which are the primary components of the
anticipated operating deficits noted above ($1,151,566 used as of December
31, 1994) as defined, with the balance, if any, (including interest) 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.
(e) Villages Northeast
In September 1986, the Partnership, through the Villages Northeast
joint venture partnership, acquired through a joint venture ("Post
Associates") with an affiliate of the developer, an interest in three
apartment complexes known as the Dunwoody Crossing (Phase I, II and III)
Apartments, formerly known as Post Crest Apartments, Post Terrace
Apartments and Post Crossing Apartments, respectively, located near
Atlanta, Georgia.
Villages Northeast acquired its interest in the apartment complexes
from an affiliate of the developer for a purchase price of $35,027,117 paid
at closing, subject to an existing first mortgage loan of $9,557,600
secured by the Dunwoody Crossing (Phase II). Villages Northeast and the
seller formed Post Associates with each contributing its interest in the
complexes to Post Associates. In addition, Villages Northeast contributed
$1,371,043 to Post Associates to pay certain expenses in connection with
the retirement of indebtedness related to the complexes.
As contemplated at the time of acquisition, in September 1987 an
additional mortgage loan funded in the amount of $21,000,000, of which the
Partnership's share was $6,300,000. The note was secured by the Dunwoody
(Phase I and III) Apartments, bore interest at a rate of 9.75% and required
monthly debt service payments consisting of interest only through April
1991 and monthly payments of $180,425 thereafter representing principal and
interest until October 1, 1994, when the entire outstanding balance of
principal of $20,692,324 and any unpaid interest was due. Thus, Villages
Northeast's cash investment was approximately $15,398,000, of which the
Partnership's share was approximately $4,619,000. Villages Northeast
negotiated an extension of the mortgage loan until December 15, 1994 and
then reached an agreement with the existing lender for a new loan, which
requires monthly payments of principal and interest (8.65% per annum) of
$171,737 beginning February 15, 1995 and continuing through November 15,
1997, when the remaining balance will be payable.
Post Associates refinanced the first mortgage loan of approximately
$9,467,000 secured by the Dunwoody (Phase II) Apartments effective October
6, 1992, with a $9,800,000 replacement loan from an institutional lender.
The new first mortgage loan, bearing interest of 7.64% per annum, is
collateralized by the property and requires monthly payments of principal
and interest of $73,316 beginning November 1, 1992 and continuing through
November 1, 1997, when the remaining balance is payable.
Villages Northeast is entitled to a cumulative preferred return of
annual net cash receipts (as defined) from the properties. Such
preferential return relates to a negotiated rate of return on contributions
made by Villages Northeast. Villages Northeast has received cash
distributions from property operations through December 31, 1994. In
addition, pursuant to the terms of the venture agreement, the unaffiliated
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
venture partner was obligated to fund the shortfall in the Villages
Northeast's cumulative preferred cash return through September 30, 1990,
all of which was received. After Villages Northeast receives its
preferential return, the unaffiliated venture partner is entitled to a
non-cumulative return on its interest in the venture; additional net cash
receipts are shared in a ratio relating to the various ownership interests
of Villages Northeast (90%) and its unaffiliated venture partner (10%).
Villages Northeast also has preferred positions (related to Villages
Northeast's investment in Post Associates) with respect to distribution of
net sale or refinancing proceeds from Post Associates. Operating profits
and losses, in general, are allocable 90% to Villages Northeast and 10% to
the unaffiliated venture partner, except that certain expenses paid for out
of Villages Northeast's cash payments are to be allocated solely to
Villages Northeast and certain costs of operations paid for out of capital
contributions, if any, of the unaffiliated venture partner are allocable
solely to it.
An affiliate of the unaffiliated 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
until December 1994 for a fee equal to 5% of the gross revenues of the
complexes. The property is currently being managed by the purchaser of the
affiliate's assets on the same terms. Reference is made to Note 6.
(f) 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.
In 1990, NewPark Associates reached an agreement with J.C. Penney to
open an anchor store at NewPark Mall, which opened in November 1991. Under
the terms of the agreement, J.C. Penney built its own store and NewPark
Associates constructed a parking deck to accommodate the addition of J.C.
Penney to the center. NewPark Associates incurred costs of approximately
$10,400,000 related to this addition, of which $2,000,000 was reimbursed by
J.C. Penney. The unaffiliated joint venture partner loaned NewPark
Associates all of the funds to cover the costs incurred related to the
addition. In December 1992, proceeds from the refinancing described below
were used to repay all amounts due to the unaffiliated joint venture
partner.
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 (which the Partnership currently
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
expects to be able to satisfy if required) as specified in the mortgage
note. The joint venture has commenced discussions with the existing lender
regarding an extension of the loan, however, there can be no assurance that
the joint venture will be able to obtain such an extension. A portion of
the proceeds from the note payable was 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 approximately $14 million at NewPark
Mall in early 1993 and such renovation was completed later that year.
The NewPark Associates partnership agreement provides that JMB/NewPark
and the joint venture partner are each entitled to receive 50% of profits
and losses, net cash flow and net sale or refinancing proceeds of NewPark
Associates and are each obligated to advance 50% of any additional funds
required under the terms of the NewPark Associates partnership agreement.
The portion of the shopping center owned by NewPark Associates is
managed by the unaffiliated joint venture partner under a long-term
agreement pursuant to which it is obligated to manage the property and
collect all receipts from operations of the property. The joint venture
partner is paid a management fee equal to 4% of the fixed and percentage
rent.
(g) JMB/Warner
On November 2, 1993, the Partnership through JMB/Warner sold its
interest in the Blue Cross Building (note 7(b)).
In December 1987, the Partnership, through a joint venture partnership
(JMB/Warner), (with Carlyle-XVII) acquired an interest in an existing five-
structure office complex in Woodland Hills (Los Angeles), California known
as the Blue Cross Building. The purchase price of the property of
$90,000,000 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. Thus, JMB/Warner's initial cash investment
in the property, excluding certain acquisition costs, was approximately
$35,000,000, of which the Partnership's share was $25,967,742 (or approxi-
mately 74%). The JMB/Warner venture agreement generally provided that any
allocation of profits or losses and distributions of cash flow, net sale
proceeds or net financing proceeds were to be distributed or allocated, as
the case may be, to the Partnership in proportion to its capital
contributions.
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 has occupied since its construction. The obligations under such
lease were secured by certain collateral pledged by the seller/tenant which
was subsequently released, as described below. 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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
As contemplated at the time of acquisition, the seller/tenant of the
Blue Cross Building sold to an affiliate of the General Partners of the
Partnership an 85% interest in approximately 24 acres of land adjacent to
the property owned in fee simple by the seller/tenant, and a joint venture
was formed between such affiliate and the seller/tenant to develop a major
commercial center on such property. As of the date of sale, there had not
been any significant development activity relating to such property. In
connection with this transaction, the collateral securing the seller/tenant
obligations under the lease was terminated and such affiliate issued a
guaranty to JMB/Warner to secure the obligations of the seller/tenant up to
$35,000,000, subject to certain conditions. In connection with
JMB/Warner's sale of the Blue Cross Building, this guarantee was
terminated.
(h) 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 (note 4), 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 and Carlyle-XVII's initial aggregate contribution was used
to make the distribution to the joint venture partner as described below
and to pay a portion of the closing costs. Except for amounts to be
contributed to Palm Desert to pay certain closing costs, the joint venture
partner was not required to make any capital contributions to Palm Desert
at closing. However, in consideration of a distribution from Palm Desert
at closing, the joint venture partner was obligated to make contributions
to Palm Desert to pay the $13,752,746 purchase price obligation of Palm
Desert to the seller of the shopping center, of which the final $4,826,906
was paid in January 1993. In addition, the joint venture partner was
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 as described below. Amounts required to pay
the cost of tenant improvements and allowances (the "Tenant Improvement
Costs") and other capital expenditures, as well as any operating deficits
of Palm Desert after December 1994, 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.
The terms of the Palm Desert agreement provide that the Partnership
and Carlyle-XVII are entitled to receive out of net cash flow a current
preferred return and a cumulative preferred return, each based on a
negotiated rate of return on their respective initial capital contributions
(other than those used to pay closing costs). Such current preferred
return was received through December 31, 1994. The Partnership, Carlyle-
XVII and the joint venture partner are entitled to a cumulative preferred
return, based on a negotiated rate of return on their respective
contributions to pay the Tenant Improvement Costs through December 1994
(the "Tenant Improvement Cost Contributions"). All cumulative preferred
returns are distributable on an equal priority level; however, they are
subordinate to the receipt by the Partnership and Carlyle-XVII of their
respective current year preferred return. Any remaining annual cash flow
will be distributable 75% to the Partnership and Carlyle-XVII and 25% to
the joint venture partner until the Partnership and Carlyle-XVII have
received an amount equal to their initial capital contributions (other than
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
those used to pay closing costs) plus a negotiated annual internal rate of
return thereon and an amount equal to their Tenant Improvement Cost
Contributions, and thereafter any remaining annual cash flow shall be
distributable 50% to the Partnership and Carlyle-XVII and 50% to the joint
venture partner.
The Palm Desert agreement also provides that upon sale or refinancing
of the property, net sale or refinancing proceeds will be distributable
first to the Partnership, Carlyle-XVII and the joint venture partner to the
extent of any deficiencies in the receipt of their respective cumulative
preferred returns; second, to the Partnership and Carlyle-XVII in an amount
equal to their initial capital contributions (other than those used to pay
closing costs) and their Tenant Improvement Cost Contributions and, as an
equal priority, to the joint venture partner in an amount equal to its
Tenant Improvement Cost Contributions; third, to the joint venture partner
in an amount equal to the amount contributed by it to pay operating
deficits through December 1994 and to provide a portion of the
Partnership's and Carlyle-XVII's current and cumulative preferred return
described above (not to exceed $1,700,000); fourth, 75% to the Partnership
and Carlyle-XVII and 25% to the joint venture partner until the Partnership
and Carlyle-XVII have received a negotiated annual internal rate of return
on their respective initial capital contributions (other than those used to
pay closing costs), and any remaining proceeds will be distributable 50% to
the Partnership and Carlyle-XVII and 50% to the joint venture partner.
The land underlying the shopping center is owned by the lender under
the first mortgage loan. Palm Desert leases the land by assignment of an
existing ground lease which has a term through December 2038 and provides
for minimum annual rental payments of $900,000, as well as for additional
rental payments for each calendar year equal to 50% of the amount by which
certain of the ground lessee's gross receipts from the shopping center
exceed $6,738,256. Total ground rent expense for the years ended December
31, 1994, 1993 and 1992 was $1,347,204, $1,015,968 and $1,021,382,
respectively. The ground lease provides for two 10-year extensions at the
option of the lessee. The ground lease does not provide for any option on
the part of Palm Desert to purchase the land. Reference is also made to
Note 8(b).
Operating profits and losses, in general, are allocable in proportion
to the amount of net cash flow distributed to the partners of Palm Desert,
or, if there are no distributions of net cash flow, generally 75% to the
Partnership and Carlyle-XVII and 25% to the joint venture partner, except
that the deductions allocable with respect to certain expenses are
allocable to the partner whose contributions are used to pay such expenses.
For 1994 and 1993, in accordance with the Palm Desert partnership
agreement, losses were allocated to the joint venture partner to the extent
that it had cumulatively contributed capital to fund the Partnership's and
Carlyle-XVII's preferred return less any losses previously allocated to the
joint venture partner as discussed above. The remainder of the loss was
allocated 75% to the Partnership and Carlyle-XVII and 25% to the joint
venture partner. For 1992, profits and losses were allocated in accordance
with the cash flow distributed.
The Palm Desert agreement also provides that the annual cash flow, net
sale or refinancing proceeds and tax items distributed or allocated
collectively to the Partnership and Carlyle-XVII generally are
distributable or allocable between them based upon their respective capital
contributions. Such capital contributions are generally in the percentages
of approximately 85.8% for the Partnership and approximately 14.2% for
Carlyle-XVII.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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.
(4) LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1994 and
1993:
1994 1993
------------ ------------
12% per annum mortgage note; secured by
the Palm Desert Town Center; payable
in monthly installments of principal
and interest of $446,842 until paid
in full in January 2019. . . . . . . . $42,164,903 42,448,451
----------- -----------
Total debt . . . . . . . . . . . 42,164,903 42,448,451
Less current portion of
long-term debt . . . . . . . . 319,509 283,548
----------- -----------
Total long-term debt . . . . . . $41,845,394 42,164,903
=========== ===========
Five year maturities of long-term debt are summarized as follows:
1995. . . . . . . . $319,509
1996. . . . . . . . 360,031
1997. . . . . . . . 405,692
1998. . . . . . . . 457,143
1999. . . . . . . . 515,121
========
(5) 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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 (note 9). 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
Interest are entitled to receive 99% and the General Partners 1% of net
sale or refinancing proceeds until the Holders of Interest (i) have
received cash distributions of "sale proceeds" or "refinancing proceeds" in
an amount equal to the Holders' of Interest 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 Interest 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.
(6) MANAGEMENT AGREEMENTS
Certain of the Partnership's properties have been managed by an
affiliate of the General Partners for fees computed as a percentage of
certain rents received by the properties. In December 1994, the affiliated
property manager sold substantially all of its assets and assigned its
interest in its management contracts to an unaffiliated third party. In
addition, certain of the management personnel of the property manager
became management personnel of the purchaser and its affiliates. The
successor to the affiliated property manager's assets is acting as the
property manager of Dunwoody Crossing Apartments (Phases I, II and III) and
260 Franklin Office Building after the sale on the same terms that existed
prior to the sale.
(7) 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 Partnership's joint venture partner in
OMLP.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 Partnership'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 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 Mills Associates 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 additional gain under Statement of Financial Accounting Standards
No. 66 ("SFAS #66"). At December 31, 1994, the total deferred gain of
JMB/Owings including principal and interest payments of $1,858,572 received
and distributed through December 31, 1994 is $10,305,310 of which the
Partnership's share is $5,152,655. The Partnership expects to recognize a
portion of the deferred gain in 1995 when it collects a sufficient amount
of the purchaser's investment in accordance with SFAS #66.
(b) JMB/Warner
On November 2, 1993, JMB/Warner sold the Blue Cross Building to an
unaffiliated buyer 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. In 1994,
the Partnership distributed $1,078,168 to the affiliated venture partner,
Carlyle-XVII. 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.
(c) JMB/125
On November 15, 1994, effective as of October 31, 1994, JMB/125 and
certain affiliates of O&Y reached an agreement to settle their disputes
regarding 125 Broad and its property. Under the terms of the agreement,
JMB/125 assigned its interest in 125 Broad to an affiliate of O&Y and
released the O&Y partners from any claims related to 125 Broad. In return,
JMB/125 received an unsecured 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
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
under certain circumstances. As of December 31, 1994, the note has been
fully reserved for by JMB/125. In addition, JMB/125 received a release
from any claims of certain O&Y affiliates and will generally be indemnified
against any liability as a general partner of 125 Broad. JMB/125 was also
relieved of any obligation to contribute cash to 125 Broad in the amount of
its deficit capital account balance. Affiliates of O&Y subsequently filed
a prearranged 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. In January 1995, the plans for reorganization was
approved by the bankruptcy court, was consummated, and the bankruptcy case
was concluded. As a result of the assignment of its interest, JMB/125 no
longer has an ownership interest in the office building and recognized in
1994 gains of $53,412,105 and $49,616,240 for financial reporting and
Federal income tax purposes, respectively. The Partnership's share of such
gains is $20,162,696 and $17,786,455 for financial reporting and Federal
income tax purposes, respectively.
(8) LEASES
(a) As Property Lessor
At December 31, 1994, the Partnership and its consolidated ventures'
principal asset is a shopping center. The Partnership has determined that
all leases are properly classified as operating leases; therefore rental
income is reported when earned and the cost of the properties, excluding
the cost of land, is depreciated over the estimated useful lives. Leases
with tenants at Palm Desert Town Center range in term from one to twenty-
five years and provide for fixed minimum rent and partial reimbursement of
operating costs. In addition, leases with shopping center tenants
generally provide for additional rent based upon percentages of tenants'
sales volumes over certain specified amounts. A substantial portion of the
ability of the retail tenants at Palm Desert Town Center to honor their
leases is dependent upon the retail economic sector.
Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit in excess of
specific reimbursements, to be received in the future under the above
operating commercial lease agreements are as follows:
1995 . . . . . . . . . . . . . . . . $ 7,838,734
1996 . . . . . . . . . . . . . . . . 7,053,208
1997 . . . . . . . . . . . . . . . . 6,759,832
1998 . . . . . . . . . . . . . . . . 6,184,821
1999 . . . . . . . . . . . . . . . . 5,199,109
Thereafter . . . . . . . . . . . . . 22,386,073
-----------
$55,421,777
===========
(b) As Property Lessee
The following lease agreement has been determined to be an operating
lease:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership owns, through Palm Desert, a leasehold interest which
expires in December 2038 in the land underlying the Palm Desert Town
Center. The ground lease provides for annual rental payments of $900,000
plus 50% of certain gross receipts of the shopping center above $6,738,256.
In addition to cash payments due, periodic ground rent expense also
reflects an adjustment equal to 50% of the net change in accrued rents
receivable. Total ground rent expense for the years ended December 31,
1994, 1993 and 1992 was $1,347,204, $1,015,968 and $1,021,382,
respectively. Actual cash payments for 1994, 1993 and 1992 were
$1,050,000, $900,000, and $900,000, respectively.
Future minimum rental commitments under the lease are as follows:
1995 . . . . . . . . . . . $ 900,000
1996 . . . . . . . . . . . 900,000
1997 . . . . . . . . . . . 900,000
1998 . . . . . . . . . . . 900,000
1999 . . . . . . . . . . . 900,000
Thereafter . . . . . . . . 35,100,000
-----------
$39,600,000
===========
(9) TRANSACTIONS WITH AFFILIATES
The General Partners deferred their share of net cash flow of the
Partnership due to them over a five-year period ended 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 consist of the Corporate General
Partner's management fees and the General Partners' distributive share of
net cash flow (see note 5). The cumulative combined amount of such
deferred distributions and management fees aggregated $2,372,056 at
December 31, 1993. In July 1994, the Partnership paid the cumulative
combined amount of such deferred distributions and management fees to the
General Partners. All amounts deferred did not bear interest and were paid
in full.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Fees, commissions and other expenses required to be paid by the
Partnership (or its consolidated ventures) to the General Partners and
their affiliates as of December 31, 1994 and for the years ended December
31, 1994, 1993 and 1992 are as follows:
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
-------- -------- -------- ------------
Insurance commissions. . . .$ 24,307 28,810 17,634 --
Reimbursement (at cost)
for administrative and
accounting services . . . .133,937 76,669 90,567 26,999
Reimbursement (at cost)
for data processing . . . . -- -- 434 --
Reimbursement (at cost)
for legal services. . . . . 906 6,775 5,106 --
Management fees to
Corporate General Partner .155,942 331,376 331,376 38,985
Reimbursement (at cost)
for out-of-pocket expenses. 4,050 29,407 14,421 --
-------- -------- -------- -------
$319,142 473,037 459,538 65,984
======== ======== ======== =======
The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries (and salary related expenses) and direct
expenses of officers and employees of the Corporate General Partner and its
affiliates while directly engaged in the administration of the Partnership.
(10) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
Summary combined financial information for JMB/125 (through the
effective date of assignment - October 31, 1994), JMB/Owings, and OMLP
(through the date of sale - June 30, 1993), 260 Franklin, Villages
Northeast and JMB/NewPark are as follows:
1994 1993
----------- ------------
Current assets . . . . . . . . . $ 8,923,337 21,169,710
Current liabilities, including
$296,919,801 of mortgage debt
in default in 1993
(note 3(b)) . . . . . . . . . . (3,031,777) (325,829,424)
------------ ------------
Working capital (deficit). . 5,891,560 (304,659,714)
------------ ------------
Deferred expenses and accrued
rents receivable. . . . . . . . 1,407,694 35,176,540
Ventures partners' equity. . . . (33,657,364) (13,051,155)
Investment properties, net . . . 192,034,618 437,509,566
Other liabilities. . . . . . . . (2,017,084) (9,887,673)
Long-term debt . . . . . . . . . (166,010,116) (158,357,756)
------------ ------------
Partnership's capital
(deficit) . . . . . . . . . $ (2,350,692) (13,270,192)
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
1994 1993
----------- ------------
Represented by:
Invested capital . . . . . . . $ 57,873,483 57,623,233
Cumulative cash distributions. (20,462,902) (19,275,162)
Cumulative losses. . . . . . . (39,761,273) (51,618,263)
------------ ------------
$ (2,350,692) (13,270,192)
============ ============
Total income . . . . . . . . . . $ 61,459,559 104,538,897
Expenses applicable to
operating loss . . . . . . . . 103,034,572 134,358,616
------------ ------------
Net operating loss . . . . . . . (41,575,013) (29,819,719)
Gain on sale or disposition
of investment in uncon-
solidated ventures
(notes 7(a) and (c)) . . . . . 52,412,102 5,254,855
Loss on sale of investment
property (note 7(b)) . . . . . -- (37,383)
------------ ------------
Net income (loss)
(see note 3(b)). . . . . . $ 10,837,089 (24,602,247)
============ ============
Partnership's share of income
(loss) . . . . . . . . . . . . $ 11,856,990 (2,224,720)
============ ============
Additionally, for the year ended December 31, 1992, total income was
$88,026,766, expenses applicable to operating loss were $160,292,419 and
the net loss was $72,265,653 for the unconsolidated ventures listed above.
(11) SUBSEQUENT EVENT - DISTRIBUTIONS
In February 1995, the Partnership paid an operating distribution of
$561,383 ($4 per Interest) and $63,488 to the General Partners (of which
$39,680 constituted a management fee).
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
COST
CAPITALIZED
INITIAL COST TO SUBSEQUENT GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
-----------------------------------------------------------------------------
BUILDINGS LAND, BUILDINGS
AND BUILDINGS AND AND
ENCUMBRANCE LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (D)
----------- ----------- -------------------------- ---------- ------------ -----------
SHOPPING
CENTER:
Palm Desert
Town Center
Palm Desert
(Palm Springs),
California . .$42,164,903 -- (C) 59,184,329 876,808 -- 60,061,137 60,061,137
=========== ========== ========== ======= ========== ========== ==========
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
LIVES ON WHICH
DEPRECIATION
IN LATEST
INCOME 1994
ACCUMULATED DATE OF DATE STATEMENT IS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
SHOPPING CENTER:
Palm Desert Town
Center
Palm Desert
(Palm Springs),
California . . . . . . 12,018,826 1983 12/23/88 5-30 YEARS 732,287
========== =======
<FN>
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the property, including
amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
approximately $59,882,165.
(C) Property operated under ground lease; see Note 7(b).
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
(D) Reconciliation of real estate owned:
1994 1993 1992
------------ ------------ -----------
Balance at beginning of period. . . . . $60,060,557 153,042,114 152,542,218
Additions during period . . . . . . . . -- 263,742 499,896
Sale of investment property . . . . . . 580 (93,245,299) --
----------- ----------- -----------
Balance at end of period. . . . . . . . $60,061,137 60,060,557 153,042,114
=========== =========== ===========
(E) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . $10,011,970 23,729,463 18,649,459
Depreciation expense. . . . . . . . . . 2,006,856 4,021,646 5,080,004
Sale of investment property . . . . . . -- (17,739,139) --
----------- ----------- -----------
Balance at end of period. . . . . . . . $12,018,826 10,011,970 23,729,463
=========== =========== ===========
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XVI:
We have audited the combined financial statements of Certain Uncon-
solidated Joint Ventures of Carlyle Real Estate Limited Partnership-XVI
(note 1) as listed in the accompanying index. In connection with our
audits of the combined financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
combined financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these combined financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of Certain
Unconsolidated Joint Ventures of Carlyle Real Estate Limited
Partnership-XVI at December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic combined
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
The accompanying Combined Financial Statements and Financial Statement
Schedule have been prepared assuming that the ventures comprising Certain
Unconsolidated Joint Ventures of Carlyle Real Estate Limited Partnership-
XVI will continue as going concerns. 260 Franklin Street Associates (260
Franklin) comprises 100%, 27.4%, and 12% of combined assets, revenues, and
net loss, respectively, in the accompanying Combined Financial Statements
as of and for the year ended December 31, 1994. As discussed in Note 3(d)
of the Partnership's Notes to Consolidated Financial Statements,
incorporated by reference in Note 2 of the Combined Financial Statements,
the 260 Franklin Street Building is expected to operate at a deficit for
1995 and several years thereafter. In addition, the mortgage loan matures
January 1, 1996. The Partnership will attempt to refinance this loan, but
there can be no assurance that such efforts will be successful. If the
Partnership is unable to refinance or extend the mortgage loan, the
Partnership may decide not to commit additional funds to the property.
This may result in the Partnership no longer having an ownership interest
in the property. These circumstances raise substantial doubt about 260
(Continued)
Franklin's ability to retain its ownership interest in the 260 Franklin
Street Building and continue as a going concern. The General Partners'
plans with regard to this matter are also described in Note 3(d) of the
Partnership's Notes to Consolidated Financial Statements. The accompanying
Combined Financial Statements and Financial Statement Schedule do not
include any adjustments that might result from the outcome of this
uncertainty.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 27, 1995
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
1994 1993
------------ ------------
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . $ 152,161 1,018,234
Rents and other receivables, net of allowance for
doubtful accounts of approximately $28,600,000 for
1993 (note 1). . . . . . . . . . . . . . . . . . . . . . . . 77,085 1,183,725
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 27,547 28,219
Escrow deposits (note 2) . . . . . . . . . . . . . . . . . . . 5,209,282 4,891,496
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . 5,466,075 7,121,674
------------ ------------
Investment properties, at cost (notes 1 and 2) - Schedule III:
Land and leasehold interests . . . . . . . . . . . . . . . . . 6,662,200 6,662,200
Buildings and improvements . . . . . . . . . . . . . . . . . . 85,235,428 430,822,638
------------ ------------
91,897,628 437,484,838
Less accumulated depreciation. . . . . . . . . . . . . . . . . 26,377,605 130,686,750
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . 65,520,023 306,798,088
------------ ------------
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . 597,877 24,983,380
Accrued rents receivable, net of allowance of
approximately $32,600,000 for 1993 (note 1). . . . . . . . . . 81,044 9,506,520
------------ ------------
$ 71,665,019 348,409,662
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED BALANCE SHEETS - CONTINUED
DECEMBER 31, 1994 AND 1993
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1994 1993
------------ ------------
Current liabilities:
Current portion of long-term debt (notes 2 and 3). . . . . . . $ -- 248,739,738
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 158,665 1,055,729
Accrued interest payable (notes 2 and 3) . . . . . . . . . . . -- 48,180,063
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . 45,808 1,606,928
Amounts due to affiliates (note 5) . . . . . . . . . . . . . . 1,756,321 2,116,183
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . 1,960,794 301,698,641
Tenant security deposits . . . . . . . . . . . . . . . . . . . . 62,585 75,614
Long-term debt, less current portion (note 3). . . . . . . . . . 85,376,895 83,629,438
Loans from venture partners. . . . . . . . . . . . . . . . . . . -- 14,650,326
------------ ------------
Commitments and contingencies (notes 1, 2, 3, 4 and 5)
Total liabilities. . . . . . . . . . . . . . . . . . . 87,400,274 400,054,019
Partners' capital accounts (deficits) (note 2):
Carlyle-XVI:
Capital contributions. . . . . . . . . . . . . . . . . . . . 38,655,919 38,610,119
Cumulative net losses. . . . . . . . . . . . . . . . . . . . (35,717,606) (47,769,726)
Cumulative cash distributions. . . . . . . . . . . . . . . . (7,678,607) (7,678,607)
------------ ------------
(4,740,294) (16,838,214)
------------ ------------
Venture Partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . 192,468,533 192,257,333
Cumulative net losses. . . . . . . . . . . . . . . . . . . . (204,349,822) (172,264,917)
Cumulative distributions (cash and non-cash) . . . . . . . . 886,328 (54,798,559)
------------ ------------
(10,994,961) (34,806,143)
------------ ------------
Total partners' capital accounts (deficits). . . . . . (15,735,255) (51,644,357)
------------ ------------
$ 71,665,019 348,409,662
============ ============
<FN>
See accompanying notes to combined financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
----------- ----------- -----------
Income:
Rental income. . . . . . . . . . . . . . . . . $ 42,013,680 52,635,345 56,501,354
Interest income. . . . . . . . . . . . . . . . 240,413 224,395 247,317
Other income (note 1). . . . . . . . . . . . . -- 26,670,778 --
------------ ----------- -----------
42,254,093 79,530,518 56,748,671
------------ ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . 30,781,659 38,243,949 37,718,309
Depreciation . . . . . . . . . . . . . . . . . 12,549,412 14,290,551 14,282,738
Property operating expenses. . . . . . . . . . 21,434,427 25,958,917 27,473,788
Professional services. . . . . . . . . . . . . 942,519 251,446 249,163
Amortization of deferred expenses. . . . . . . 1,868,192 3,277,449 2,439,871
Provision for uncollectible rents and
accrued rents receivable (note 1). . . . . . 14,873,365 19,289,459 41,945,558
------------ ----------- -----------
82,449,574 101,311,771 124,109,427
------------ ----------- -----------
Net operating loss . . . . . . . . . . (40,195,481) (21,781,253) (67,360,756)
Gain on assignment of JMB/125's
interest in 125 Broad Street
Company (note 1) . . . . . . . . . . 52,412,102 -- --
------------ ----------- -----------
Net income (loss). . . . . . . . . . . $ 12,216,621 (21,781,253) (67,360,756)
============ =========== ===========
<FN>
See accompanying notes to combined financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
VENTURE
CARLYLE-XVI PARTNERS TOTAL
------------ ------------ ------------
Balance at December 31, 1991 . . . . . . . . . . . . . $ 1,481,470 37,014,082 38,495,552
Capital contributions. . . . . . . . . . . . . . . . . 400 600 1,000
Cash distributions . . . . . . . . . . . . . . . . . . -- -- --
Net loss . . . . . . . . . . . . . . . . . . . . . . . (13,489,499) (53,871,257) (67,360,756)
------------ ----------- -----------
Balance (deficit) at December 31, 1992 . . . . . . . . (12,007,629) (16,856,575) (28,864,204)
Capital contributions . . . . . . . . . . . . . . . . 990 110 1,100
Cash distributions . . . . . . . . . . . . . . . . . . (392,040) (607,960) (1,000,000)
Net loss . . . . . . . . . . . . . . . . . . . . . . . (4,439,535) (17,341,718) (21,781,253)
------------ ----------- -----------
Balance (deficit) at December 31, 1993 . . . . . . . . (16,838,214) (34,806,143) (51,644,357)
Capital contributions . . . . . . . . . . . . . . . . 45,800 211,200 257,000
Cash distributions . . . . . . . . . . . . . . . . . . -- -- --
Net operating loss . . . . . . . . . . . . . . . . . . (8,110,576) (32,084,905) (40,195,481)
Gain on assignment of JMB/125's ownership interest
in 125 Broad Street Company (note 1) . . . . . . . . 20,162,696 32,249,406 52,412,102
------------ ----------- -----------
(4,740,294) (34,430,442) (39,170,736)
Transfer of 125 Broad Street Company net assets
to unaffiliated venture partner. . . . . . . . . . . -- 23,435,481 23,435,481
------------ ----------- -----------
Balance (deficit) at December 31, 1994 . . . . . . . . $ (4,740,294) (10,994,961) (15,735,255)
============ =========== ===========
<FN>
See accompanying notes to combined financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
------------ ----------- -----------
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . . $ 12,216,621 (21,781,253) (67,360,756)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . 12,549,412 14,290,551 14,282,738
Amortization of deferred expenses. . . . . . 1,868,192 3,277,449 2,439,871
Long-term debt-deferred accrued interest . . 1,747,457 2,746,003 2,246,731
Accrued rents receivable . . . . . . . . . . (1,710,248) 3,155,506 (569,354)
Provision for uncollectible rents and
accrued rents receivable . . . . . . . . . 14,873,365 19,289,459 41,945,558
Gain on assignment of JMB/125's interest
in 125 Broad Street Company. . . . . . . . (52,412,102) -- --
Changes in:
Rents and other receivables. . . . . . . . . . (15,305,189) (18,271,307) (9,743,609)
Prepaid expenses . . . . . . . . . . . . . . . 672 3,377 2,051
Escrow deposits. . . . . . . . . . . . . . . . (317,786) (1,327,631) (703,081)
Accounts payable . . . . . . . . . . . . . . . 267,146 (1,116,088) (890,530)
Accrued interest payable . . . . . . . . . . . 22,078,013 28,477,923 18,625,490
Unearned rents . . . . . . . . . . . . . . . . (114,092) (1,368,847) 934,889
Tenant security deposits . . . . . . . . . . . (13,029) 6,113 (16,120)
Amounts due to affiliates. . . . . . . . . . . (359,862) 825,541 1,273,496
------------ ------------ ------------
Net cash provided by (used in)
operating activities . . . . . . . . (4,631,430) 28,206,796 2,467,374
------------ ------------ ------------
Cash flows from investing activities:
Additions to investment properties . . . . . . (120,321) (667,417) (1,164,325)
Payment of deferred expenses . . . . . . . . . (193,007) (50,641) (274,276)
------------ ------------ ------------
Net cash used in investing activities. (313,328) (718,058) (1,438,601)
------------ ------------ ------------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . -- (28,670,778) --
Loans from (repayments to) venture partners. . 4,880,000 2,596,221 (539,702)
Cash contributions from Partnership. . . . . . 45,800 990 400
Cash distributions to Partnership. . . . . . . -- (392,040) --
Cash contributions from venture partners . . . 211,200 110 600
Cash distributions to venture partners . . . . (1,058,315) (607,960) --
------------- ------------ ------------
Net cash provided by (used in)
financing activities . . . . . . . . 4,078,685 (27,073,457) (538,702)
------------- ------------ ------------
Net increase (decrease) in cash . . . (866,073) 415,281 490,071
Cash and cash equivalents,
beginning of year. . . . . . . . . . 1,018,234 602,953 112,882
------------- ------------ ------------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . $ 152,161 1,018,234 602,953
============= ============ ============
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . $ 5,991,284 7,020,023 16,846,088
============= ============ ============
Non-cash investing and financing activities. .
Disposal of fully depreciated fixed assets . . $ 413,091 -- --
============= ============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------- ----------- -----------
Assignment of JMB/125's of ownership interest
in 125 Broad Street (note 1):
Reduction of investment property, net of
accumulated depreciation . . . . . . . . . . $(228,848,974) -- --
Reduction of deferred expenses . . . . . . . . (22,710,318) -- --
Balance due on mortgage payable. . . . . . . . 248,739,738 -- --
Reduction of accrued interest. . . . . . . . . 69,447,311 -- --
Reduction of accounts receivable and
accrued rents. . . . . . . . . . . . . . . . (12,674,188) -- --
Reduction of accounts payable and
accrued expenses . . . . . . . . . . . . . . 22,952,329 -- --
Non-cash gain on assignment. . . . . . . . . . (52,412,102) -- --
Non-cash transfer to unaffiliated
venture partner. . . . . . . . . . . . . . . (23,435,481) -- --
------------- ------------ ------------
Cash retained by unaffiliated
venture partner. . . . . . . . . . . $ 1,058,315 -- --
============= ============ ============
<FN>
See accompanying notes to combined financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(1) ORGANIZATION AND BASIS OF ACCOUNTING
The accompanying combined financial statements have been prepared for
the purpose of complying with Rule 3.09 of Regulation S-X of the Securities
and Exchange Commission. They include the accounts of certain of the
unconsolidated joint ventures in which Carlyle Real Estate Limited
Partnership-XVI ("Carlyle-XVI" or "Partnership") owns a direct interest.
Also included are the accounts of certain of those joint venture
partnerships (underlying ventures) in which Carlyle-XVI owned an indirect
interest through one of the unconsolidated joint ventures. Certain
unconsolidated ventures previously included in the combined financial
statements have been excluded. The entities included in the combined
financial statements are as follows:
VENTURE DATE ACQUIRED
------- -------------
1. Carlyle-XVI Associates, L.P. (a)
- JMB/125 Broad Building Associates, L.P.
("JMB/125") (b) 12/31/85
- 125 Broad Street Company (b)
2. 260 Franklin Street Associates
("260 Franklin") (a) 5/21/86
(a) Represents an unconsolidated venture in which Carlyle-XVI owns a
direct ownership interest.
(b) Represents a joint venture in which Carlyle-XVI owned an indirect
ownership interest through an unconsolidated venture.
For purposes of preparing the combined financial statements, the
effect of all transactions between an unconsolidated joint venture and an
underlying venture has been eliminated.
In November 1994, effective October 31, 1994, the Partnership through
its indirect ownership of JMB/125 assigned its interest in the 125 Broad
Street Building to the unaffiliated venture partner. Reference is made to
Notes 3(b) and 7(c) of Notes to Consolidated Financial Statements of
Carlyle-XVI. Therefore, the balance sheet presented as of December 31,
1994 does not contain 125 Broad Street as the net assets were deemed to be
distributed to the venture partners as of the assignment date. The
statement of operations and cash flows for the year ended December 31, 1994
contain 125 Broad Street Company activity through October 31, 1994.
The records of the ventures are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying combined financial statements have been prepared from such
records after making appropriate adjustments to reflect the ventures'
accounts in accordance with generally accepted accounting principles. Such
adjustments are not recorded on the records of the ventures.
Statement of Financial Accounting Standards No. 95 requires the
ventures 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. The
ventures record amounts held in U.S. government obligations at costs which
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
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 as cash equivalents with any remaining
amounts (generally with original maturities of one year or less) reflected
as short-term investments being held to maturity.
Deferred expenses are comprised of deferred leasing costs, which are
amortized using the straight-line method over the terms of the related
leases and financing costs which are amortized over the term of the related
debt.
Depreciation on the investment properties has been provided over the
estimated useful lives of 5 to 30 years using the straight-line method.
Investment property is pledged as security for the long-term debt, for
which there is no recourse to the venture.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives. Provisions for value impairment are
recorded with respect to the investment property whenever the estimated
future cash flows from a property's operations and projected sale are less
than the Property's net carrying value.
Certain amounts in the 1992 and 1993 combined financial statements
have been reclassified to conform to the 1994 presentation.
Although certain leases provide for tenant occupancy during periods
for which no rent is due and/or increases in minimum lease payments over
the term of the lease, the ventures accrue prorated rental income for the
full period of occupancy on a straight-line basis.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the venture partners rather than the
ventures.
As more fully described in Note 3(b) of Notes to the Consolidated
Financial Statements of Carlyle-XVI, JMB/125 reserved for certain
receivables relating to one of the major tenants at 125 Broad Street. In
1992, 125 Broad reserved for approximately $32,600,000 of accrued rents
receivable relating to such tenant's lease. Additionally, 125 Broad
provided for additional losses of approximately $14,900,000, $19,300,000
and $9,300,000 in 1994, 1993 and 1992, respectively, relating to amounts
currently due from the O&Y partners relating to such tenant's lease.
In October 1993, 125 Broad entered into an agreement with Salomon
Brothers, Inc. to terminate its lease covering approximately 236,000 square
feet 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 $26,700,000,
which 125 Broad in turn paid to its lender to reduce mortgage principal
outstanding under the mortgage loan. In addition, Salomon Brothers, Inc.
paid JMB/125 $1,000,000 in consideration of JMB/125's consent of the lease
termination.
(2) VENTURE AGREEMENTS
A description of the venture agreements is contained in Note 3 of
Notes to Consolidated Financial Statements of Carlyle-XVI. Such note is
hereby incorporated herein by reference.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
(3) LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1994 and 1993:
1994 1993
------------ ------------
11.0% per annum mortgage note; secured by the 260 Franklin Street
Building; monthly payments of interest only at 11% per annum
were required through January 1, 1991; modified in 1991 to
require monthly payments of principal and interest of $714,375
through May 1, 1991, monthly payments of interest only (6% per
annum) of $374,455 from June 1, 1991 through January 1, 1992,
monthly payments of interest only (8% per annum) of $499,273
from February 1, 1992 through December 1, 1995, with the unpaid
balance of principal of $74,891,013 plus accrued unpaid interest
due on January 1, 1996. Additional interest payable upon
maturity to provide an 11% per annum return to lender and
60% of the greater of net sales or refinancing proceeds or
the net appraised value, as defined. Reference is made to
Note 3(d) of Notes to Consolidated Financial Statements of
Carlyle-XVI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $85,376,895 83,629,438
10.125% per annum consolidated mortgage notes; secured by the
125 Broad Street Building; semi-annual payments of interest
only required through December 23, 1995; any outstanding
principal and unpaid interest was due on December 27, 1995.
In default as of June 1992. JMB/125 assigned its interest in
125 Broad Street Company to the unaffiliated venture partner
in November 1994. Reference is made to Notes 1 of the combined
financial statements . . . . . . . . . . . . . . . . . . . . . . . . -- 248,739,738
----------- ------------
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . 85,376,895 332,369,176
Less current portion of long-term debt . . . . . . . . . . . -- 248,739,738
----------- ------------
Total long-term debt . . . . . . . . . . . . . . . . . . . . $85,376,895 83,629,438
=========== ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
As of December 1993, accrued interest relating to the 125 Broad Street
mortgage note in default was $48,180,063.
Included in the above total long-term debt is $10,485,882 and
$8,738,425 for 1994 and 1993, respectively, which represents mortgage
interest accrued but not currently payable pursuant to the terms of the 260
Franklin mortgage note.
Five year maturities of long-term debt are as follows:
1995. . . . . . . . . $ --
1996. . . . . . . . . 85,376,895
1997. . . . . . . . . --
1998. . . . . . . . . --
1999. . . . . . . . . --
============
(4) LEASES
(a) As Property Lessor
At December 31, 1994, the property in the combined group consisted of
an office building. The ventures have determined that all leases relating
to the properties are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of each of the
properties, excluding cost of land, is depreciated over the estimated
useful lives. Leases range in term from one to 25 years and provide for
fixed minimum rent and partial to full reimbursement of operating costs.
Minimum lease payments including amounts representing executory costs
(e.g., taxes, maintenance, insurance), to be received in the future under
the above operating commercial lease agreements, are as follows:
1995. . . . . . . . . $ 7,972,632
1996. . . . . . . . . 5,988,083
1997. . . . . . . . . 3,681,702
1998. . . . . . . . . 3,105,684
1999. . . . . . . . . 3,025,911
Thereafter. . . . . . 3,986,973
-----------
$27,760,985
===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONCLUDED
(5) TRANSACTIONS WITH AFFILIATES
An affiliate of the Corporate General Partner has provided property
management services at 260 Franklin Street since June of 1988.
Additionally, during 1994, 1993 and 1992, an affiliate of the Corporate
General Partner provided leasing services. Pursuant to the terms of the
loan modification for 260 Franklin, cash flow from the property in an
amount equal to all management fees and leasing fees payable to affiliates
of the Corporate General Partner are being escrowed by 260 Franklin and are
reported as escrow deposits in the accompanying Combined Financial
Statements. Such affiliates earned property management fees of $320,385,
$340,753 and $308,339 in 1994, 1993 and 1992, respectively, of which
$988,374 was unpaid at December 31, 1994. Such affiliate also earned
leasing fees of $100,855, $6,789 and $65,157 for 1994, 1993 and 1992, res-
pectively. As of December 31, 1994, $189,947 of these fees were unpaid.
Remaining amounts due to affiliates at December 31, 1994 represents
advances from Carlyle-XV and Carlyle-XVI of $404,600 and $173,400,
respectively, which can be repaid pursuant to the reserve escrow agreement.
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
COST
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
UNCONSOLIDATED VENTURES(A)ACQUISITION AT CLOSE OF PERIOD (B)
------------------------------------- --------------------------------------
BUILDINGS
LAND BUILDINGS AND PROVISION LAND AND BUILDINGS
LEASEHOLD AND ------------- FOR VALUE LEASEHOLD AND
ENCUMBRANCE INTERESTS IMPROVEMENTSIMPROVEMENTS IMPAIRMENT INTEREST IMPROVEMENTS TOTAL (D)
---------------------------------------------- ---------- ----------------------- -----------
OFFICE
BUILDING:
Boston,
Massachu- (C)
setts . . . .$85,376,895 8,169,209 97,607,593 3,241,560 17,120,734 6,662,200 85,235,428 91,897,628
=========== ========= ========== ========= ========== ========= ========== ==========
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1994
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
OFFICE BUILDINGS:
Boston, Massachusetts. . . $26,377,605 1985 05/21/86 5-30 years $2,017,073
=========== ==========
<FN>
-----------------
Notes:
(A) The initial cost to the unconsolidated venture or underlying ventures represents the original purchase
price of the properties, including amounts incurred subsequent to acquisition which were contemplated at the time
the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
approximately $107,631,287.
(C) In 1990, the affiliated joint venture recorded a provision for value impairment totalling $17,120,734;
see Note 2.
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
(D) Reconciliation of real estate owned as of December 31, 1994, 1993 and 1992:
1994 1993 1992
------------ ----------- -----------
- Balance at beginning of period . . . . . . . . . $437,484,838 436,817,421 524,492,548
Additions during period. . . . . . . . . . . . . 120,322 667,417 1,538,843
Reductions during period (F) . . . . . . . . . . (345,707,532) -- --
Provision for value impairment . . . . . . . . . -- -- --
------------ ------------ ------------
Balance at end of period . . . . . . . . . . . . $ 91,897,628 437,484,838 436,817,421
============ ============ ============
(E) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . . . $130,686,750 116,396,199 108,843,465
Reductions during period (F) . . . . . . . . . . (116,858,557) -- --
Depreciation expense . . . . . . . . . . . . . . 12,549,412 14,290,551 15,557,970
------------ ------------ ------------
Balance at end of period . . . . . . . . . . . . $ 26,377,605 130,686,750 116,396,199
============ ============ ============
(F) In November 1994, JMB/125 assigned its ownership interest in 125 Broad Street Company to the
unaffiliated venture partner; see Note 1 of the combined financial statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with the accountants during
fiscal year 1993 and 1994.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. The outstanding shares of JMB
are owed by certain of its officers and directors and members of their
families. JMB has responsibility for all aspects of the Partnership's
operations, subject to the requirement that sales of real property must be
approved by the Associate General Partner of the Partnership, Realty
Associates-XVI, L.P., an Illinois limited partnership with JMB as the sole
general partner. The Associate General Partner shall be directed by a
majority in interest of its limited partners (who are generally officers,
directors and affiliates of JMB or its affiliates) as to whether to provide
its approval of any sale of real property (or any interest therein) of the
Partnership. The Partnership is subject to certain conflicts of interest
arising out of its relationships with the General Partners and their
affiliates as well as the fact that the General Partners and their
affiliates are engaged in a range of real estate activities. Certain
services have been and may in the future be provided to the Partnership or
its investment properties by affiliates of the General Partners, including
property management services and insurance brokerage services. In general,
such services are to be provided on terms no less favorable to the
Partnership than could be obtained from independent third parties and are
otherwise subject to conditions and restrictions contained in the
Partnership Agreement. The Partnership Agreement permits the General
Partners and their affiliates to provide services to, and otherwise deal
and do business with, persons who may be engaged in transactions with the
Partnership, and permits the Partnership to borrow from, purchase goods and
services from, and otherwise to do business with, persons doing business
with the General Partners or their affiliates. The General Partners and
their affiliates may be in competition with the Partnership under certain
circumstances, including, in certain geographical markets, for tenants for
properties and/or for the sale of properties. Because the timing and
amount of cash distributions and profits and losses of the Partnership may
be affected by various determinations by the General Partners under the
Partnership Agreement, including whether and when to sell or refinance a
property, the establishment and maintenance of reasonable reserves, the
timing of expenditures and the allocation of certain tax items under the
Partnership Agreement, the General Partners may have a conflict of interest
with respect to such determinations.
The names, positions held and length of service therein of each
director and executive officer and certain officers of the Corporate
General Partner are as follows:
Served in
Name Office Office Since
---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
Served in
Name Office Office Since
---- ------ ------------
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Jeffrey R. Rosenthal Managing Director-Corporate 4/22/91
Chief Financial Officer 8/01/93
Douglas H. Cameron Executive Vice President 1/01/95
Ira J. Schulman Executive Vice President 6/01/88
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve one-year
terms until the annual meeting of the Corporate General Partner to be held
on June 7, 1995. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 7,
1995. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV
("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-
XVII"), JMB Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage
Partners, Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB
Income Properties, Ltd.-VIII ("JMB Income-VIII"), JMB Income Properties,
Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-X ("JMB Income-X"),
JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB Income Properties,
Ltd.-XII ("JMB Income-XII"), and JMB Income Properties, Ltd.-XIII ("JMB
Income-XIII"). Most of the foregoing directors and officers are also
officers and/or directors of various affiliated companies of JMB including
Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.
("Arvida")), Arvida/JMB Managers-II, Inc. (the general partner of
Arvida/JMB Partners, L.P.-II ("Arvida-II")) and Income Growth Managers,
Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd.
("IDS/BIG")). Most of such directors and officers are also partners of
certain partnerships which are associate general partners in the following
real estate limited partnerships: the Partnership, Carlyle-VII, Carlyle-
IX, Carlyle-X, Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-
XV, Carlyle-XVII, JMB Income-VI, JMB Income-VII, JMB Income-VIII, JMB
Income-IX, JMB Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII,
Mortgage Partners, Mortgage Partners-II, Mortgage Partners-III, Mortgage
Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.
Certain of such officers are also officers and the sole director of Carlyle
Advisors, Inc., the general partner of JMB/125. Reference is made to Note
7(c).
The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc.,
an affiliate of JMB that is a real estate investment trust in the business
of owning, managing and developing shopping centers, and a director of
Catellus Development Corporation, a major diversified real estate
development company. He is a Certified Public Accountant.
Neil G. Bluhm (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 56) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Stuart C. Nathan (age 53) has been associated with JMB since July,
1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 61) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.
John G. Schreiber (age 48) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. He is also a director of Urban
Shopping Centers, Inc., an affiliate of JMB that is a real estate
investment trust in the business of owning, managing and developing
shopping centers as well as a director of a number of investment companies
advised or managed by T. Rowe Price Associates with its affiliates. Since
1994, Mr. Schreiber has also served as a Trustee of Amli Residential
Property Trust, a publicly-traded real estate investment trust that invests
in multi-family properties. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 45) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 47) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Jeffrey R. Rosenthal (age 43) has been associated with JMB since
December, 1987. He is a Certified Public Accountant.
Douglas H. Cameron (age 45) has been associated with JMB since April
1977. Prior to becoming Executive Vice President of JMB in 1995, Mr.
Cameron was Managing Director of Capital Markets-Property Sales from June
1990. He holds a Masters degree in Business Administration from the
University of Southern California.
Gary Nickele (age 42) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Ira J. Schulman (age 43) has been associated with JMB since February,
1983. He holds a Masters degree in Business Administration from the
University of Pittsburgh.
Gailen J. Hull (age 46) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 59) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
Officers and directors of the Corporate General Partner receive no
direct remuneration in such capacities from the Partnership. The
Partnership is required to pay a management fee to the Corporate General
Partner and the General Partners are entitled to receive a share of cash
distributions, when and as cash distributions are made to the Limited
Partners, and a share of profits or losses as described in Notes 5 and 9
for a description of such distributions and allocations. In 1994, the
General Partners received $235,331 of distributions and the Corporate
General Partner earned management fees of $155,942. In July 1994, the
Partnership paid the cumulative combined amount of deferred distributions
and management fees which aggregated $2,372,056 to the General Partners.
See Note 9. The General Partners received a share of Partnership income
for tax purposes aggregating $2,683,078 in 1994.
The Partnership is permitted to engage in various transactions
involving the General Partners and their affiliates, certain of which may
involve conflicts of interest, as discussed in Item 10 above. The
relationship of the Corporate General Partner (and its directors and
officers) to its affiliates is set forth above in Item 10.
An affiliate of the Corporate General Partner provided property
management services in 1994 for the 260 Franklin Street Building in Boston,
Massachusetts. In 1994, such affiliate earned property management fees of
$320,349 for such services. Additionally during 1994, an affiliate of the
Corporate General Partner provided leasing services for the 260 Franklin
Building amounting to $100,855, of which all were unpaid as of December 31,
1994. All property management and leasing fees earned in 1994 were
escrowed by 260 Franklin. See Note 3(d) for a description of the
accounting for these fees. Additionally, during 1994, an affiliate of the
Corporate General Partner provided property management services for the
Dunwoody Crossing (Phases I, II and III) Apartments and earned property
management fees amounting to $329,429, all of which was paid as of December
31, 1994. As set forth in the Prospectus of the Partnership, the Corporate
General Partner must negotiate such agreements on terms no less favorable
to the Partnership than those customarily charged for similar services in
the relevant geographical area (but in no event at rates greater than 6% of
the gross income from the property), and such agreements must be terminable
by either party thereto, without penalty, upon 60 days notice. In December
1994, the property manager sold substantially all of its assets to an
unaffiliated third party, who has assumed management of 260 Franklin and
the Dunwoody Crossing Apartments on the same terms that existed prior to
the sale. Reference is made to Note 6.
JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1994
aggregating $24,307 in connection with the provision of insurance coverage
for certain of the real property investments of the Partnership. Such
commissions are at rates set by insurance companies for the classes of
coverage provided.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses relating to
the administration of the Partnership and the acquisition and operation of
the Partnership's real property investments. In 1994, the Corporate
General Partner of the Partnership was due reimbursement for such
out-of-pocket expenses in the amount of $4,050 all of which was paid as of
December 31, 1994.
Additionally, the General Partners or their affiliates are also
entitled to reimbursements for administrative, legal, accounting and data
processing services. Such costs for 1994 were $134,843, $26,999 of which
was unpaid as of December 31, 1994. Amounts of these reimbursements may
not exceed cost or 90% of what an independent party would charge.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Corporate General Partner and its officers and director own the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
-------------- ---------- ----------------- --------
Limited Partnership JMB Realty Corporation 5 Interests (1) Less than 1%
Interests indirectly
Limited Partnership Corporate General Partner 5 Interests (1) Less than 1%
Interests and its officers and indirectly
director as a group
-----------------
<FN>
(1) Includes 5 Interests owned by the Initial Limited Partner of the Partnership, for which JMB, as its
indirect majority shareholder, is deemed to have sole voting and investment power.
No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the General
Partners, the executive officers and directors of the Corporate General Partner and persons who own more than ten
percent of the Interests to file an initial report of ownership or changes in ownership of Interests on Form 3, 4
or 5 with the Securities and Exchange Commission (the "SEC"). Such persons are also required by SEC rules to
furnish the Partnership with copies of all Section 16(a) forms they file. Timely filing of an initial report of
ownership on Form 3 or Form 5 was not made on behalf of Glenn Emig.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) Exhibits.
3. Amended and Restated Agreement of Limited
Partnership, which is incorporated by reference to Exhibit 3 to the
Partnership's Report on Form 10-K for December 31, 1992 (File No. 0-16516)
dated March 19, 1993.
4-A. Assignment Agreement set forth as Exhibit B to
the Prospectus, a copy of which is incorporated by reference to Exhibit 4-A
to the Partnership's Report on Form 10-K for December 31, 1992 (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 Form 10-K for
December 31, 1992 (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 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-C.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-D.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-E.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-F.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-G.Sale documents and exhibits thereto relating to
the Partnership's contract of sale of the Blue Cross Building, Woodland
Hills (Los Angeles), California are hereby incorporated by reference to
Exhibit 10-N to the Partnership's Report on Form 10-Q for September 30,
1993 (File No. 0-16516) dated November 11, 1993.
10-H.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-I.First Amendment to Loan Documents relating to the
mortgage loan secured by Dunwoody Crossing Apartments (Phases I and III) is
hereby incorporated by reference to the Partnership's Form 10-Q for
September 30, 1994 (File No. 0-16516) dated November 10, 1994.
10-J.Documents relating to the modification of the
mortgage loan secured by Dunwoody Crossing Apartments (Phases I and III)
are filed herewith.
10-K.Documents relating to the assignment of JMB/125's
interest in 125 Broad Street Company are filed herewith.
21. List of Subsidiaries.
24. Powers of Attorney
Although certain additional long-term debt instruments of the
Registrant have been excluded from Exhibit 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such to the
Securities and Exchange Commission upon request.
(b) The following report on Form 8-K was filed since the
beginning of the last quarter of the period covered by this report.
(i) The Partnership's report on Form 8-K describing the
assignment of interest in the 125 Broad Street Building. The Report was
dated November 15, 1994. No financial statements were filed herewith.
No annual report or proxy material for the fiscal year 1994 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
By: JMB Realty Corporation
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Corporate General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and Director
Date: March 27, 1995
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 27, 1995
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 27, 1995
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 27, 1995
JEFFREY R. ROSENTHAL*
By: Jeffrey R. Rosenthal, Chief Financial Officer
Principal Financial Officer
Date: March 27, 1995
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 27, 1995
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 27, 1995
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 27, 1995
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 27, 1995
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVI
EXHIBIT INDEX
-------------
DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
------- ------- ------------ -------------
3. Amended and Restated Agree-
ment of Limited Partnership
of the Partnership Yes
4-A. Assignment Agreement Yes
4-B. Documents relating to the
loan modification of the
mortgage loan secured by the
260 Franklin Street Office
Building Yes
10-A. Escrow Deposit Agreement Yes
10-B. Acquisition documents relating
to the purchase of an interest
in the 260 Franklin Street
Building, Boston, Massachusetts Yes
10-C. Additional acquisition documents
relating to the purchase of an
interest in the 260 Franklin
Street Building, Boston,
Massachusetts Yes
10-D. Acquisition documents relating
to the purchase by the Part-
nership of an interest in the
Post Crest Apartments, Post
Terrace Apartments, and Post
Crossing Apartments in DeKalb
County (Atlanta), Georgia Yes
10-E. Acquisition documents relating
to the purchase by the Partnership
of an interest in NewPark Mall
in Newark (Alameda County),
California Yes
10-F. Acquisition documents
relating to the acquisition
by the Partnership of an
interest in the Palm Desert
Town Center in Palm Desert,
California, dated Decem-
ber 23, 1988 Yes
10-G. Sale documents and exhibits
thereto relating to the
Partnership's contract of sale
of the Blue Cross Building,
Woodland Hills (Los Angeles),
California Yes
10-H. Takeover Agreement relating
to the Johnson & Higgins space
at the 125 Broad Building Yes
DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
------- ------- ------------ -------------
10-I. First Amendment to Loan
Documents relating to the
mortgage loan secured by
Dunwoody Crossing Apartments
(Phases I and III) Yes
10-J. Documents relating to the
modification of the mortgage
loan secured by Dunwoody
Crossing Apartments (Phases I
and III) No
10-K. Documents relating to the
assignment of JMB/125's interest
in 125 Broad Street Company No
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
-----------------
* Previously filed as exhibits to the Partnership's Registration
Statement (as amended) on Form S-11 (File No. 33-3567) to the Securities
Act of 1933 and to Carlyle Real Estate Limited Partnership - XVI's,
Registration Statement (as amended) on Form S-11 (File No. 2-95382) to the
Securities Act of 1933 and the Partnership's prior Reports on Form 8-K and
Form 10-K of the Securities Act of 1934.