ITEM 1. BUSINESS
Unless otherwise indicated, all references to "Notes" are to Notes to Consolidated Financial Statements contained in this report. Capitalized terms used herein, but not defined, have the same meanings as used in the Notes.
The registrant, Carlyle Real Estate Limited Partnership-XV (the "Partnership"), is a limited partnership formed in August of 1984 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 July 5, 1985, the Partnership commenced an offering to the public of $250,000,000 (subject to increase by up to $250,000,000) in Limited Partnership Interests and assignee interests therein ("Interests") pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933 (No. 2-95382). A total of 443,711.76 Interests were sold to the public at $1,000 per Interest. The offering closed on July 31, 1986. Subsequent to admittance to the Partnership, no holder of Interests (hereinafter, a "Holder" or "Holders 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 have been held by fee title, leasehold estates and/or through joint venture partnership interests. The Partnership's real property investments were located throughout the nation and it has had no real estate investments located outside of the United States. A presentation of information about industry segments, geographic regions, raw materials or seasonality is not applicable and would not be material to an understanding of the Partnership's business taken as a whole. Pursuant to the Partnership Agreement, the Partnership is required to terminate no later than December 31, 2035. The Partnership is self-liquidating in nature. At sale of a particular property, the net proceeds, if any, are generally distributed or reinvested in existing properties rather than invested in acquiring additional properties.
The Partnership has made the real property investments set forth in the following table:
The Partnership's real property investments are subject to competition from similar types of properties (including in certain areas properties owned by affiliates of the General Partners or properties owned by venture partners or their affiliates) 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 in the table in Item 2
ITEM 2. PROPERTIES
The Partnership owns or owned directly or through joint venture partnerships the properties or interests in the properties referred to under Item 1 above to which reference is hereby made for a description of said properties.
The following is a listing of principal businesses or occupations carried on in and approximate occupancy levels by quarter during fiscal years 2000 and 1999 for the Partnership's investment properties owned during 2000:
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
On July 20, 2000, an action entitled TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA V. 222 SOUTH NINTH STREET LIMITED PARTNERSHIP, OB JOINT VENTURE, JMB/PIPER JAFFRAY TOWER ASSOCIATES, CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV, JMB/PIPER JAFFRAY TOWER ASSOCIATES II, CAMPBELL- MITHUN-ESTY, L.L.C., U.S. BANCORP PIPER JAFFRAY INC. JMB REALTY CORPORATION, OB JOINT VENTURE II AND LHDL REALTY LIMITED PARTNERSHIP was initiated in and an order for judgement entered by Minnesota District Court of Hennepin County, Minnesota. In the proceeding, Teachers Insurance and Annuity Association of America ("Teachers"), as the holder of the mortgage note secured by the Piper Jaffray Tower, sought the enforcement of its security interest and the appointment of a receiver for the benefit of the lender to take exclusive possession, control and operation of the property.
Due to a substantial amount of space vacated by a major tenant at the expiration of its lease in May 2000, the property owning venture has not made all of the scheduled debt service payments on the mortgage note since June 1, 2000. In consideration for, among other things, being released under the mortgage loan documents upon the expiration of the redemption period for foreclosure on the property and for payment of their expenses in connection with the transaction, within certain limitations, the defendants listed above executed a stipulation consenting to the foreclosure sale of the property. In July 2000, the Court approved the stipulation agreement, granted Teachers' application and entered an order for a receiver to take exclusive possession, control and operation of the property. Accordingly, the receiver has control of the property and its operations. In September 2000, a sheriff's sale of the property was held, and the lender was granted certain rights to the title of the property in 2001. Title to the property is currently expected to be transferred to Teachers or its designee in April 2001. However, there can be no assurance that the lender will take title to the property or that such disposition will be completed within the time frame currently anticipated.
The Partnership is not subject to any other material legal proceedings.
ITEM 4.
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 2000 and 1999.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS
As of December 31, 2000, there were 39,833 record Holders of the 442,309.11 Interests outstanding in the Partnership. There is no public market for Interests, and it is not anticipated that a public market for Interests will develop. Upon request, the Corporate General Partner may provide information relating to a prospective transfer of Interests to an investor desiring to transfer his Interests. The price to be paid for the Interests, as well as any other economic aspect 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, which may be granted or withheld in its sole and absolute discretion. The rights of a transferee of Interests who does not become a substituted Limited Partner will be limited to the rights to receive his share of profits or losses and cash distributions from the Partnership, and such transferee will not be entitled to vote such Interests or have other rights of a Limited Partner. No transfer will be effective until the first day of the next succeeding calendar quarter after the requisite transfer form satisfactory to the Corporate General Partner has been received by the Corporate General Partner. The transferee consequently will not be entitled to receive any cash distributions or any allocable share of profits or losses for tax purposes until such next succeeding calendar quarter. Profits or losses from operations of the Partnership for a calendar year in which a transfer occurs will be allocated between the transferor and the transferee based upon the number of quarterly periods in which each was recognized as the Holder of the Interests, without regard to the results of the Partnership's operations during particular quarterly periods and without regard to whether cash distributions were made to the transferor or transferee. Profits or losses arising from the sale or other disposition of Partnership properties will be allocated to the recognized Holder of the Interests as of the last day of the quarter in which the Partnership recognized such profits or losses. Cash distributions to a Holder of Interests arising from the sale or other disposition of Partnership properties will be distributed to the recognized Holder of the Interests as of the last day of the quarterly period with respect to which such distribution is made.
Reference is made to the Notes for a discussion of the provisions of the Partnership Agreement relating to cash distributions. Reference is made to Item 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Capitalized terms used but not defined herein have the same meanings as in the Notes. As a result of the public offering of Interests as described in Item 1, the Partnership had approximately $385,000,000 (after deducting selling expenses and other offering costs) with which to make investments in income-producing commercial and residential real property, to pay legal fees and other costs (including acquisition fees) related to such investments and to satisfy working capital requirements. A portion of the proceeds was utilized to acquire the properties described in Item 1 above.
At December 31, 2000, the Partnership and its consolidated ventures had cash and cash equivalents of approximately $9,919,000. Such funds were available for future distributions to partners and to an affiliated joint venture partner and for working capital requirements. Approximately $900,000 of the cash and cash equivalents represent amounts due to the Partnership's affiliated joint venture partner. The Partnership's two investment properties are restricted as to their use of excess cash flow by escrow agreements negotiated pursuant to loan modifications. In such regard, reference is made to the Partnership's property specific discussions below. Due to the property specific concerns discussed below, the Partnership does not consider either of its two remaining investment properties, Wells Fargo - South Tower and Piper Jaffray Tower to be potential sources of future cash generated from sales or operations. A receiver was appointed for the Piper Jaffray Tower in July 2000.
In February 2000, JMB/900 distributed approximately $26,400,000, which was included in the Partnership's cash and cash equivalents at December 31, 1999, to Carlyle-XIV (the Partnership's affiliated partner in the JMB/900 venture) representing Carlyle-XIV's share of sales proceeds and cash flow generated from the operations of the 900 Third Avenue office building.
The Partnership, in February 2000, made a distribution of approximately $39,906,000 ($90 per Interest) of sale proceeds (primarily related to the sales of the California Plaza office building and the 900 Third Avenue office building) to the Holders of Interests. Additionally, in February 2000, the Partnership made a distribution of approximately $17,736,000 ($40 per Interest) to the Holders of Interests and approximately $739,000 to the General Partners from Partnership operational cash flow. The Corporate General Partner also received its management fee of approximately $1,232,000 related to the February 2000 distribution of operational cash flow. The Partnership made a distribution of cash flow from operations of approximately $4,434,000 ($10 per interest) to the Holders of Interests and $185,000 to the General Partners in August 2000. The Corporate General Partner received a management fee of approximately $308,000 in connection with this distribution.
The General Partners and their affiliates previously deferred property management and leasing fees and advances payable to them in an aggregate amount of approximately $2,652,500 relating to certain of the Partnership's investment properties, which amount included the Partnership's proportionate share of deferred management and leasing fees for its consolidated and unconsolidated entities. In February 2000, the advances (approximately $676,000) were repaid to an affiliate of the General Partners. In conjunction with the appointment of a receiver for the Piper Jaffray Tower in July 2000, the obligation to pay deferred management and leasing fees for that property (of which approximately $919,500 was the Partnership's share payable to an affiliate of the General Partners) was released. At December 31, 2000, the obligation to pay the remaining approximately $1,057,000 of deferred management and leasing fees to an affiliate of the General Partners was released. Such deferred fees were written off and are no longer reflected in the 2000 consolidated balance sheet.
The Partnership has not budgeted any amounts for its share of tenant improvements and other capital expenditures at the Piper Jaffray Tower or Wells Fargo - South Tower as it has no funding obligations for its remaining investment properties.
PIPER JAFFRAY TOWER
Occupancy of the building at the end of the fourth quarter of 2000 was 82%.
U.S. Bancorp Piper Jaffray Inc. ("PJI"), which occupied 335,684 square feet or approximately 46% of the building's rentable square feet vacated the majority of its space (approximately 222,000 square feet) and moved to a recently completed office tower upon expiration of its lease on May 31, 2000. However, PJI extended a portion of its former space (approximately 114,000 square feet) through May 31, 2002, although the new rental rates, while at market rates, are significantly less than rental rates under the previous PJI lease. Additionally, Piper has executed new long-term leases representing an additional approximately 170,000 square feet. The property manager has been actively pursuing replacement tenants for the balance of the vacant space; however, given the extremely competitive nature of the downtown Minneapolis market due to a significant amount of new office construction, not all of the PJI space had been released quickly enough to generate sufficient cash flow to fund the required debt service payments. As a result, Piper has not made the required debt service payments under the mortgage loan since June 1, 2000, and is in monetary default under such loan. Such default led to the appointment of a receiver and a foreclosure sale of the property as described below.
The mortgage loan had an original principal amount of $100,000,000. Prior to the default, the lender was essentially entitled to all operating cash flow (as defined) in excess of fixed interest and certain other costs.
During 2000 (prior to the default), 1999 and 1998, no such cash flow was generated. As of December 31, 2000, aggregate amounts due to the lender were approximately $107,100,000, including certain default interest.
On a monthly basis, Piper was required to deposit the property management fee into an escrow account to be used (including interest earned thereon) for future leasing costs to the extent cash flow was not sufficient to cover such items or to be applied to the outstanding loan balance in the event of a default. Prior to the execution of the stipulation agreement (discussed below), approximately $339,000 and $610,000 representing property management fees was deposited and approximately $970,000 and $260,000 was withdrawn from the escrow account for certain leasing costs in 2000 and 1999, respectively. The escrow balance as of July 20, 2000 was approximately $5,146,000. Such balance was applied to the outstanding principal balance of the loan on July 20, 2000, as a result of the default. The manager of the property (which was an affiliate of the Corporate General Partner through November 1994) had agreed to defer receipt of its management fee and receive the payment thereof out of the amount available from the escrow account, if any. As of July 20, 2000, the manager had deferred approximately $5,395,000 ($1,839,000 of which represented deferred fees due to an affiliate of the Corporate General Partner through November 1994) of management fees. However, in conjunction with the appointment of the receiver at the property and the application of the funds in the escrow account to the outstanding loan balance, the obligation to pay the deferred fees was released. As a result, the liability for such fees was written off in the third quarter of 2000.
JMB/Piper, on behalf of Piper, had been negotiating with the lender to transfer title to the property through a deed in lieu of foreclosure. JMB/Piper and the lender were unable to reach an agreement related to such a transaction. Consequently, and as a result of the monetary default discussed above, the lender began legal proceedings to realize upon its security in the building. In consideration for, among other things, Piper and all of its constituent partners (collectively, the "Defendants") being released under the loan documents upon the expiration of the redemption period for foreclosure on the property and for payment of the Defendants' expenses in connection with the transaction, within certain limitations, the Defendants executed a stipulation agreement consenting to a foreclosure sale of the property, including the fee interest in the land underlying the building. On July 20, 2000, the Court approved the stipulation and appointed a receiver on behalf of the lender. On September 26, 2000, a sheriff's sale of the property occurred at which the lender received a sheriff's certificate of sale, subject to redemption of the property at any time within six months from the date of such sale. JMB/Piper currently expects that title to the land and building will transfer to the lender sometime in April 2001. Such transfer would result in Piper, JMB/Piper, and the Partnership, realizing a significant amount of gain for both financial reporting and Federal income tax purposes in 2001, with no distributable proceeds from such disposition. However, there can be no assurance that such disposition will be completed within the time frame currently anticipated.
JMB/Piper's plan to sell or dispose of the Piper Jaffray Tower had not, as of June 30, 1999 resulted in a sale or disposition. As a result, JMB/Piper made an adjustment as of June 30, 1999 to record depreciation that would have been recognized had the Piper Jaffray Tower not been considered "held for sale or disposition". Further, JMB/Piper began recording depreciation expense for the Piper Jaffray Tower commencing July 1, 1999. However, as a result of the default discussed above, JMB/Piper has reclassified the Piper Jaffray Tower as held for sale or disposition as of July 1, 2000, and therefore, it is not subject to continued depreciation beyond such date for financial reporting purposes.
900 THIRD AVENUE BUILDING
In March 1999, JMB/900 settled various claims and acquired the interests of the FDIC and the unaffiliated venture partners in Progress Partners, which owned the 900 Third Avenue office building, for $16,300,000, of which $13,800,000 was paid upon closing of the various transactions. In connection with these transactions, the Partnership contributed its proportionate share (approximately $9,200,000) of the $13,800,000 to JMB/900 to effect these transactions. The remaining amount was paid at the sale of the property as discussed below.
In July 1999, JMB/900, through Progress Partners, entered into a contract to sell the 900 Third Avenue Building to an unaffiliated third party. On November 2, 1999, JMB/900 sold the property for approximately $163,000,000. Upon closing, JMB/900 received cash of approximately $62,300,000 (net of closing costs but before prorations). The cash received was also net of the repayment of the mortgage loan secured by the property of approximately $87,000,000, a prepayment penalty of approximately $5,800,000 and the final payment to the Progress Parties pursuant to the Settlement Agreement of approximately $2,500,000. As a result of this sale, JMB/900 recognized a gain of approximately $54,000,000 and $77,000,000 for financial reporting and Federal Income tax purposes. The Partnership's share of such items is approximately $35,900,000 and $51,400,000, respectively. As is customary in such transactions, JMB/900 agreed to certain representations, warranties and covenants with a stipulated survival period, which expired on September 15, 2000. As required by the sale agreement, Progress Partners had placed $2,000,000 into an escrow account as security for such representations, warranties,
covenants and certain other costs. As a result of a claim made by the buyer under the sale contract, in September 2000, Progress Partners received only a portion, approximately $1,800,000, of such amount placed in escrow, plus interest earned thereon. Progress Partners was able to settle such claim with the buyer and the remaining amount (approximately $200,000) held in escrow, including interest earned thereon, was received by Progress Partners in the first quarter of 2001.
WELLS FARGO CENTER - SOUTH TOWER
The Wells Fargo Center ("South Tower") operates in the downtown Los Angeles office market, which has become extremely competitive over the last several years. The Partnership expects that the competitive market conditions in Downtown Los Angeles will continue to have an adverse affect on the building through lower effective rental rates achieved on re-leasing of existing space which expires or is given back over the next several years. In addition, new leases have required and are expected to require substantial expenditures for lease commissions and tenant improvements prior to occupancy. This anticipated decline in rental rates, the anticipated re-leasing time and the costs upon releasing will result in a decrease in cash flow from operations over the next several years.
During 1996, the Partnership, the joint venture, and the lenders reached an agreement to modify the mortgage note and the promissory note secured by the Partnership's interest in the property. In conjunction with the note modifications, the Maguire/Thomas Partners - South Tower LLC was converted to a limited liability company with members' interests in the same ratio as the prior venture ownership interests. The conversion of the Partnership's interest to a member's interest in a limited liability company eliminated any potential additional obligation of the Partnership in the future to provide additional funds under the previous joint venture agreement. As a result, previously recognized losses of $10,620,944 have been reversed, and the Partnership's share of losses in 2000 and 1999 of approximately $3,112,000 and $3,629,000, respectively, were not recognized.
The Partnership's 1998 share of income for financial reporting purposes (approximately $464,000) has not been recognized as such income amount is not considered realizable. Since the terms of the modified mortgage note and the amended and restated promissory note make it unlikely that the Partnership would recover any incremental investment, the Partnership has decided not to commit any significant additional amounts to the property. Reference is made to the "Wells Fargo Center - South Tower" in the Notes for a further description of these events.
The lender has had discussions with the Partnership regarding the lender's rights to realize upon its security under the loan agreement secured by the Partnership's interest in the limited liability company. Accordingly, the lender may proceed to foreclose on the Partnership's interest in the limited liability company in 2001, which would trigger significant gain with no realizable proceeds. Such loan and the loan secured by the property are scheduled to mature in 2003.
CALIFORNIA PLAZA
On December 23, 1999, the Partnership, through a joint venture, C-C California Plaza Partnership (the "Venture"), sold the California Plaza office building. Upon closing, the Venture received cash of approximately $6,800,000 (net of closing costs but before prorations). The cash was also net of the repayment of the mortgage loan secured by the property of approximately $64,100,000. The terms of the Venture's partnership agreement generally provided that the unaffiliated venture partner did not participate in any sale proceeds until (i) the Partnership's cumulative preferred return, as defined, had been satisfied and (ii) the Partnership received up to an additional $20,000,000 in sale proceeds. Therefore, the
Partnership was entitled to and received all of the proceeds from the sale of the property. Additionally, in connection with the sale of the property, the Venture received the balance (approximately $3,400,000) in a reserve account that had been controlled by the mortgage lender for the payment of future costs, including tenant improvements, leasing commissions and capital improvements for the property. The terms of the Venture's partnership agreement generally provided that net cash receipts would be distributed to the Partnership until the Partnership's cumulative preferred return, as defined, had been satisfied. Under these terms, the Partnership also received the funds refunded from the reserve account. As is customary in such transactions, the Venture had agreed to certain representations, warranties and covenants with a stipulated survival period, which expired on December 25, 2000 with no liability to the Partnership. The property had been classified as held for sale or disposition as of December 31, 1996, and therefore, had not been subject to continued depreciation. Reference is made to the discussion of California Plaza in the Notes for a further description of such sale.
JMB/125
In October 1995, the makers of the $5 million promissory note payable to JMB/125 filed for protection from creditors under Chapter 11 of the Bankruptcy Code. Pursuant to the bankruptcy reorganization of the makers of the note, JMB/125, as an unsecured creditor, received limited partnership interests and a convertible note interest in a reorganized entity that had majority or controlling interests in six office buildings in New York, New York and Boston, Massachusetts. The convertible note interest was collected in 1997. In December 1998, the limited partnership interests were sold back to the reorganized entity for $118,642 resulting in recognition of gain for financial reporting purposes, of which the Partnership's share was $81,612. Reference is made to the discussion of JMB/125 in the Notes.
NEWPARK ASSOCIATES
Pursuant to a liquidation agreement dated November 13, 1998, JMB/NewPark and its venture partner dissolved NewPark Associates and distributed all of its assets to the partners. On November 18, 1998, JMB/NewPark sold its interest in the net assets of the NewPark Mall to the joint venture partner for $16,000,000, of which the Partnership's share was $14,400,000.
260 FRANKLIN
On January 2, 1998, 260 Franklin through a trust disposed of the land, building and related improvements of the 260 Franklin Street Building. 260 Franklin transferred title to the land, building and improvements, and all other assets and liabilities related to the property in consideration of a discharge of the mortgage loan and receipt of $200 in cash. Reference is made to the discussion of 260 Franklin in the Notes for a further description of such transfer.
GENERAL
Certain of the Partnership's investments have been made through joint ventures. There are certain risks associated with the Partnership's investments made through joint ventures, including the possibility that the Partnership's joint venture partners in an investment might become unable or unwilling to fulfill their financial or other obligations, or that such joint venture partners may have economic or business interests or goals that are inconsistent with those of the Partnership.
The Partnership's and its ventures' obligations generally are separate non-recourse loans secured individually by the investment properties and are not obligations of the entire investment portfolio, and the Partnership and its ventures are not personally liable for the payment of the indebtedness. The Partnership does not intend to commit any significant additional funds to either the Wells Fargo Center - South Tower or the Piper Jaffray Tower.
Although the Partnership expects to make minimal future cash distributions, aggregate distributions received by Holders of Interests over the entire term of the Partnership will be substantially less than one-third of their original investment. However, in connection with sales or other dispositions (including transfers to lenders) of properties (or interests therein) owned by the Partnership or its ventures, the Holders of Interests will be allocated gain for Federal income tax purposes, regardless of whether any proceeds are distributable from such sales or other dispositions. In particular, the Piper Jaffray Tower and Wells Fargo Center - South Tower investment properties have high levels of debt secured by each property and provide no cash flow to the Partnership. While loan and joint venture modifications have been obtained that enable the Partnership to retain an ownership interest in these properties, the Partnership does not expect to receive any proceeds from operations or sales of either of these properties. However, upon disposition of these properties or the Partnership's interest therein, the Partnership, and therefore, the Holders of Interests, will recognize a substantial amount of taxable income with no distributable proceeds. For certain Holders of Interests, such taxable income may be offset by their suspended passive activity losses (if any). Each Holder's tax consequences will depend on such Holder's own tax situation. As discussed above, it is currently expected that title to the Piper Jaffray Tower will be transferred to the lender in April 2001.
RESULTS OF OPERATIONS
Significant fluctuations in the accompanying consolidated financial statements are primarily due to the acquisition by JMB/900 of the interests of the FDIC and the unaffiliated venture partners in Progress Partners in March 1999 (resulting in the consolidation of JMB/900), the sale of the 900 Third Avenue office building in November 1999, the sale of the California Plaza office building in December 1999 and the sale of the 260 Franklin Street Building in January 1998.
The decrease in cash and cash equivalents at December 31, 2000 as compared to December 31, 1999 is primarily due to distributions in February and August 2000 of cash flow from sales and operations of approximately $57,641,000 and $4,434,000, respectively, to the Holders of Interests and approximately $739,000 and $185,000, respectively, to the General Partners and the payment of management fees to the Corporate General Partner of approximately $1,540,000 related to such distributions. Additionally, such decrease and the related decrease in venture partner's subordinated equity in venture is due to the distribution made by JMB/900, in February 2000, of approximately $26,400,000 to Carlyle-XIV, representing its share of sales proceeds and cash flow generated from the operations of the 900 Third Avenue Office Building.
The decrease in interest, rents and other receivables at December 31, 2000 as compared to December 31, 1999 is primarily due to a lower average cash balance available for investment as a result of the distributions discussed above.
The decrease in escrow deposits at December 31, 2000 as compared to December 31, 1999 is primarily due to the release of a portion of the escrow account in the amount of approximately $1,800,000 related to the sale of the 900 Third Avenue Office Building upon the expiration on September 15, 2000 of the representations, warranties and covenants related to such sale, as discussed above.
The decrease in accounts payable at December 31, 2000 as compared to December 31, 1999 is primarily due to the repayments to an affiliate of the General Partners of advances previously made. Additionally, the decrease and related other income for the year ended December 31, 2000 is due to the release of the obligation to pay certain management and leasing fees related to the 260 Franklin investment property.
The decrease in the liability investment in unconsolidated ventures, at equity at December 31, 2000 as compared to December 31, 1999 and the related increase in Partnership's share of operations of unconsolidated ventures for the year ended December 31, 2000 as compared to the year ended December 31, 1999 is primarily due to the cessation of the recording of depreciation from July 1, 2000 as a result of the Piper Jaffray Tower being reclassified as held for sale or disposition as of that date. Additionally, such increase is also due to the write off of certain deferred management fees at the Piper Jaffray Tower, as discussed above.
The increase in long-term debt at December 31, 2000 as compared to December 31, 1999 is primarily due to the interest accrual on the promissory note secured by the Partnership's interest in the limited liability company that owns the Wells Fargo Center - South Tower.
The decrease in interest income for the year ended December 31, 2000 as compared to the year ended December 31, 1999 is primarily due to a lower average cash balance available for investment due to the distributions discussed above.
The decrease in other income for the year ended December 31, 1999 as compared to the same period in 1998 is primarily due to a collection of demand notes related to the 21900 Burbank Boulevard Building in 1998.
The management fees to Corporate General Partner for the years ended December 31, 2000 and 1998 are due to the Partnership's payments of distributions from operational cash flow in 2000 and 1998, a portion of which are earned by the Corporate General Partner as partnership management fees.
The decrease in Partnership's share of operations from unconsolidated venture for the year ended December 31, 1999 as compared to the year ended December 31, 1998 is due to the allocation of additional losses to the Partnership because the Piper Jaffray Tower was no longer classified as held for sale at June 30, 1999, an adjustment was made to record depreciation from prior periods and the recording of continued depreciation from July 1, 1999 until June 30, 2000. Additionally, such decrease is due to the acquisition by JMB/900 of the interests of the FDIC and unaffiliated venture partners in March 1999, which resulted in the consolidation of JMB/900. This amount is partially offset by the decrease in assessed value of the Piper Jaffray Tower, which resulted in lower real estate tax expense being incurred by the property.
The gain on sale for the year ended December 31, 1999 relates to the recognition of gain from the sale of the California Plaza and 900 Third Avenue office buildings of $23,089,381 and $36,233,307, respectively, in 1999. The gain on sale or disposition of investment property for the year ended December 31, 1998 relates to the recognition of gain from the sale of the 260 Franklin Street Building.
The gain on sale of interests in unconsolidated ventures for the year ended December 31, 1998 relates to the recognition of $7,656,304 of gain from the liquidation of the NewPark joint venture and the sale through JMB/NewPark of the Partnership's interest in NewPark Mall, recognition of $3,006,762 of deferred gain from the sale of JMB/Owing's interest in the Owings Mills Limited Partnership and recognition of $81,612 of gain relating to the investment in 125 Broad from the sale of limited partnership interests.
The extraordinary items - prepayment penalties and the write-off of deferred mortgage expense for the year ended December 31, 1999 resulted from the sale of the 900 Third Avenue office building in 1999.
The extraordinary item - gain on forgiveness of indebtedness of $17,451,802 for the year ended December 31, 1998 represents the interest waived by the lender pursuant to a loan modification agreement for the debt secured by the 260 Franklin Street building in January 1998.
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.
However, to the extent that inflation in future periods would have an adverse impact on property operating expenses, the effect would generally be offset by amounts recovered from tenants as many of the long-term leases at the Partnership's commercial properties have escalation clauses covering increases in the cost of operating and maintaining the properties as well as real estate taxes. Therefore, there should be little effect on net operating earnings if the properties remain substantially occupied.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership has identified interest rate changes as a potential market risk. However, as the Partnership's long-term debt bears interest at fixed rates, the Partnership does not believe that it is exposed to market risk relating to interest rate changes.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 2000 and 1999
Consolidated Statements of Operations, years ended December 31, 2000, 1999 and 1998
Consolidated Statements of Partners' Capital Accounts (Deficits), years ended December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows, years ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
Schedules not filed:
All schedules have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV:
We have audited the consolidated financial statements of Carlyle Real Estate Limited Partnership - XV (a limited partnership) and consolidated ventures as listed in the accompanying index. These consolidated financial statements are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 - XV and consolidated ventures at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
KPMG LLP
Chicago, Illinois March 26, 2001
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000, 1999 AND 1998
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership currently holds (through joint ventures) an equity investment in two office buildings. Business activities have consisted of rentals to a variety of commercial and retail companies, and the ultimate sale or disposition of the Partnership's real estate.
The accompanying consolidated financial statements include the accounts of the Partnership and its majority-owned ventures, 260 Franklin Street Associates ("260 Franklin") (prior to the sale in January 1998); C-C California Plaza Partnership ("Cal Plaza") (prior to the sale in December 1999) and effective in March 1999, Progress Partners due to JMB/900's purchase of the unaffiliated venture partners' interests in Progress Partners (then sold in November 1999). The effect of all transactions between the Partnership and the consolidated ventures has been eliminated.
The equity method of accounting has been applied in the accompanying consolidated financial statements with respect to the Partnership's interests in JMB/Piper Jaffray Tower Associates ("JMB/Piper") and JMB/Piper Jaffray Tower Associates II ("JMB/Piper II"); 900 Third Avenue Associates ("JMB/900") (prior to March 1999 acquisition as mentioned above); JMB/Owings Mills Associates ("JMB/Owings") (sold June 30, 1993); JMB/NewPark Associates, ("JMB/NewPark") (sold November 18, 1998); and Carlyle-XV Associates, L.P., which owned an interest in JMB/125 Broad Building Associates, L.P. ("JMB/125"). In November 1994, the Partnership through its indirect ownership of JMB/125 assigned its interest in the 125 Broad Street Building. In December 1998, JMB/125 was terminated.
Due to the restructuring of the Partnership's interest in Wells Fargo Center - South Tower as discussed below, the Partnership has ceased loss recognition relative to its real estate investment and has reversed those previously recognized losses that the Partnership is no longer obligated to fund, which was reflected as income from restructuring in 1996 in the Partnership's share of income from operations of unconsolidated ventures. The Partnership has no future funding obligation for its investment in Wells Fargo Center - South Tower. Accordingly, the Partnership has discontinued the application of the equity method of accounting, and additional losses from the investment in Wells Fargo Center - South Tower will not be recognized.
The Partnership's records are maintained on the accrual basis of accounting as adjusted for Federal income tax reporting purposes. The accompanying consolidated financial statements have been prepared from such records after making appropriate adjustments to present the Partnership's accounts in accordance with accounting principles generally accepted in the United States of America ("GAAP") and to consolidate the accounts of certain ventures as described above. Such GAAP and consolidation adjustments are not recorded on the records of the Partnership. The net effect of these items is summarized as follows for the years ended December 31, 2000 and 1999:
The net earnings (loss) per limited partnership interest ("Interest") is based upon the Interests outstanding at the end of each period. Deficit capital accounts will result, through the duration of the Partnership, in the recognition of net gain for financial reporting and Federal income tax purposes to the General Partners and Holders of Interests.
The preparation of financial statements in accordance with GAAP requires the General Partners to make estimates and assumptions that affect the reported or disclosed amount of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Statement of Financial Accounting Standards No. 95 requires the Partnership to present a statement which classifies receipts and payments according to whether they stem from operating, investing or financing activities. The required information has been segregated and accumulated according to the classifications specified in the pronouncement. Partnership distributions from unconsolidated ventures are considered cash flow from operating activities only to the extent of the Partnership's cumulative share of net earnings. In addition, the Partnership records amounts held in U.S. Government obligations and other securities at cost which approximates market. For the purposes of these statements, the Partnership's policy is to consider all such amounts held with original maturities of three months or less (approximately $9,770,000 and $96,000,000 at December 31, 2000 and 1999, respectively) as cash equivalents, which includes investments in an institutional mutual fund which holds U.S. Government obligations, with any remaining amounts (generally with maturities of one year or less) reflected as short-term investments being held to maturity.
Escrow deposits and restricted securities primarily represent cash and investments restricted as to their use by the Partnership.
Deferred expenses are comprised principally of deferred financing fees which are amortized over the related debt term and deferred leasing fees which are amortized over the related lease term.
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. Due to this, approximately $130,000 and $16,000 representing such withholding was remitted to the state of Maryland on behalf of the Holders of Interest in 1999 and 1998, respectively.
The Partnership acquired, either directly or through joint ventures, interests in four apartment complexes, twelve office buildings, four shopping centers and one parking facility. The Partnership's aggregate cash investment, excluding certain related acquisition costs, was $299,637,926. During 1989, the Partnership disposed of its interest in the investment property owned by CBC Investment Company ("Boatmen's"). During 1991, the Partnership sold 62% of its interest in the 300 E. Lombard Building and in 1993 sold the remaining 38% of its interest in the 300 E. Lombard Building. In September 1992, the Partnership sold the Erie-McClurg Parking Facility. In June 1993, the Partnership sold (through JMB/Owings) its interest in Owings Mills Shopping Center. In March 1994, the Partnership, through Villa Solana Associates, sold the Villa Solana Apartments. In May 1994, the lender realized upon its security interest in the Park at Countryside Apartments. In October 1994, the Partnership sold the 9701 Wilshire Office Building. In November 1994, the Partnership through the JMB/125 venture, assigned its interest in the 125 Broad Street
Building to an affiliate of its unaffiliated venture partner. In June 1995, the Partnership sold its interest in Eastridge Mall. In January 1996, the lender realized upon its security interest in the 160 Spear Street Building. In March 1996, the lender realized upon its security interest in the 21900 Burbank Boulevard Building. In May 1996, the Partnership sold the Woodland Hills apartment complex. Also, in May 1996, the Partnership, through Villages Northeast and VNE Partners, Ltd., sold the Dunwoody Crossing Phases I, II and III apartment complex. In January 1997, the lender realized upon its security interest in the Springbrook Shopping Center. In December 1997, the Partnership sold the RiverEdge Place office building. In January 1998, the Partnership, through 260 Franklin Street Associates, disposed of the 260 Franklin Street Building. In November 1998, the Partnership, through the NewPark Associates venture, sold the NewPark Mall. In November 1999, the Partnership, through JMB/900, sold the 900 Third Avenue office building. In December 1999, the Partnership, through C-C California Plaza Partnership sold the California Plaza office building. The two remaining properties owned at December 31, 1999 were completed and operating.
The cost of the investment properties represents the total cost to the Partnership or its ventures plus miscellaneous acquisition costs, reduced for provisions for value impairment where applicable. Depreciation on the operating properties has been provided over the estimated useful lives of 5-30 years using the straight-line method.
Statement of Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" was issued in March 1995. SFAS 121 requires that the Partnership record an impairment loss on its properties to be held for investment whenever their carrying value cannot be fully recovered through estimated undiscounted future cash flows from their operations and sale. The amount of the impairment loss to be recognized would be the difference between the property's carrying value and the property's estimated fair value. The Partnership's policy is to consider a property to be held for sale or disposition when the Partnership has committed to a plan to sell or dispose of such property and active marketing activity has commenced or is expected to commence in the near term or the Partnership has concluded that it may dispose of the property by no longer funding operating deficits or debt service requirements of the property thus allowing the lender to realize upon its security. In accordance with SFAS 121, any properties identified as "held for sale or disposition" are no longer depreciated. Adjustments for impairment loss for such properties (subsequent to the date of adoption of SFAS 121) are made in each period as necessary to report these properties at the lower of carrying value or estimated fair value less costs to sell. In certain situations, such estimated fair value could be less than the existing non-recourse debt which is secured by the property. There can be no assurance that any estimated fair value of these properties would ultimately be obtained by the Partnership in any future sale or disposition transaction.
The results of operations for consolidated properties classified as held for sale or disposition as of December 31, 2000 or sold or disposed of during the past three years were $653,832, $2,111,998 and $75,736, respectively, for the years ended December 31, 2000, 1999 and 1998. In addition, the accompanying consolidated financial statements include for the years ended December 31, 2000, 1999 and 1998, $890,810, $(2,420,987) and $2,864,907, respectively, as the Partnership's share of property operations of $1,781,621, $(5,094,806) and $3,579,605 of unconsolidated properties held for sale or disposition as of December 31, 2000, or sold or disposed of in the past three years.
The Partnership has adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Partnership defines each of its property investments as an individual operating segment and has determined such property investments exhibit substantially identical economic characteristics and meet the other criteria specified by SFAS No. 131, which permits the property investments to be aggregated into one reportable segment. The Partnership assesses and measures operating results based on net operating income (rental income less property operating expenses). With the exception of interest income, professional services and general and administrative expenses, substantially all other components of net earnings (loss) of the Partnership relate to property investments. With the exception of cash and cash equivalents, substantially all other assets of the Partnership relate to property investments.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated over their estimated useful lives.
Certain amounts in the 1999 consolidated financial statements have been reclassified to conform with the 2000 presentation.
VENTURE AGREEMENTS - GENERAL
The Partnership at December 31, 2000 is a party to four operating joint venture agreements. Pursuant to such agreements, the Partnership made initial capital contributions of approximately $98,145,000 (before legal and other acquisition costs and its share of operating deficits as discussed below). Under certain circumstances, either pursuant to the venture agreements or due to the Partnership's obligations as a general partner, the Partnership may be required to make additional cash contributions to certain of the ventures. The four joint venture agreements (JMB/Piper, JMB/Piper II, JMB/900 and South Tower) are, directly or indirectly, with Carlyle Real Estate Limited Partnership-XIV ("C-XIV") a partnership sponsored by the Corporate General Partner or its affiliates. These four joint ventures have entered into a total of four property joint venture agreements.
The Partnership acquired, through the above ventures, interests in three office buildings, including the 900 Third Avenue office building prior to its sale in November 1999. The venture properties have been financed under various long-term debt arrangements as described below.
There are certain risks associated with the Partnership's investments made through joint ventures including the possibility that the Partnership's joint venture partners in an investment might become unable or unwilling to fulfill their financial or other obligations, or that such joint venture partners may have economic or business interests or goals that are inconsistent with those of the Partnership. Under certain circumstances, either pursuant to the venture agreements or due to the Partnership's obligations as a general partner, the Partnership may be required to contribute additional amounts to the venture.
INVESTMENT PROPERTIES
BOATMEN'S
During 1989 the joint venture defaulted on the mortgage loan secured by the property, and the lender obtained title to the property. As a result, the Partnership has no further ownership interest in the property.
During 1990, the Partnership accepted non-interest bearing promissory notes totalling $2,325,000 as settlement for certain claims against the joint venture partner. As of December 31, 1997, the Partnership had received cash payments totalling $1,910,937 and scheduled payments were delinquent in the amount of $414,063. During 1998, $23,748 was received as
final settlement for one of the promissory notes and the remaining amount of $224,690 was written off. During 1999, $55,000 was received as a final settlement on the remaining promissory note and the remaining amount of $110,625 was written off. The Partnership has recognized revenue on the settlement to the extent of the cash collected.
CALIFORNIA PLAZA
In December 1993, an agreement was reached with the lender to modify the mortgage loan by reducing the pay rate. The loan modification reduced the monthly payments to $384,505, effective with the March 1, 1993 payment, and extended the maturity date to January 1, 2000 when the unpaid balance of principal and interest was due (including the difference between the accrual rate of 10.375% and pay rate of 8% per annum). Additionally, the joint venture entered into a cash management agreement which required monthly net cash flow to be escrowed (as defined). A portion of such funds were reserved for the payment of deferred interest and principal on the mortgage loan.
On December 23, 1999, the Partnership, through a joint venture, C-C California Plaza Partnership (the "Venture"), sold the California Plaza office building. Upon closing, the Venture received cash of $6,754,665 (net of closing costs but before prorations). The cash was also net of the repayment of the mortgage loan secured by the property of approximately $64,100,000. The terms of the Venture's partnership agreement generally provided that the unaffiliated venture partner did not participate in any sale proceeds until (i) the Partnership's cumulative preferred return, as defined, had been satisfied and (ii) the Partnership received up to an additional $20,000,000 in sale proceeds. Therefore, the Partnership was entitled to and received all of the proceeds from the sale of the property.
Additionally, in connection with the sale of the property, the Venture received the balance of cash receipts (approximately $3,400,000) in a reserve account that had been controlled by the mortgage lender for the payment of future costs, including tenant improvements, leasing commissions and capital improvements for the Property. The terms of the Venture's partnership agreement generally provided that net cash receipts would be distributed to the Partnership until the Partnership's cumulative preferred return, as defined, had been satisfied. Therefore, the Partnership also received the funds released from the reserve account.
The property had been classified as held for sale or disposition as of December 31, 1996, and therefore, had not been subject to continued depreciation after such date. As a result of this sale, the Venture recognized a gain of $23,089,381 and $49,334,171 for financial reporting and Federal income tax purposes, respectively. The Partnership's share of such items was $23,089,381 and $29,545,904, respectively. As is customary in such transactions, the Venture had agreed to certain representations, warranties and covenants with a stipulated survival period, which expired on December 25, 2000, with no liability to the Partnership.
In 1998, the venture reached a settlement agreement with a former tenant and accepted a promissory note in the principal amount of $275,000 with payments of principal and interest amortized over five years. The Partnership assumed the rights to the note upon the sale of the California Plaza office building. As of December 31, 2000, the outstanding balance of the note receivable was $155,556 which is included in current portion of note receivable and long-term portion of note receivable. The Partnership is currently discussing with the former tenant an early payoff of this promissory note. However, there can be no assurance that any agreement can be reached.
PIPER JAFFRAY TOWER
In 1984, the Partnership with C-XIV acquired, through JMB/Piper, an interest in a 42-story office building known as the Piper Jaffray Tower in Minneapolis, Minnesota with the developer and certain limited partners. In April 1986, JMB/Piper II, a joint venture partnership between the Partnership and C-XIV, acquired the developer's interest in the OB Joint Venture, which owns a fee interest in the land underlying the office building. JMB/Piper holds its interest in the property through three existing joint ventures (OB Joint Venture, OB Joint Venture II and 222 South Ninth Street Limited Partnership, together "Piper"). The terms of the JMB/Piper and JMB/Piper II venture agreements generally provide that JMB/Piper's and JMB Piper II's respective shares of Piper's annual cash flow, sale or refinancing proceeds and profits and losses will be distributed or allocated to the Partnership in proportion to its 50% share of capital contributions.
JMB/Piper invested approximately $19,915,000 for its 71% interest in Piper. JMB/Piper is obligated to loan amounts to Piper to fund operating deficits (as defined). The loans bear interest at a rate of not more than 14.36% per annum, provide for payments of interest only from net cash flow, if any, and are repayable from net sale or refinancing proceeds. Such loans and accrued interest were approximately $147,000,000 at December 31, 2000 and 1999. Due to the unlikely ability of Piper to pay such loan, JMB/Piper ceased accruing interest on the loan effective January 1, 2000.
U.S. Bancorp Piper Jaffray Inc. ("PJI"), which occupied 335,684 square feet or approximately 46% of the building's rentable square feet vacated the majority of its space (approximately 222,000 square feet) and moved to a recently completed office tower upon expiration of its lease on May 31, 2000. However, PJI extended a portion of its former space (approximately 114,000 square feet) through May 31, 2002, although the new rental rates, while at market rates, are significantly less than rental rates under the previous PJI lease. Additionally, Piper has executed new long-term leases representing an additional approximately 170,000 square feet. The property manager has been actively pursuing replacement tenants for the balance of the vacant space; however, given the extremely competitive nature of the downtown Minneapolis market due to a significant amount of new office construction, not all of the PJI space had been released quickly enough to generate sufficient cash flow to fund the required debt service payments. As a result, Piper has not made the required debt service payments under the mortgage loan since June 1, 2000, and is in monetary default under such loan. Such default led to the appointment of a receiver and a foreclosure sale of the property as described below.
The mortgage loan had an original principal amount of $100,000,000. Prior to the default, the lender was essentially entitled to all operating cash flow (as defined) in excess of fixed interest and certain other costs.
During 2000 (prior to the default), 1999 and 1998, no such cash flow was generated. As of December 31, 2000, aggregate amounts due to the lender were approximately $107,100,000, including certain default interest.
On a monthly basis, Piper was required to deposit the property management fee into an escrow account to be used (including interest earned thereon) for future leasing costs to the extent cash flow was not sufficient to cover such items or to be applied to the outstanding loan balance in the event of a default. Prior to the execution of the stipulation agreement (discussed below), approximately $339,000 and $610,000 representing property management fees was deposited and approximately $970,000 and $260,000 was withdrawn from the escrow account for certain leasing costs in 2000 and 1999, respectively. The escrow balance as of July 20, 2000 was approximately $5,146,000. Such balance was applied to the outstanding principal balance of the loan on July 20, 2000, as a result of the default. The manager of the property (which was an affiliate of the Corporate General Partner through November 1994) had agreed to defer receipt of its management fee and receive the payment thereof out of the amount available from the escrow account, if any. As of July 20, 2000, the manager had deferred approximately $5,395,000 ($1,839,000 of which represented deferred fees due to an affiliate of the
Corporate General Partner through November 1994) of management fees. However, in conjunction with the appointment of the receiver at the property and the application of the funds in the escrow account to the outstanding loan balance, the obligation to pay the deferred fees was released. As a result, such fees were written off in the third quarter of 2000.
JMB/Piper, on behalf of Piper, had been negotiating with the lender to transfer title to the property through a deed in lieu of foreclosure. JMB/Piper and the lender were unable to reach an agreement related to such a transaction. Consequently, and as a result of the monetary default discussed above, the lender began legal proceedings to realize upon its security in the building. In consideration for, among other things, Piper and all of its constituent partners (collectively, the "Defendants") being released under the loan documents upon the expiration of the redemption period for foreclosure on the property and for payment of the Defendants' expenses in connection with the transaction, within certain limitations, the Defendants executed a stipulation agreement consenting to a foreclosure sale of the property, including the fee interest in the land underlying the building. On July 20, 2000, the Court approved the stipulation and appointed a receiver on behalf of the lender. On September 26, 2000, a sheriff's sale of the property occurred at which the lender received a sheriff's certificate of sale, subject to redemption of the property at any time within six months from the date of such sale. JMB/Piper currently expects that title to the land and building will transfer to the lender sometime in April 2001. Such transfer would result in Piper, JMB/Piper, and the Partnership, realizing a significant amount of gain for both financial reporting and Federal income tax purposes in 2001, with no distributable proceeds from such disposition. However, there can be no assurance that such disposition will be completed within the time frame currently anticipated.
The Piper venture agreements provide that any net cash flow, as defined, will be used to pay principal and interest on the operating deficit loans (as described above) with any excess generally distributable 71% to JMB/Piper and 29% to the venture partners, subject to certain adjustments (as defined). In general, operating profits or losses are allocated in relation to the economic interests of the joint venture partners. Accordingly, operating profits (excluding depreciation and amortization) were generally allocated 71% to the JMB/Piper and 29% to the venture partners during 2000, 1999 and 1998.
The Piper venture agreements further provide that, in general, upon any sale or refinancing of the property, the principal and any accrued interest outstanding on any operating deficit loans are to be repaid out of net proceeds. Any remaining proceeds will be distributable 71% to JMB/Piper and 29% to the joint venture partners, subject to certain adjustments, as defined.
During the fourth quarter 1991, Larkin, Hoffman, Daly & Lindgren, Ltd. (23,344 square feet) approached Piper indicating it was experiencing financial difficulties and desired to give back a portion or all of its leased space. Larkin was also a limited partner with partial interests in the building and the land under the building. On January 15, 1992, Piper agreed to terminate Larkin's lease in return for its partial interest in the land under the building and a $1,011,798 note receivable. The note receivable provides for monthly payments of principal and interest at 8% per annum with full repayment over ten years. The balance of the note receivable as of December 31, 2000 is $163,567. It is currently expected that the lender will assume such note upon the transfer of property to the lender in April 2001.
JMB/Piper's plan to sell or dispose of the Piper Jaffray Tower had not, as of June 30, 1999 resulted in a sale or disposition. As a result, JMB/Piper made an adjustment as of June 30, 1999 to record depreciation that would have been recognized had the Piper Jaffray Tower not been considered "held for sale or disposition". Further, JMB/Piper began recording depreciation expense for the Piper Jaffray Tower commencing July 1, 1999. However, as a result of the default discussed above, JMB/Piper has reclassified the Piper Jaffray Tower as held for sale or disposition as of July 1, 2000, and therefore, it is not subject to continued depreciation beyond such date for financial reporting purposes.
JMB/900
In 1984, the Partnership with C-XIV acquired, through JMB/900, an interest in an existing joint venture ("Progress Partners") which owned a 36-story office building known as the 900 Third Avenue Building in New York, New York. The partners of Progress Partners were the developer of the property ("PPI"), an original affiliate of PPI ("JRA") and JMB/900. In 1986, PPI transferred a portion of its interest to another partnership ("PC-900") in which it and a major tenant of the building (Central National Bank) were partners. In 1987 the bank failed and the Federal Deposit Insurance Corporation ("FDIC") assumed its position as a limited partner in PC-900. Prior to the sale of their interests, the partners of Progress Partners were PPI, JRA and PC-900 (together "Venture Partners") and JMB/900.
The terms of the JMB/900 venture agreement generally provide that JMB/900's share of Progress Partners' cash flow, sale or refinancing proceeds and profits and losses will be distributed or allocated to the Partnership in proportion to its 66-2/3% share of capital contributions.
Pursuant to the extension of the mortgage loan, prior to the sale of the property in November 1999, net cash flow (as defined) was paid into an escrow account controlled by the lender. The escrow account, including interest earned thereon, was to be used by Progress Partners for payment of property taxes and releasing costs associated with leases which expired in 1999 and 2000 (approximately 50% of the building including the Schulte, Roth & Zabel lease). The escrow balance at closing of the property sale was approximately $16,083,000, which was released to Progress Partners upon the sale of the property discussed below.
In December, 1997, two of the Venture Partners, JRA and PPI, filed for bankruptcy in order to prevent the foreclosure of their interests by State of Maryland Deposit Insurance Fund Corporation ("MDIFC"). Since the bankruptcy filing, an affiliate of PPI effected a settlement with MDIFC by purchasing its claims. JMB/900 pursued certain claims against the Venture Partners in the bankruptcy forum and sought to either foreclose on or buy- out the interests of the Venture Partners in Progress Partners, or to otherwise dispose of those interests pursuant to a bankruptcy plan. The Venture Partners asserted claims against Progress Partners and JMB/900 including claims for unpaid Guaranteed Payments in the purported amount of $36 million. JMB/900 denied that such claims were due and owing.
In March 1999, JMB/900 entered into a settlement agreement ("Settlement Agreement") with the Venture Partners and a judgment creditor of JRA and PPI (such judgment creditor, JRA and PPI, are hereinafter collectively referred to as the "Progress Parties") to resolve outstanding claims and to place JMB/900 in a position to control and market the 900 Third Avenue Building. The Settlement Agreement generally provided for the
settlement and release of all claims and causes of action by and against JMB/900 and the Progress Parties related to or arising from the joint venture relationship or the property including, without limitation, any claims by the Venture Partners to Guaranteed Payments and any claims by Progress Partners for capital contributions from JMB/900. Under the Settlement Agreement and related transactions, JMB/900 and an affiliate acquired all of the right, title and interest of the Progress Parties in the property, Progress Partners and PC-900 and resolved all outstanding litigation in exchange for a total payment of $16.0 million, $13.5 million of which was paid at closing of the Settlement Agreement with the remaining $2.5 million paid upon the sale of the property as discussed below. In a related agreement and for the payment of $300,000 and the release of various claims, certain litigation and claims by and between the FDIC and JMB/900 were resolved and dismissed. As part of the settlement, the limited partnership interests in PC-900 were assigned to 14-15 Office Associates, L.P. ("Office Associates"), in which JMB/900 owns a 99% limited partnership interest. P-C 900's interest in Progress Partners was then transferred to JMB/900 and Office Associates, which became the sole remaining partners in Progress Partners. Amendments to the joint venture agreement of Progress Partners were made to effectuate the terms of the settlement and the substitution of partners.
In July 1999, JMB/900, through Progress Partners, entered into a contract to sell the 900 Third Avenue Building to an unaffiliated third party. On November 2, 1999, JMB/900 sold the property for approximately $163,000,000. Upon closing, JMB/900 received cash from the sale of approximately $62,300,000 (net of closing costs but before prorations). The cash received is also net of the repayment of the mortgage loan secured by the property of approximately $87,000,000, a prepayment penalty of approximately $5,800,000 and the final payment to the Progress Parties pursuant to the Settlement Agreement of approximately $2,500,000. As a result of this sale, JMB/900 recognized a gain of approximately $54,000,000 and $77,000,000 for financial reporting and Federal income tax purposes, respectively. The Partnership's share of such items was approximately $35,900,000 and $51,400,000, respectively. As is customary in such transactions, JMB/900 agreed to certain representations, warranties and covenants with a stipulated survival period, which expired on September 15, 2000. As required by the sale agreement, Progress Partners had placed $2,000,000 into an escrow account as security for such representations, warranties, covenants and certain other costs. As a result of a claim made by the buyer under the sale contract, in September 2000, Progress Partners received only a portion, approximately $1,800,000, of such amount placed in escrow, plus interest earned thereon. Progress Partners was able to settle such claim with the buyer and the remaining amount (approximately $200,000) held in escrow, including interest earned thereon, was received by Progress Partners in the first quarter of 2001.
As Progress Partners had committed to a plan to sell or dispose of the property, the 900 Third Avenue Building was classified as held for sale or disposition as of July 1, 1998, and therefore, has not been subject to continued depreciation beyond such date for financial reporting purposes.
WELLS FARGO CENTER - SOUTH TOWER
In June 1985, the Partnership acquired an interest in a joint venture partnership ("South Tower") which owns a 44-story office building in Los Angeles, California. The joint venture partners of the Partnership included Carlyle-XIV ("Affiliated Partner"), one of the sellers of the interests in South Tower, and another unaffiliated venture partner.
The Partnership and the Affiliated Partner purchased their interests for $61,592,000. In addition, the Partnership and the Affiliated Partner made capital contributions to South Tower totaling $48,400,000 for general working capital requirements and certain other obligations of South Tower. The Partnership's share of the purchase price, capital contributions (net of additional financing) and interest thereon totaled $53,179,000.
The terms of the original South Tower partnership agreement generally provided that the Partnership and Affiliated Partner's aggregate share of the South Tower's annual cash flow, net sale or refinancing proceeds, and profits and losses be distributed or allocated to the Partnership and the Affiliated Partner in proportion to their aggregate capital contributions.
Annual cash flow was to be distributed 80% to the Partnership and Affiliated Partner and 20% to another partner until the Partnership and the Affiliated Partner received, in the aggregate, a cumulative preferred return of $8,050,000 per annum. The remaining cash flow was to be distributable 49.99% to the Partnership and the Affiliated Partner, and the balance to the other joint venture partners. Additional contributions to South Tower were contributed 49.99% by the Partnership and the Affiliated Partner until all partners had contributed $10,000,000 in aggregate.
Operating profits and losses, in general, were to be allocated 49.99% to the Partnership and the Affiliated Partner and the balance to the other joint venture partners. Substantially all depreciation and certain expenses paid from the Partnership's and Affiliated Partner's capital contributions were to be allocated to the Partnership and Affiliated Partner. In addition, operating profits, up to the amount of any annual cash flow distribution, were allocated to all partners in proportion to such distributions of annual cash flow.
In general, upon sale or refinancing of the property, net sale or refinancing proceeds were to be distributed 80% to the Partnership and the Affiliated Partner and 20% to another partner until the Partnership and the Affiliated Partner received the amount of any deficiency in their preferred return described above plus an amount equal to their "Disposition Preference" (which, in general, began at $120,000,000 and increased annually by $8,000,000 to a maximum of $200,000,000). Any remaining net sale or refinancing proceeds were to be distributed 49.99% to the Partnership and the Affiliated Partner and the remainder to the other partners.
The office building is being managed by an affiliate of one of the venture partners under a long-term agreement pursuant to which the affiliate is entitled to receive a monthly management fee of 2-1/2% of gross project income, a tenant improvement fee of 10% of the cost of tenant improvements, and commissions on new leases.
In the fourth quarter of 1996, South Tower reached an agreement with its lender to modify the mortgage note secured by the property, and the Partnership reached an agreement with its lender to modify the promissory note secured by the Partnership's interest in South Tower. In conjunction with the note modifications, South Tower was converted to a limited liability company with members' interests in the same ratio as the prior venture ownership interests. The conversion of the Partnership's interest to a member's interest in a limited liability company eliminated any potential additional obligation of the Partnership in the future to provide additional funds under the previous joint venture agreement. As a result, previously recognized losses of $10,620,944 have been reversed, and the Partnership's share of losses in 2000 and 1999 of approximately $3,112,000 and $3,629,000, respectively, were not recognized. The Partnership's share of income for financial reporting purposes (approximately $464,000 in 1998) has not been recognized as such income amount is not considered realizable.
The mortgage note secured by the property (with a balance, including accrued interest, of approximately $181,000,000 as of December 31, 2000), as extended, bears interest at 10% per annum and matures in September, 2003. All excess cash flow is being escrowed for future tenant improvements and principal payments. In addition, upon sale or refinancing of the property subsequent to September 1, 1999, the mortgage loan requires payment of participation interest (as defined) of any excess proceeds.
As modified, the amended and restated promissory note secured by the Partnership's interest in the limited liability company, which has an adjusted principal balance of approximately $40,835,000, and accrued interest of approximately $28,716,000 at December 31, 2000, is due September 2003. The note accrues interest at 17% per annum and requires payments of cash flow distributed by the limited liability company to the Partnership from either property operations or sales proceeds as well as a portion of the property management fee paid to the unaffiliated member in the limited liability company. The loan is nonrecourse and secured solely by the Partnership's interest in the limited liability company.
The lender has had discussions with the Partnership regarding the lender's rights to realize upon its security under the loan agreement secured by the Partnership's interest in the limited liability company. Accordingly, the lender may proceed to foreclose on the Partnership's interest in the limited liability company in 2001, which would trigger significant gain with no realizable proceeds.
JMB/125
In December 1985, the Partnership, through the JMB/125 joint venture partnership, acquired an interest in an existing joint venture partnership ("125 Broad") which owned 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 included O&Y 25 Realty Company L.P., Olympia & York Broad Street Holding Company L.P. (USA) and certain other affiliates of Olympia & York Development, Ltd. ("O&Y").
In November 1994, the Partnership through its indirect ownership of JMB/125 assigned its interest in the 125 Broad Street Building to an affiliate of the venture partners 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 under certain circumstances. In addition, JMB/125 received a release from any claims of certain O&Y affiliates and generally was to 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.
In October 1995, the makers of the promissory note payable to JMB/125 filed for protection from creditors under Chapter 11 of the Bankruptcy Code. JMB/125, as an unsecured creditor in a bankruptcy reorganization, received, among other things, limited partnership interests in a reorganized entity that had majority or controlling interests in six office buildings in New York, New York and Boston, Massachusetts. In December 1998, the limited partnership interests were sold back to the reorganized entity for $118,642 resulting in recognition of gain, of which the Partnership's share was $81,612, and JMB/125 was terminated.
JMB/NEWPARK
Pursuant to a liquidation agreement dated November 13, 1998, JMB/New Park and the venture partner dissolved NewPark Associates and distributed all of its assets to the joint venture partners. On November 18, 1998, JMB/NewPark sold its interest in the net assets of the NewPark Mall to the venture partner for $16,000,000 less brokerage commissions and closing costs of approximately $455,000. As a result of the sale, the Partnership recognized a gain for financial reporting purposes of approximately $7,656,000 in 1998, in part as a result of a previous impairment loss recognized by the Partnership of $3,780,000. The Partnership recognized a gain on sale of approximately $4,781,000 for Federal income tax purposes in 1998.
260 FRANKLIN
On January 2, 1998, 260 Franklin disposed of, through a trust, the land, building and related improvements of the 260 Franklin Street Building. 260 Franklin transferred title to the land, building and improvements, and other assets and liabilities related to the property in consideration of a discharge of the mortgage loan and receipt of $200 in cash. 260 Franklin recognized in 1998 gains in the aggregate of approximately $23,200,000 for financial reporting purposes, in part as a result of previous impairment losses recognized by the joint venture in 1996 aggregating $17,400,000, and an extraordinary gain on forgiveness of indebtedness of approximately $17,500,000 for financial reporting purposes, all of which is included in the consolidated financial statements of the Partnership. In addition, 260 Franklin recognized a gain of approximately $24,400,000 for Federal income tax reporting purposes, of which the Partnership's share was approximately $17,000,000, with no distributable proceeds in 1998. 260 Franklin and the Partnership have no future liability for any representations, warranties or covenants to the purchaser as a result of the disposal of the property.
OWINGS MILLS
In December 1985, the Partnership, through the JMB/Owings joint venture partnership, acquired an interest in an existing joint venture partnership ("Owings Mills") which owned an interest in an enclosed regional shopping center. JMB/Owings's original cash investment was $7,000,000, of which the Partnership's share was $3,500,000. On June 30, 1993, JMB/Owings sold its partnership interest in Owings Mills to an affiliate of JMB/Owing's joint venture partners.
The sale price of the interest was $9,416,000, all of which was received in the form of a promissory note. In addition, JMB/Owings was relieved of its allocated portion of the debt secured by the property. The promissory note (which was secured by a guaranty from an affiliate of the purchaser and a joint venture partner) bore interest at a rate of 7% per annum subject to increase to 8% per annum for the remainder of the term of the note. The promissory note required 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. On June 30, 1998, JMB/Ownings collected the remaining principal balance of the purchase price note of approximately $5,598,000, of which the Partnership's share was approximately of $2,800,000 and JMB/Ownings was subsequently terminated.
The net cash proceeds and gain from sale of the interest were allocated 50% to the Partnership and 50% to Carlyle Real Estate Limited Partnership - XVI in accordance with the JMB/Owings partnership agreement. For financial reporting purposes, JMB/Owings recognized, on the date of sale, gain of $5,254,855, of which the Partnership's share was $2,627,427, attributable to JMB/Owings being relieved of its obligations under the Owings Mills partnership agreement pursuant to the terms of the sale agreement. JMB/Owings had adopted the cost recovery method until such time as the purchaser's initial investment was sufficient in order to recognize additional gain under Statement of Financial Accounting Standards No. 66 ("SFAS #66"). JMB/Owings recognized $6,048,733 of deferred gain and $202,547 of interest income for the year ended December 31, 1998 of which the Partnership's share of deferred gain was $3,028,163 and the Partnership's share of interest income was $101,273.
LONG-TERM DEBT
Long-term debt consists of the following at December 31, 2000 and 1999:
2000 1999 ----------- ----------- 17.0% promissory note; secured by the Partnership's interest in the Wells Fargo Center South Tower office building in Los Angeles, California; principal and accrued interest due September 2003 . . $69,550,819 62,608,944 ----------- ------------ Total debt. . . . . . . . . . . . . . . 69,550,819 62,608,944 Less current portion of long-term debt . . . . . . . . . . -- -- ----------- ------------ Total long-term debt. . . . . . . . . . $69,550,819 62,608,944 =========== ============
Included in the above total long-term debt is $28,716,261 and $21,774,386 for 2000 and 1999, respectively, which represents interest accrued but not currently payable pursuant to the terms of the note.
Five year maturities of long-term debt are as follows:
2001 . . . . . . . $ -- 2002 . . . . . . . -- 2003 . . . . . . . 69,550,819 2004 . . . . . . . -- 2005 . . . . . . . --
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 dispositions of investment properties are 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 dispositions (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 are allocated 1% to the General Partners. The remaining sale or other disposition profits and losses are allocated to the Holders of Interests.
The General Partners are not required to make any additional capital contributions except under certain limited circumstances upon termination of the Partnership. "Net cash receipts" from operations of the Partnership will be allocated 90% to the Holders of Interests and 10% to the General Partners (of which 6.25% constitutes a management fee to the Corporate General Partner for services in managing the Partnership).
The Partnership Agreement provides that subject to certain conditions, the General Partners shall receive as a distribution of the proceeds (net after expenses and liabilities and retained working capital) from the sale or refinancing of an investment property by the Partnership of up to 3% of the selling price for any property sold, and that the remaining proceeds be distributed 85% to the Holders of Interests and 15% to the General Partners. However, prior to such distribution being made, the Holders of Interests are entitled to receive 99% and the General Partners l% of net sale or refinancing proceeds until the Holders of Interests (i) have received cash distributions of "sale proceeds" or "refinancing proceeds" in an amount equal to the Holders' aggregate initial capital investment in the Partnership and (ii) have received cumulative cash distributions from the Partnership's operations which, when combined with "sale proceeds" or "refinancing proceeds" previously distributed, equal a 6% annual return on
the Holders' average capital investment for each year (their initial capital investment as reduced by "sale proceeds" or "refinancing proceeds" previously distributed) commencing with the third fiscal quarter of 1986. The Holders of Interests have not yet received and are not expected to receive cash distributions of net sale or refinancing proceeds in an amount equal to their initial capital investment in the Partnership. If upon the completion of the liquidation of the Partnership and the distribution of all Partnership funds, the Holders of Interests have not received the amounts in (i) and (ii) above, the General Partners will be required to return all or a portion of the 1% distribution of net sale or refinancing proceeds described above up to an amount equal to such deficiency in payments to the Holders of Interests pursuant to (i) and (ii) above. As of the date of this report, the General Partners have received net sale or refinancing proceeds aggregating $170,311 which will be refunded upon completion of the liquidation of the Partnership.
NOTES RECEIVABLE
In 1987 and 1988, the Partnership advanced funds to pay for certain deficits at the 21900 Burbank Boulevard Building which were the obligation of an affiliate of the seller. Such advances, including unpaid interest, were approximately $2,313,000. The Partnership received demand notes from the seller, which were personally guaranteed by certain of its principals. The seller had been paying interest on the note at a rate equal to 3% over the prime rate. In February 1991, the seller ceased paying monthly interest required under terms of the note. The Partnership put the seller in default and effective October 31, 1991, the notes began accruing interest at the default rate. During 1994, two of the principals which guaranteed the notes became subject to Chapter 7 bankruptcy proceedings. Subsequently, these individuals' obligations, including their obligations under the notes, were discharged. Previously, it appeared that the principals guaranteeing the notes had little or no assets which the Partnership could pursue for collection and it appeared unlikely that any further amounts would be collected. As a matter of prudent accounting policy, a reserve for uncollectibility for the entire amount had been recorded for financial reporting purposes. In July 1998, the Partnership received final collection, from bankruptcy proceeds, toward the notes in the amount of $785,998. Therefore, such amount was recognized in income as of December 31, 1998.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted to engage in various transactions involving the Corporate General Partner and its affiliates including the reimbursement for salaries and salary- related expenses of its employees, certain of its officers, and other direct expenses relating to the administration of the Partnership and the operation of the Partnership's investments. Fees, commissions and other expenses required to be paid by the Partnership to the General Partners and their affiliates as of December 31, 2000, 1999 and 1998 are as follows:
UNPAID AT DECEMBER 31, 2000 1999 1998 2000 ---------- ------- -------- ------------ Management fees to corporate general partner . . . . . . . . . .$1,539,569 -- 708,497 -- Insurance commissions. . . . 7,767 2,739 1,706 -- Reimbursement (at cost) for accounting services . . 23,151 2,759 15,520 6,089 Reimbursement (at cost) for portfolio manage- ment services . . . . . . . 43,329 110,540 74,307 3,701 Reimbursement (at cost) for legal services. . . . . 20,197 22,027 15,368 4,389 Reimbursement (at cost) for administrative charges and other out-of-pocket expenses. . . 1,142 -- 17,153 -- ---------- ------- --------- -------- $1,635,155 138,065 832,551 14,179 ========== ======= ========= ========
Through November of 1994, certain of the properties owned by the Partnership's consolidated and unconsolidated ventures were managed by an affiliate of the Corporate General Partner. Included in accounts payable are amounts due to affiliates of $1,732,968 at December 31, 1999 which consist of management fees and leasing commissions and advances repayable to affiliates of the General Partners (discussed below). Payments to affiliates of the Corporate General Partner for the advances in the amount of $675,876 were made in February 2000 to reduce the liability. The cumulative deferred amounts do not bear interest. An affiliate of the General Partners was entitled to payment of property management and leasing fees relating to 260 Franklin through November 1994. Pursuant to a loan modification for the property, property management and leasing fees were required to be escrowed through December 1995. Upon the sale of the 260 Franklin Street building, the Partnership recorded a liability for a prorata share of the unpaid fees. As of December 31, 2000, the obligation to pay the remaining $1,057,092 of management and leasing fees was released. Such fees were written off as of that date, and are no longer reflected in the 2000 consolidated balance sheet.
The affiliate also managed Piper Jaffray Tower prior to December 1994, and pursuant to the terms of a loan modification, agreed to defer receipt of its property management fees earned of approximately $1,839,000 (of which the Partnership's share is approximately $919,500) and receive payment thereof out of the amount available, if any, from the escrow of the management fees, which had been required by the lender. However, in conjunction with the default under the mortgage loan and the subsequent appointment of the receiver for the Piper Jaffray Tower, the escrowed funds were applied to the outstanding principal balance of the mortgage loan, and the obligation to pay such deferred fees was released. As a result, such amounts were written off and are no longer reflected in the unconsolidated venture's balance sheet at December 31, 2000.
Effective January 1, 1994, certain officers and directors of the Corporate General Partner acquired interests in a company which, among other things, had provided management services to Erie McClurg Park Facility (sold in September 1992). In connection with the sale of Erie McClurg, a management termination agreement was reached which required the Partnership to make monthly payments to such company through 2010. Such acquisition had no effect on the fees payable by the Partnership under any existing agreements with such company. The Partnership disputed the amounts due under such management termination agreement. Effective September 29, 1999, the Partnership and such company executed a new termination agreement whereby the Partnership agreed to pay a $659,028 termination fee in full satisfaction of all previous and future amounts due
through 2010 under the original termination agreement. Such amount was determined primarily by estimating the future annual payments through September 2010 to become due to such company under the original termination agreement and discounting them to a present value at a 10% per annum rate. At the time the new termination agreement was entered into, officers and directors of the Corporate General Partner owned in the aggregate an approximate 5% indirect interest in such company.
INVESTMENT IN UNCONSOLIDATED VENTURES
Summary financial information for Wells Fargo Center - South Tower, JMB/Piper and JMB/Piper II JMB/900 (no longer an unconsolidated venture as of March 1999, the venture partner interest purchase date) for the years ended 2000 and 1999 follows is as: 2000 1999 ------------ ------------
Current assets . . . . . . . . . . . $ 9,698,405 9,545,029 Current liabilities. . . . . . . . . (17,413,229) (15,061,291) ------------ ------------ Working capital (deficit). . . . (7,714,824) (5,516,262) ------------ ------------ Other assets . . . . . . . . . . . . 34,542,162 30,904,880 Deferred expenses. . . . . . . . . . 6,623,036 6,723,036 Investment properties, net . . . . . 211,915,769 214,368,430 Other liabilities. . . . . . . . . . (204,699) (17,392) Long-term debt . . . . . . . . . . . (267,747,093) (275,359,348) Venture partners' equity (deficit) . (1,864,141) 6,693,183 ------------ ------------ Partnership's capital (deficit). $(24,449,790) (22,203,473) ============ ============ Represented by: Invested capital . . . . . . . . . $111,275,212 111,275,212 Cumulative distributions . . . . . (40,508,173) (40,483,173) Cumulative losses. . . . . . . . . (95,216,829) (92,995,512) ------------ ------------ $(24,449,790) (22,203,473) ============ ============ Total income . . . . . . . . . . . . $ 51,131,706 48,783,628 Expenses applicable to operating earnings . . . . . . . . 56,204,699 66,346,587 ------------ ------------ Net earnings (loss). . . . . . . . . $ (5,072,993) (17,562,959) ============ ============
Total income and net income (loss) for 2000 includes income of $5,394,954 related to the write off of deferred property management fees at the Piper Jaffray Tower.
The total income, expenses applicable to operating earnings and net earnings (loss) for the above ventures for the year ended December 31, 1998 were $48,783,628, $66,346,587 and $(17,562,959), respectively.
During 1996, as a result of the restructuring at Wells Fargo Center - South Tower, the Partnership reversed previously recognized losses from the unconsolidated venture. The Partnership's capital (deficit) in Wells Fargo Center - South Tower differs from its investment in the unconsolidated venture as reflected in the accompanying financial statements due to the Partnership's 1996 reversal of previously recognized losses. The Partnership's shares of loss (approximately $3,112,000 and $3,629,000) were not recognized in 2000 and 1999, respectively. The 1998 share of income from Wells Fargo Center - South Tower (approximately $464,000) has not been recognized as such income amount is not considered realizable.
SUPPLEMENTARY QUARTERLY DATA (UNAUDITED)
----------------------------------------------- At 3/31 At 6/30 At 9/30 At 12/31 ----------- ---------- ---------- ---------- Total income . . . . . . .$ 973,314 380,212 403,924 1,299,851 =========== ========== ========== ==========
Earnings (loss) before extraordinary items. . .$(2,896,354) (2,036,409) (494,876) (679,328) Extraordinary items. . . . -- -- -- -- ----------- ---------- ---------- ---------- Net earnings (loss). . . .$(2,896,354) (2,036,409) (494,876) (679,328) =========== ========== ========== ========== Net earnings (loss) per Interest: Earnings (loss) before extraordinary items . .$ (6.27) (4.41) (1,07) (1.50) Extraordinary item . . . -- -- -- -- ----------- ---------- ---------- ---------- Net earnings (loss). . . . . . .$ (6.27) (4.41) (1.07) (1.50) =========== ========== ========== ==========
----------------------------------------------- At 3/31 At 6/30 At 9/30 At 12/31 ----------- ---------- ---------- ---------- Total income . . . . . . .$ 8,585,229 8,536,264 8,838,796 5,877,653 =========== ========== ========== ========== Earnings (loss) before gain (losses) on sale of investment proper- ties and extraordinary items . . . . . . . . . .$(1,338,083) (826,642) (3,742,684) (2,014,266) Gains (losses) on sale of investment proper- ties. . . . . . . . . . . -- -- -- 59,322,688 Extraordinary items. . . . -- -- -- (3,989,364) ----------- ---------- ---------- ---------- Net earnings (loss). . . .$(1,338,083) (826,642) (3,742,684) 53,319,058 =========== ========== ========== ========== Net earnings (loss) per Interest: Earnings (loss) before gain (losses) on sale of investment proper- ties and extraordinary items . . . . . . . . .$ (2.90) (1.78) (8.10) (4.36) Gains (losses) on sale of investment proper- ties. . . . . . . . . . -- -- -- 132.40 Extraordinary items. . . -- -- -- (8.90) ----------- ---------- ---------- ---------- Net earnings (loss). . . . . . .$ (2.90) (1.78) (8.10) 119.14 =========== ========== ========== ==========
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with accountants during fiscal years 2000 and 1999.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership is JMB Realty Corporation ("JMB"), a Delaware corporation. Substantially all of the outstanding shares of JMB are owned, directly or indirectly, by certain of its officers, directors, members of their families and their affiliates. JMB, as the Corporate General Partner, has responsibility for all aspects of the Partnership's operations, subject to the requirement that purchases and sales of real property must be approved by the Associate General Partner, ABPP Associates, L.P., an Illinois limited partnership with JMB as its sole general partner. The limited partners of the Associate General Partner are generally current or former officers and directors of JMB and their affiliates.
The Partnership is subject to certain conflicts of interest arising out of its relationships with the General Partners and their affiliates as well as the fact that the General Partners and their affiliates are engaged in a range of real estate activities. Certain services have been and may in the future be provided to the Partnership or its investment properties by affiliates of the General Partners, including property management, insurance brokerage and administrative 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 or its investment properties 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 and the determination of the sources (i.e., from offering proceeds, cash generated from operations or sale proceeds) and uses or distribution of such reserves, the timing of expenditures and the allocation of certain tax items under the Partnership Agreement, the General Partners may have a conflict of interest with respect to such determinations.
The names, positions held and length of service therein of each director and the executive 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 Chief Financial Officer 2/22/96 Neil G. Bluhm President 5/03/71 Director 5/03/71 Burton E. Glazov Director 7/01/71 Stuart C. Nathan Executive Vice President 5/08/79 Director 3/14/73 A. Lee Sacks Director 5/09/88 John G. Schreiber Director 3/14/73 H. Rigel Barber Chief Executive Officer 8/01/93 Executive Vice President 1/02/87 Gary Nickele Executive Vice President 1/01/92 General Counsel 2/27/84 Gailen J. Hull Senior Vice President 6/01/88
Effective May 31, 1996, the Board of Directors of JMB established a special committee, consisting of Messrs. Malkin, Glazov, Nathan, Sacks and Schreiber, to deal with all matters relating to tender offers for Interests.
There is no family relationship among any of the foregoing directors or officers. The foregoing directors have been elected to serve a one-year term until the annual meeting of the Corporate General Partner to be held on June 5, 2001. 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 5, 2001. 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-XIII ("Carlyle-XIII") and Carlyle Real Estate Limited Partnership-XIV ("Carlyle-XIV") and the managing general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"). JMB is also the sole general partner of the associate general partner of Carlyle-XIII and Carlyle-XIV. Most of the foregoing officers and directors are also officers and/or directors of various affiliated companies of JMB. Most of such directors and officers are also partners, directly or indirectly, in the associate general partner in the Partnership Carlyle-XIII and Carlyle-XIV.
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 includes the following:
Judd D. Malkin (age 63) is an individual general partner of JMB Income-V. Mr. Malkin has been associated with JMB since October, 1969. Mr. Malkin was also Co-Chairman of the Board of Directors of Urban Shopping Centers, Inc. from its inception in 1993 until November 2000. He is also a director of Chisox Corporation, which is the general partner of a limited partnership that owns the Chicago White Sox, a Major League Baseball team, and a director of CBLS, Inc., which is the general partner of the general partner of a limited partnership that owns the Chicago Bulls, a National Basketball Association team.
Neil G. Bluhm (age 63) is an individual general partner of JMB Income-V. Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm is also a principal of Walton Street Capital, L.L.C., which sponsors real estate investment funds. He was also a Co-Chairman of the Board of Directors of Urban Shopping Centers, Inc. from its inception in 1993 until November 2000. He is a member of the Bar of the State of Illinois.
Burton E. Glazov (age 62) has been associated with JMB since June, 1971 and served as an Executive Vice President of JMB until December 1990. Mr. Glazov is currently retired. He is a member of the Bar of the State of Illinois.
Stuart C. Nathan (age 59) has been associated with JMB since July, 1972. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 67) has been associated with JMB since December, 1972. He is also President and a director of JMB Insurance Agency, Inc.
John G. Schreiber (age 54) has been associated with JMB since December, 1970. Mr. Schreiber is President of Centaur Capital Partners, Inc., a family investment firm. He is also senior advisor and partner of Blackstone Real Estate Advisors, L.P., which manages large real estate private equity funds. Mr. Schreiber is a trustee of AMLI Residential Properties Trust and a director of Host Marriott Corporation, as well as a number of mutual funds advised by T. Rowe Price Associates, Inc. He is also a director of The Brickman Group, Ltd. From February 1995 until November 2000, Mr. Schreiber was a director of Urban Shopping Centers, Inc.
Prior to his retirement as an officer of JMB in 1990, Mr. Schreiber was Chairman of JMB/Urban Development Co. from its inception in 1988 until 1990 and an Executive Vice president of JMB from 1979 to 1990. He received an M.B.A. from Harvard University Graduate School of Business in 1970.
H. Rigel Barber (age 52) 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.
Gary Nickele (age 48) has been associated with JMB since February, 1984. He holds a J.D. degree from the University of Michigan Law School and is a member of the Bar of the State of Illinois.
Gailen J. Hull (age 52) 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.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. 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 Holders of Interests, and a share of profits or losses. Reference is also made to the Notes for a description of such transactions, distributions and allocations. During 2000, the General Partners received cash distributions from operations of $923,742, and the Corporate General Partner was paid a partnership management fee in the amount of $1,539,569. For 2000, the General Partners were allocated losses for Federal income tax purposes of approximately $157,000. Such allocation of losses may benefit the General Partners or the partners thereof to the extent that such losses may offset their taxable income from the Partnership or other sources.
If upon completion of the liquidation and the distribution of all Partnership funds, the Holders of Interests have not received a specified amount of net sale or refinancing proceeds, the General Partners will be required to return the net sale or refinancing proceeds received by them, $170,311 as of the date of this report. The Holders of Interests are not expected to receive the specified amount of net sale or refinancing proceeds. Accordingly, it is expected that the General Partners will be required to return the amount of net sale or refinancing proceeds received by them upon completion of the liquidation of the Partnership.
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.
Through November of 1994, certain of the properties owned by the Partnership's consolidated and unconsolidated ventures were managed by an affiliate of the Corporate General Partner. Included in accounts payable are amounts due to affiliates of $1,732,968 at December 31, 1999 which consist of management fees and leasing commissions and advances repayable to affiliates of the General Partners (discussed below). Payments to affiliates of the Corporate General Partner for the advances in the amount of $675,876 were made in February 2000 to reduce the liability. The cumulative deferred amounts do not bear interest. An affiliate of the General Partners was entitled to payment of property management and leasing fees relating to 260 Franklin through November 1994. Pursuant to a loan modification for the property, property management and leasing fees were required to be escrowed through December 1995. Upon the sale of the 260 Franklin Street building, the Partnership recorded a liability for a prorata share of the unpaid fees. As of December 31, 2000, the obligation to pay the remaining $1,057,092 of management and leasing fees was released. Such fees were written off as of that date, and are no longer reflected in the 2000 consolidated balance sheet.
The affiliate also managed Piper Jaffray Tower prior to December 1994, and pursuant to the terms of a loan modification, agreed to defer receipt of its property management fees earned of approximately $1,839,000 (of which the Partnership's share is approximately $919,500) and receive payment thereof out of the amount available, if any, from the escrow of the management fees, which had been required by the lender. However, in conjunction with the default under the mortgage loan and the subsequent appointment of the receiver for the Piper Jaffray Tower, the escrowed funds were applied to the outstanding principal balance of the mortgage loan, and the obligation to pay such deferred fees was released. As a result, such amounts were written off and are no longer reflected in the unconsolidated venture's balance sheet at December 31, 2000.
JMB Insurance Agency, Inc., an affiliate of the Corporate General Partner, earned and received insurance brokerage commissions in 2000 aggregating $7,767 in connection with the provision of professional liability insurance coverage for 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 operation of the Partnership's real property investments. In 2000, $1,142 of out-of-pocket expenses were incurred by the General Partner or its affiliates.
Additionally, the General Partners are also entitled to reimbursements of salaries and salary-related expenses for administrative, legal, accounting and portfolio management services. Such costs for 2000 were $86,677, of which $14,179 was unpaid as of December 31, 2000. Reference is made to the Notes.
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-A. Amended and Restated Agreement of Limited Partnership, is hereby incorporated by reference to Exhibit 3 to the Partnership's Form 10-K (File No. 0-16111) for December 31, 1992 dated March 19, 1993.
3-B. Acknowledgement of rights and duties of the General Partners of the Partnership between ABPP Associates, L.P. (a Successor Associated General Partner of the Partnership), and JMB Realty Corporation as of December 31, 1995 is incorporated herein by reference to the Partnership's Report on Form 10-Q (File No. 0-1611) for September 30, 1996 dated November 8, 1996.
4-A. Assignment Agreement set forth as Exhibit B to the Prospectus is hereby incorporated herein by reference to Exhibit 4-A to the Partnership's Report on Form 10-K (File No. 0-16111) for December 31, 1992 dated March 19, 1993.
4-B. Documents relating to the modification of the mortgage loan secured by 260 Franklin Street Building are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) for December 31, 1992 dated March 19, 1993.
4-C. Documents relating to the modification and extension of the mortgage loan secured by Wells Fargo-South Tower are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
4-D. Amended and restated promissory note between Wells Fargo Bank and the Partnership is hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
4-E. Loan modification agreement of Wells Fargo Bank is hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
10-A. Acquisition documents relating to the purchase by the Partnership of an interest in the Piper Jaffray Tower in Minneapolis, Minnesota, are hereby incorporated herein by reference to the Partnership's Registration Statement on Form S-11 (File No. 2-95382) dated January 18, 1985.
10-B. Acquisition documents relating to the purchase by the Partnership of an interest in the Crocker Center South Tower in Los Angeles, California, are hereby incorporated herein by reference to the Partnership's Registration Statement on Amendment No. 2 to Form S-11 (File No. 2-95382) dated July 5, 1985.
10-C. Acquisition documents relating to the purchase by the Partnership of an interest in the California Plaza office building in Walnut Creek, California are hereby incorporated herein by reference to the Partnership's Registration Statement on Post-Effective Amendment No. 5 to Form S-11 dated July 31, 1986.
10-D. Documents relating to the modification of the mortgage loan secured by California Plaza are hereby incorporated herein by reference to the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-16111) dated March 28, 1994.
10-E. Documents relating to the extension of the mortgage loan secured by the 900 Third Building are incorporated herein by reference to the Partnership's report for December 31, 1994 on Form 10-K (File No. 0-16111) dated March 27, 1995.
10-F. Modification to Reserve Escrow Agreement relating to the 260 Franklin Street Building is hereby incorporated by reference to the Partnership's Report for June 30, 1995 on Form 10-Q (File No. 0-16111) dated August 9, 1995.
10-G. Documents relating to the operating agreement of Maguire Thomas Partners-South Tower, L.L.C. are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
10-H. Modification to Reserve Escrow Agreement dated December 4, 1996 relating to the 260 Franklin Street Building dated December 4, 1996 are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
10-I. Modification to Reserve Escrow Agreement relating to the 260 Franklin Street building dated May 22, 1997 is hereby incorporated herein by reference to the Partnership's Report for June 30, 1997 on Form 10-Q (File No. 0-16111) dated August 8, 1997.
10-J. Purchase Agreement between C-C California Plaza Partnership and California Plaza at Walnut Creek, Inc. entered into as of December 16, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated December 23, 1999.
10-K. Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated July 27, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated November 17, 1999.
10-L. Amendment to Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated September 17, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated November 17, 1999.
10-M. Second Amendment to the Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated October 20, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated November 17, 1999.
10-N. Third Amendment to the Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated November 2, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated November 17, 1999.
10-O. Assignment of Partnership Interest between Federal Deposit Insurance Corporation and 14-15 Office Associates, L.P., dated March 10, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-P. Assignment of Partnership Interest between P-C 900 Third Associates and 14-15 Office Associates, L.P. and 900 3rd Avenue Associates, dated March 22, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-Q. Assignment of Partnership Interest between 900 Realty, LLC and 900 3rd Avenue Associates dated March 22, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-R. Amendment No. 2 to Amended and Restated Agreement of General Partnership for Progress Partners dated March 17, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-S. Amendment No. 3 to Amended and Restated Agreement of General Partnership for Progress Partners dated March 22, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-T. Settlement Agreement and Release between Progress Properties, Inc., J.R.A. Realty Corporation, P-C 900 Third Associates, 900 Realty LLC and 900 3rd Avenue Associates dated March 17, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-U. Stipulation Agreement, dated July 20, 2000 between Teachers Insurance and Annuity Association of America (Plaintiff) and 222 S. Ninth Street Limited Partnership, et al. (Defendants) is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated November 10, 2000.
21. List of Subsidiaries.
24. Powers of Attorney.
-----------------
(b) No reports on Form 8-K were filed since the beginning of the last quarter of the period covered by this report.
No annual report for the fiscal year 2000 or proxy material has been sent to the Partners of the Partnership. An annual report will be sent to the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange 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 - XV
By: JMB Realty Corporation Corporate General Partner
GAILEN J. HULL By: Gailen J. Hull Senior Vice President Date: March 23, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation Corporate General Partner
JUDD D. MALKIN* By: Judd D. Malkin, Chairman and Chief Financial Officer Date: March 23, 2001
NEIL G. BLUHM* By: Neil G. Bluhm, President and Director Date: March 23, 2001
H. RIGEL BARBER* By: H. Rigel Barber, Chief Executive Officer Date: March 23, 2001
GAILEN J. HULL By: Gailen J. Hull, Senior Vice President Principal Accounting Officer Date: March 23, 2001
A. LEE SACKS* By: A. Lee Sacks, Director Date: March 23, 2001
STUART C. NATHAN* By: Stuart C. Nathan, Executive Vice President and Director Date: March 23, 2001
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL By: Gailen J. Hull, Attorney-in-Fact Date: March 23, 2001
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV EXHIBIT INDEX
Document Incorporated By Reference Page ------------ ----
3-A. Amended and Restated Agreement Yes of Limited Partnership of the Partnership, included as Exhibit A to the Partnership's Prospectus dated July 5, 1985.
3-B. Acknowledgement of Rights and Dates of General Partners Yes
4-A. Assignment Agreement, included as Yes Exhibit B to the Partnership's Prospectus dated July 5, 1985.
4-B. Documents relating to the modification of the mortgage loan secured by the 260 Franklin Street Building Yes
4-C. Documents relating to the modifica- tion and extension of the mortgage loan secured by Wells Fargo- South Tower Yes
4-D. Amended and restated promissory note of Wells Fargo Bank Yes
4-E. Loan modification agreement of Wells Fargo Bank Yes
10-A. Acquisition documents relating to the purchase by the Partnership of an interest in the Piper Jaffray Tower in Minneapolis, Minnesota Yes
10-B. Acquisition documents relating to the purchase by the Partnership of an interest in the Crocker Center South Tower in Los Angeles, California Yes
10-C. Acquisition documents relating to the purchase by the Partnership of an interest in the California Plaza office building in Walnut Creek, California Yes
10-D. Documents relating to the modification of the mortgage loan secured by California Plaza Yes
10-E. Documents relating to the extension of the mortgage loan secured by the 900 Third Building Yes
10-F Modification to Reserve Escrow Agreement relating to the 260 Franklin Street Building Yes
Document Incorporated By Reference Page ------------ ----
10-G. Documents relating to the operating agreement of Maguire Thomas Partners-South Tower, L.L.C. Yes
10-H. Modification to Reserve Escrow Agreement dated December 4, 1996 relating to the 260 Franklin Street Building Yes
10-I. Modification to Reserve Escrow Agreement relating to the 260 Franklin Street building dated May 22, 1997 Yes
10-J. Purchase Agreement between C-C California Plaza Partnership and California Plaza at Walnut Creek, Inc. entered into as of December 16, 1999 Yes
10-K. Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated July 27, 1999 Yes
10-L. Amendment to Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated September 17, 1999 Yes
10-M. Second Amendment to the Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated October 20, 1999 Yes
10-N. Third Amendment to the Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated November 2, 1999 Yes
10-O. Assignment of Partnership Interest between Federal Deposit Insurance Corporation and 14-15 Office Associates, L.P., dated March 10, 1999 Yes
10-P. Assignment of Partnership Interest between P-C 900 Third Associates and 14-15 Office Associates, L.P. and 900 3rd Avenue Associates, dated March 22, 1999 Yes
10-Q. Assignment of Partnership Interest between 900 Realty, LLC and 900 3rd Avenue Associates dated March 22, 1999 Yes
10-R. Amendment No. 2 to Amended and Restated Agreement of General Partnership for Progress Partners dated March 17, 1999 Yes
10-S. Amendment No. 3 to Amended and Restated Agreement of General Partnership for Progress Partners dated March 22, 1999 Yes
Document Incorporated By Reference Page ------------ ----
10-T. Settlement Agreement and Release between Progress Properties, Inc., J.R.A. Realty Corporation, P-C 900 Third Associates, 900 Realty LLC and 900 3rd Avenue Associates dated March 17, 1999 Yes
10-U. Stipulation Agreement between Teachers Insurance and Annuity Association of America and 222 S. Ninth Street Limited Partnership, et al. dated July 20, 2000 Yes
21. List of Subsidiaries No
24. Powers of Attorney No
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.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements filed with this annual report).
(2) Exhibits.
3-A. Amended and Restated Agreement of Limited Partnership, is hereby incorporated by reference to Exhibit 3 to the Partnership's Form 10-K (File No. 0-16111) for December 31, 1992 dated March 19, 1993.
3-B. Acknowledgement of rights and duties of the General Partners of the Partnership between ABPP Associates, L.P. (a Successor Associated General Partner of the Partnership), and JMB Realty Corporation as of December 31, 1995 is incorporated herein by reference to the Partnership's Report on Form 10-Q (File No. 0-1611) for September 30, 1996 dated November 8, 1996.
4-A. Assignment Agreement set forth as Exhibit B to the Prospectus is hereby incorporated herein by reference to Exhibit 4-A to the Partnership's Report on Form 10-K (File No. 0-16111) for December 31, 1992 dated March 19, 1993.
4-B. Documents relating to the modification of the mortgage loan secured by 260 Franklin Street Building are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) for December 31, 1992 dated March 19, 1993.
4-C. Documents relating to the modification and extension of the mortgage loan secured by Wells Fargo-South Tower are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
4-D. Amended and restated promissory note between Wells Fargo Bank and the Partnership is hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
4-E. Loan modification agreement of Wells Fargo Bank is hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
10-A. Acquisition documents relating to the purchase by the Partnership of an interest in the Piper Jaffray Tower in Minneapolis, Minnesota, are hereby incorporated herein by reference to the Partnership's Registration Statement on Form S-11 (File No. 2-95382) dated January 18, 1985.
10-B. Acquisition documents relating to the purchase by the Partnership of an interest in the Crocker Center South Tower in Los Angeles, California, are hereby incorporated herein by reference to the Partnership's Registration Statement on Amendment No. 2 to Form S-11 (File No. 2-95382) dated July 5, 1985.
10-C. Acquisition documents relating to the purchase by the Partnership of an interest in the California Plaza office building in Walnut Creek, California are hereby incorporated herein by reference to the Partnership's Registration Statement on Post-Effective Amendment No. 5 to Form S-11 dated July 31, 1986.
10-D. Documents relating to the modification of the mortgage loan secured by California Plaza are hereby incorporated herein by reference to the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-16111) dated March 28, 1994.
10-E. Documents relating to the extension of the mortgage loan secured by the 900 Third Building are incorporated herein by reference to the Partnership's report for December 31, 1994 on Form 10-K (File No. 0-16111) dated March 27, 1995.
10-F. Modification to Reserve Escrow Agreement relating to the 260 Franklin Street Building is hereby incorporated by reference to the Partnership's Report for June 30, 1995 on Form 10-Q (File No. 0-16111) dated August 9, 1995.
10-G. Documents relating to the operating agreement of Maguire Thomas Partners-South Tower, L.L.C. are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
10-H. Modification to Reserve Escrow Agreement dated December 4, 1996 relating to the 260 Franklin Street Building dated December 4, 1996 are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-16111) dated March 21, 1997.
10-I. Modification to Reserve Escrow Agreement relating to the 260 Franklin Street building dated May 22, 1997 is hereby incorporated herein by reference to the Partnership's Report for June 30, 1997 on Form 10-Q (File No. 0-16111) dated August 8, 1997.
10-J. Purchase Agreement between C-C California Plaza Partnership and California Plaza at Walnut Creek, Inc. entered into as of December 16, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated December 23, 1999.
10-K. Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated July 27, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated November 17, 1999.
10-L. Amendment to Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated September 17, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated November 17, 1999.
10-M. Second Amendment to the Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated October 20, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated November 17, 1999.
10-N. Third Amendment to the Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated November 2, 1999 is hereby incorporated by reference to the Partnership's Report on Form 8-K (File No. 0-16111) dated November 17, 1999.
10-O. Assignment of Partnership Interest between Federal Deposit Insurance Corporation and 14-15 Office Associates, L.P., dated March 10, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-P. Assignment of Partnership Interest between P-C 900 Third Associates and 14-15 Office Associates, L.P. and 900 3rd Avenue Associates, dated March 22, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-Q. Assignment of Partnership Interest between 900 Realty, LLC and 900 3rd Avenue Associates dated March 22, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-R. Amendment No. 2 to Amended and Restated Agreement of General Partnership for Progress Partners dated March 17, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-S. Amendment No. 3 to Amended and Restated Agreement of General Partnership for Progress Partners dated March 22, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-T. Settlement Agreement and Release between Progress Properties, Inc., J.R.A. Realty Corporation, P-C 900 Third Associates, 900 Realty LLC and 900 3rd Avenue Associates dated March 17, 1999 is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated May 12, 1999.
10-U. Stipulation Agreement, dated July 20, 2000 between Teachers Insurance and Annuity Association of America (Plaintiff) and 222 S. Ninth Street Limited Partnership, et al. (Defendants) is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-16111) dated November 10, 2000.
21. List of Subsidiaries.
24. Powers of Attorney.
-----------------
(b) No reports on Form 8-K were filed since the beginning of the last quarter of the period covered by this report.
No annual report for the fiscal year 2000 or proxy material has been sent to the Partners of the Partnership. An annual report will be sent to the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange 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 - XV
By: JMB Realty Corporation Corporate General Partner
GAILEN J. HULL By: Gailen J. Hull Senior Vice President Date: March 23, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation Corporate General Partner
JUDD D. MALKIN* By: Judd D. Malkin, Chairman and Chief Financial Officer Date: March 23, 2001
NEIL G. BLUHM* By: Neil G. Bluhm, President and Director Date: March 23, 2001
H. RIGEL BARBER* By: H. Rigel Barber, Chief Executive Officer Date: March 23, 2001
GAILEN J. HULL By: Gailen J. Hull, Senior Vice President Principal Accounting Officer Date: March 23, 2001
A. LEE SACKS* By: A. Lee Sacks, Director Date: March 23, 2001
STUART C. NATHAN* By: Stuart C. Nathan, Executive Vice President and Director Date: March 23, 2001
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL By: Gailen J. Hull, Attorney-in-Fact Date: March 23, 2001
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV EXHIBIT INDEX
Document Incorporated By Reference Page ------------ ----
3-A. Amended and Restated Agreement Yes of Limited Partnership of the Partnership, included as Exhibit A to the Partnership's Prospectus dated July 5, 1985.
3-B. Acknowledgement of Rights and Dates of General Partners Yes
4-A. Assignment Agreement, included as Yes Exhibit B to the Partnership's Prospectus dated July 5, 1985.
4-B. Documents relating to the modification of the mortgage loan secured by the 260 Franklin Street Building Yes
4-C. Documents relating to the modifica- tion and extension of the mortgage loan secured by Wells Fargo- South Tower Yes
4-D. Amended and restated promissory note of Wells Fargo Bank Yes
4-E. Loan modification agreement of Wells Fargo Bank Yes
10-A. Acquisition documents relating to the purchase by the Partnership of an interest in the Piper Jaffray Tower in Minneapolis, Minnesota Yes
10-B. Acquisition documents relating to the purchase by the Partnership of an interest in the Crocker Center South Tower in Los Angeles, California Yes
10-C. Acquisition documents relating to the purchase by the Partnership of an interest in the California Plaza office building in Walnut Creek, California Yes
10-D. Documents relating to the modification of the mortgage loan secured by California Plaza Yes
10-E. Documents relating to the extension of the mortgage loan secured by the 900 Third Building Yes
10-F Modification to Reserve Escrow Agreement relating to the 260 Franklin Street Building Yes
Document Incorporated By Reference Page ------------ ----
10-G. Documents relating to the operating agreement of Maguire Thomas Partners-South Tower, L.L.C. Yes
10-H. Modification to Reserve Escrow Agreement dated December 4, 1996 relating to the 260 Franklin Street Building Yes
10-I. Modification to Reserve Escrow Agreement relating to the 260 Franklin Street building dated May 22, 1997 Yes
10-J. Purchase Agreement between C-C California Plaza Partnership and California Plaza at Walnut Creek, Inc. entered into as of December 16, 1999 Yes
10-K. Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated July 27, 1999 Yes
10-L. Amendment to Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated September 17, 1999 Yes
10-M. Second Amendment to the Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated October 20, 1999 Yes
10-N. Third Amendment to the Agreement of Purchase and Sale between Progress Partners and Paramount Group, Inc. dated November 2, 1999 Yes
10-O. Assignment of Partnership Interest between Federal Deposit Insurance Corporation and 14-15 Office Associates, L.P., dated March 10, 1999 Yes
10-P. Assignment of Partnership Interest between P-C 900 Third Associates and 14-15 Office Associates, L.P. and 900 3rd Avenue Associates, dated March 22, 1999 Yes
10-Q. Assignment of Partnership Interest between 900 Realty, LLC and 900 3rd Avenue Associates dated March 22, 1999 Yes
10-R. Amendment No. 2 to Amended and Restated Agreement of General Partnership for Progress Partners dated March 17, 1999 Yes
10-S. Amendment No. 3 to Amended and Restated Agreement of General Partnership for Progress Partners dated March 22, 1999 Yes
Document Incorporated By Reference Page ------------ ----
10-T. Settlement Agreement and Release between Progress Properties, Inc., J.R.A. Realty Corporation, P-C 900 Third Associates, 900 Realty LLC and 900 3rd Avenue Associates dated March 17, 1999 Yes
10-U. Stipulation Agreement between Teachers Insurance and Annuity Association of America and 222 S. Ninth Street Limited Partnership, et al. dated July 20, 2000 Yes
21. List of Subsidiaries No
24. Powers of Attorney No